How a Global Slowdown Impacts Digital Transformation | Predict 2023

Hey everyone. Welcome. I'm Alan ship mobile CEO of tech strong group and thank you for joining us on what I think it's going to be probably the best battle of the day and it's not because I'm the one moderating it, you know that we we put on our schedule for predict a panel to talk about how kind of worldwide economic conditions are going to impact or not impact digital transformation.

And I they ask me who I want is my kind of dream dream gets for this panel and I I got very lucky I was able to get both of my dream dream team partners here to join me, even though and we are live we are live. So I hope this is coming through a okay. I had to go Halfway Around the World to get them, but let me introduce you to my dream team for this panel.

Sitting in his car from the Italian Alps. He was nice enough to come off the ski slopes today to talk to us is my friend Emmett Keith Emmett Kiefer third Emmett is with inside Partners, but he's also the founder of inside ignite and he can tell you more about it. But in that role and it meets with many many.

Sea level folks at the global 2000 level and talks to them about digital transformation and devops and cyber and and you know technology issues and business issues that are important to him. So Emmett, I want to thank you. Thank you for coming off the ski slopes and joining us today.

It's always a pleasure to have you my friends good to see you. Thanks for the invites great to be here. Yep, and then joining me.

And Emmett today is another very good friend of mine. com though. He's he went his life took a different path and you know that pass included.

Guaranteed Rate mortgage Martin forgive me, I forgot the name of the company right before seizures were gaming orbits Expedia. I work Amazon but no right before there's guarantee rate and William Hill that was William Hill, which is you and then acquired by seasons and he's not the CTO and CTO Chief product officer Chief Tech officer for Seasons entertainment. It's my friend Martin Logan and Martin's actually on vacation in Costa Rica and we were able to he was nice enough to come in off the beach over there.

We have the ski and the beach. We've got it all covered Martin. Welcome.

Thank you. Thank you to be here. So thank you both for coming on.

look Let me just set the table. Right, we're coming out of two and a half three years of this covid nightmare. On top of that.

We've got one person we've got inflation and we've got other viruses and it's all kinds of the fourth Horseman of the Apocalypse right riding in and kind of putting a damp and damper on our economy. But we've also just were coming through a period where by everyone's estimation. We probably saw five maybe seven years worth of digital transformation take place in the last two and a half years.

Right digital transformation became the 800 pound gorilla of our it budgets. Right at the expense of other very important. Projects right A lot of them were put on the back burner because we had a digitally transformed now.

You know that comes a point where you got to pay the piper and and these other projects have to be given their due. And then add that to a scenario where you have a potential economic worldwide economic slowdown. You know, what is this mean for the digital transformation?

Efforts of the global 2000 and not only the global 2000 every organization had some level of transformation going on. So I mean, I'm gonna ask you to kick it off could you know you're in touch with so many different organizations? Or what we see a lot of organizations content to kind of consolidate their gains and kind of bury their head in the sand while we get through these, you know hard times or something else.

Now I don't I don't think so. I mean, I I wrote a piece in 2018 called the the theater of digital and my perspective back then I was traveling around the world interviewing companies asking about their digital strategy looking for Meaningful digital change and I couldn't find it. I found that everything was kind of rhetoric and and hype around digital but you're right.

I mean the pandemic completely unlocked that and it unlocked also some key technology sectors. I mean that the cloud really came out of the hype cycle during the pandemic. There's been talking about the cloud for 20 years, but I'd say large corporations got really serious about it and really started doing it for real during the pandemic data also unlocked, you know, there was a lot of talk about data being the new oil and you know data has been in the hype cycle for a long time, but it fully unlocked during the pandemic many other Technologies also began to accelerate.

There was almost like a like a tsunami of Of software category locking during that period And I think the digital train has left the station. I mean it's going to take 10 20 30 years to to be done and these large corporations really have to cross this digital Rubicon or digital Chasm. I don't think there's any way to stop that process last year.

We were interviewing a lot of companies asking them what their strategy was and the strategy was pull cost out of the Run side of the budget and reallocate that cost to digital and to cyber so they wanted to further accelerate the digital transformation as macro conditions hit. I think at the end of the year where we started to see is certain industries did have to pull the handbrake. So I was talking to a friend the other day.

