It’s Episode 38 of the MI&S Hot Desk Podcast — Join Robert Kramer and Melody Brue as they break down Alphabet Inc.‘s recent earnings, SAP’s latest updates to SuccessFactors and its new Sustainability Data Exchange, Zoom‘s AI Companion, Zoho’s AI partnership with NVIDIA, and the growing influence of AI agents in ERP.
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Disclaimer: This show is for information and entertainment purposes only. While we will discuss publicly traded companies on this show. The contents of this show should not be taken as investment advice.
Transcript:
Robert Kramer: Hello, and welcome to this week’s edition of Moor Insights & Strategy Hot