He works at a luxury goods company and he said they've had they've had to just slam on the on the brakes and for a couple years, they're gonna slow down and then and then re-accelerate when the economy comes back. So I think I think to answer your question. It's very industry driven at the moment.

Some are gonna have to pull back but others are really going to Throttle Down Like banks. For example, I think we're gonna see huge acceleration in digital Pharma. We're gonna see big acceleration Healthcare we're seeing acceleration.

So I think it's going to be industry dependent. Martin thank you. Good I was just gonna say I think there's something interesting economic Trends out there that you know that managers are having to think about so, you know for public and for for private companies looking for money so investors, obviously when things get tight like this investors lose patience with growth, right?

They don't want to put money into like growth somewhere down the line when we're rolling into a recession. Everybody's a little bit tighter with their money. So investors are looking for profitability, right?

That's what they're that that's when you when you're in an inflationary environment. You want something that produces real money. All right the cash flows and so investors are looking to put their money into things that cash flow.

So while you're saying less money for things like for growth plays and some of these things that we often associate with digital transformation. I think where the money goes right now where we're seeing it go is into operational efficiency and digital transformation plays in that space as well. So I think you're exactly right.

It's industry. It's down to company dependent a lot of cases. You know, we want to hold cash into a recession, but we've also got to pay attention to operational efficiency and making sure that we're investing in that and that's where the money is going to come from.

So, I think that's something that's on a lot of managers minds and they're trying to navigate that. Agreed, you know a lesson I learned from being you know living through. com bust and even before that.

2008 is that I mean to use your words to slam on the brakes. Really a lot of times just put you in this sort of death spiral right? It's that's right, you know and and as bad as the economy is I don't know if you could slam on the brakes and then just turn it back on.

You know, when when the sun comes up because you kind of lose your momentum. You lose your your mojo you you know, you'll lose your talent. I mean, I yeah, you know the talent will walk on the door because two years is a long time.

They don't want to sit and and wait they'll leave and and go to a company that is in a transformation. Yeah, agreed Martin, you know you we were talking a little bit industry specific. What about the gaming industry?

Right? So the gaming industry right now is is going through a lot of what I was just talking about, right? If you read the news there and you look at what Caesars is doing and you look at what most companies are doing with the exception of DraftKings who continues to spend, you know, heavily people are pulling back on their spend and they're focusing more on profitability.

Right? So it's all about showing investors that you know, you're a company that cash flows that the Investments that you've made into what has been one of the most Monumental digital Transformations I've ever been a part of which is taking gaming from something that was always brick and mortar and you know what I've been working on the last You know almost four years now is making gaming and sports betting in particular something that's on a tele, you know on a mobile phone. And so investors want to see that that is not dead weight investment right that we didn't spend all this money on marketing and take all the losses that every single company in the industry is taken only to have something that doesn't add the ebit that doesn't add the valuation the company that you know isn't something that's gonna you know, ultimately cash flow.

So we're we're you know, you look to spend a little bit less on marketing and you look to you look to really be operationally more efficient and and focus in on that. I think everybody's focusing in on the profitability. Bad news for the Manning family, huh?

They're making a lot of marketing dollars there. So guys, let me let me ask I'll throw this out to both of you. An interesting convergence, right?

Because look every you know, you look at the Gartner hype cycle, right? You've got your Your peak of the you know peak of height inflation, then it goes into the trial of disillusionment before it. Exits out into you know normalcy or whatever.

Digital transformation. Wow during the pandemic. It was certainly at the hype top of the hype cycle, you know.

Up here where you just couldn't live up to the hype and so a lot of organizations, you know jumping on that bandwagon. They got discouraged because digital transformation and everything that goes with it and it's your point. We were talking off camera cicd software delivery data security all the things that you need to enable a successful digital transformation.

They're hard a lot of organizations. Don't get it right right away. It takes a lot a lot of organizations still don't get it right and they become disillusioned.

With digital transformation and at the same time maybe they're going into that trial of disillusionment. You got a double whammy of economic slowdown money getting tight budgets getting cut. How do we It's easy to say, you know, we should power our way through that we should double down.

We should keep moving forward. How you know those are two things that loggerheads? How are leaders?

You know, what? What do you tell your board? What do you tell your team?

How do you You know make sense of that. I don't to be honest. I don't see the disillusionment.

Okay, you know we we last year brought a gentleman in as a strategic advisor. His name is Peter Weil a long time MIT professor and he did a definitive piece of research to prove that. If you have three people on the board that no technology or no digital.

Um, your company is going to is going to outperform businesses that don't have that type of expertise on the board. So particularly in companies that have a tech savvy CEO and a tech savvy board. I don't think there's any disillusionment I think.

If there is disillusionment, it would be where there isn't support at the top of the business. And that and that and that was a problem. Even before this macro condition.

That was a that's that's been a problem regardless of the conditions. Right? But I think what what we see corporations doing right now is they're staying very very focused on the cloud.

There's obviously economic benefits of getting to the the cloud in a full sort of public Cloud way organizations are staying focused on data. We're seeing lots of categories unlocking and in data and analytics they're obviously very focused on Cyber. We're beginning to see a focus on.

Next Generation software delivery, which we can talk about But I think as long as everyone stays focused on cloud native software delivery. They're going to be they're gonna get to a point where they can deliver digital products at speed. Right and I I don't see any events slowing down and I don't see the disillusionment actually.

Martin what about you? I mean in terms of the dissolution man, I think you know, there's probably companies that have had large projects that failed and they pour you know, a lot of dollars down the drain and those companies might might be feeling it but I think you know the verdict is in it works. Right and we saw it through the pandemic right the number of companies that went through a digital transformation and it saved them right frankly.

They wouldn't be here if they didn't do it. So I think the verdict is in we all know it works. Right?

We all know it's good. And so I think you know what people feel is you know, there's a nervousness there's trepidation. You know, nobody wants to have a fail project but I think you know, I think the verdict is in and and people are optimistic for a reason and and I don't I haven't seen you know, certainly where we are any disillusionment and and in my peer set, you know, they're they're plow ahead.

Sure, Emily. I want to return to something we talked about off camera when we were just warming up. You know digital Transformations up here, but is there's a lot of pieces that enable it and I I referenced it a little bit in the last section things like cicd thing, you know Technologies devops Frameworks devops.

Cloud native these kinds of things. and you know you you have an interesting thought on that. And I think it's directly tried tied to people's success with digital transformation.

Why don't you expand on that a little bit? Yeah, I I joke. I've I've become a student of of hype and you know and and I was joking about the cloud.

I think I think the clouds set the world record. They that was in the hype cycle the longest before it finally came about but I actually think next Generation software delivery has is still in the hype cycle, right? There's been a talk about project to project delivery.

There's been enthusiasm about agile devops, you know, there's a lot of Technologies emerging obviously but last year we made several Investments that are Next Generation software delivery related. So I took a I asked a lot of questions in the global 2000 to try and find out who's actually world class at developing software products and the answer I came to was not that many companies or world class at it yet. But I think it's gonna happen and then not too distant future and and that's really gonna have a dramatic impact on on digital.

does happen Martin do you agree with that assessment? Not many companies are good at it yet. I don't I don't know how to quantify it right because I'm not sort of out there saying nearly as many companies as Emmett does but I do interview a lot of people and when I'm interviewing, you know, when we sift, you know, you sift through a lot of resumes and you know, it takes us 10 interviews to hire one person, you know, and and I would say that we still have as even in this slowdown, you know Talent is slightly more available that you are not saying the wage inflation that we used to see but at the same time they're still hundreds of thousands of open jobs with no candidates in them and they're just isn't you know, there's not enough talent to go around and so when you're in that kind of a, you know a situation You know, it's like anything it's not magic, right if you're building the house and you can't find people that know how to wheel the hammer properly then it's gonna be tough to build house.

So I think it's just we have there's a talent shortage. Everybody knows it and that makes digital transformation fundamentally tough because it is not about tools. It's about the people that put it together.

It's all custom. Everything's custom no matter what even if you buy a solution, it's still custom. We all know that right the Integrations are as hard as building the software itself sometimes so yeah, I I I I think I would agree.

Let me throw a couple of dirty words out at you. AI ml right A lot of people are saying we can make up for the lack of people the lack of talent because we could just automate everything or automate a lot more and you know, we've seen this chat gvt. I oh my developer friends are asking you to generate python code and I I see that now looking at code for vulnerabilities and finding, you know vulnerabilities and sloppy coat.

Is is that it is that an answer here? So I'll come in more on the technology side. I mean, what's what's fascinating pre-pandemic?

We only had a few? Data and analytics Investments. I mean even though there was a lot of excitement around data.

They're you know our model at inside Partners we invest in the center of Market timing. So when the world decides I'm going to solve that problem now then we invest in the middle of that and so it's it's always interesting to look at what are we investing in because that'll tell you what are the problems that the world is trying to solve but it's also very interesting to look at. What are we not investing in because I'll tell you what hasn't arrived yet right, for example.

Haven't done, you know, obviously anything in Quantum yet. We've done very little in web 3, not that you know, not that much an iot Etc. But in the pandemic there was a huge number of categories unlocking in the data analytics space and you know, we have upwards of 40 Investments now and there's continued new categories that are unlocking.

So I think I think large corporations have realized that they have to democratize data and they have to put data at the center of their Innovation strategy. You know the question about what's gonna get automated what jobs are going to be lost. You know, there's also a lot of questions around, you know, ethic the ethics behind AI there's a huge set of issues there that I won't dive into here.

But but I do think it's it's gonna be game changing as we get there. What about you? I don't think that GPT or you know, any of these large language models or anything like that solve the problem, but I think that it actually does help it I think it has the potential to perhaps level up people or make them more productive for sure.

We have I you know, it's hard very hard to quantify whether it solves or what that effect actually turns out to be but I think where this thing will be useful is kind of as a co-pilot, right? You can sit there and have chat GPT check the code. If you're trying to write, you know, a tightly optimized.

Well specified algorithm chat GPT can actually, you know, generate fairly good code for something that's well specified. So that would make an engineer quite a bit faster. You know, you just saying Hey, I want to You know do X or I've never integrated with this particular database adapter for you know, since that a coma through the doxy ass chat GPT.

Like hey, give me how do I you know open up a connection to this thing route some data through it and close the connection and then boom it just spits it out to you. It makes it makes stack Overflow look really slow at Google searches look really slow. When I started when I started coding in the 80s, there was no internet yet open a book and then the internet came along and it got a little better and then you know, we got all the message boards and we got enough content on there.

And now it's just like Google anything boom. It's right there chat GPT is gonna write your custom code based on your specification that can't but make people more efficient and you know, this isn't a talk about chat GPT. There's a bunch of other there's Myriad other applications for these kind of large language models that I think developers are going to be able to put to use but I mean, I think we all know that it's it's huge leap from there from where we are right now.

To you know being able to replace a developer with with something like this. So I I think we will get more productivity out of it, but I doubt it at current state or even the next three four five years that it it solves you. We haven't reached the era of software writing software yet.

No, and I don't think this type of model will be able to do that as well. You can see the week. It is a threat to Google certainly.

I mean as a as an investor, I mean, I I think it's obvious that this could really And the Q it's all things like tiktok are already a threat to the Google search Monopoly if I want to use the m word, but you know, certainly this and yet another thread on the horizon for for that business model. I wanted to ask a question, you know, we keep saying that. Digital transformation was the budget darling it got it soaked up all these dollars and these other projects that were put on the back burner suffered as a result.

What are the kinds of projects that you think me may receive, you know precious budget dollars. even in downturn that maybe you're not digital transformation. related I mean, I I think we're gonna see a continued surgeon cybersecurity related Technologies.

I mean, it's, you know every single day it becomes a bigger and bigger issue. So we're seeing you know budgets accelerating software categories accelerating. So I think that's going to clearly be one.

I also think now that the cloud and and data has also left the station. I don't I don't think you can slow that down. It's just I think there's gonna be continued allocation on budget towards that I think the types of projects that are going to continue to have a lot of scrutiny are You know next Generation business applications kind of vertical SAS apps I think are going to be it's gonna be hard to get some of those funded during this period but I think anything cloud data or cyber related goes goes ahead.

Martin how about you? You know I go back to what I said at the beginning right? It's it's things that drive efficiency are definitely going to get dollars and so we will see.

You know money going towards streamlining projects right places where we can we can be more efficient where we can raise productivity work, you know, certainly companies in our industry or investing in that I think, you know companies all over best thing and just greater operational efficiency and that's not necessarily A transformation. You know, we've been Cloud native forever, you know, we started out that way but as you scale, you know, you're interested just like roads and bridges and everything else gets clunky and you know, you've got to keep up with with where you got to twenty a lot of the companies that were successful at digital transformation grew like crazy during the pandemic, right? Well that growth, you know, what on infrastructure that isn't able to handle it or you know code paths that no longer can deal with that is going to you know is crushing at this point for a lot of a lot of folks and so those projects to you know, it's sort of like the the infrastructure You know update type of projects or you know continue to be really important.

Sure, guys, we only have about four minutes left. So I want to send people home with something they can take with them. Right so for our Enterprise Executives out here.

What's your best advice? regarding digital transformation given current economic conditions. Let's you know some good inflation numbers came out this morning.

Here in the US. Hopefully, it's it's Peak and we are coming down. What's your best advice for executives out here regarding digital transformation regarding what they should be doing for the next 12 to 18 months.

I meant we let you lead off the whole time Martin if it's okay with you. I'm gonna ask you to give your advice first. I mean, it's this is this is the advice it's this advice.

I give to a lot of different questions related to technology the thing I spend the most time on, you know, I train every new employee. I spent two hours of my own time for the last eight years twice a month training new employees that come in on interviewing. And you know, it really is about Talent selection.

If you're gonna embark on a digital transformation, you need to have the proper oversight. You can't Outsource all of it. You need to have people, you know in-house that really understand that to Emmett's point the companies with people on the board either with tech savvy people on the board make it the reason they make it is because those people understand the vicissitudes of these projects and dealing with this stuff.

And so they have the stamina the patients. They know how it's going to go. They don't get scared pull out, you know jump in and metal and pull things off the track you need to bring people in that have the experience that can can ride, you know, give oversight to these projects, you know, even if you're doing it most of your Dev with third parties, you still need somebody internally that that can do that if you're doing it internally you need to bring in top people.

So, you know, I would spend a lot of time and quite a bit of money bringing in the anchor folks that the people you absolutely top of the industry the 18 people in the beginning. Then allow them the ability to rigorously sort through the folks that come in the door, but if you don't have the right team on this stuff, you have no prayer of successfully attempting any digital transformation. So about the people and we're gonna give you the last word.

You know, it's funny. I I went straight to that topic in my mind. I think Talent is the number one topic.

I would put a slight Twist on it and and say to kind of keep an open mind on how you might get the talent and what that Talent might look like. We made a couple of Investments recently that are Talent related one is called Riviera Partners, which is a search firm actually that brings VP of engineering talent and chief product officer Talent up to Global 2000 companies, you know, they they're inspired to build to build products at scale and they wanted they want to do it for large Global entries. So being open to bringing, you know leadership up from a different Walk of Life and we also made an investment in a business called a team which is assembled about 7,000 designers developers Architects data scientists that don't want to work for companies anymore.

They want to work on products there inspired by so leveraging something like a team is a kind of out of the box thought so I think stay open minded to how you're gonna find the talent. I would say is a key factor. Excellent guys.

Look I'm gonna let you both. Get back to skiing snow and skiing and Beach and water. I want to thank you for coming on here.

This was a great discussion. It's a pleasure to see you both. Hope to see you both in person in 2023 for our audience out there.

I hope you've enjoyed this discussion. You couldn't ask for a better two people to who you in about it Martin Emmett. Thank you.

Thank you to our audience. Stay tuned. We have a great day here predict 2023.

Thanks guys.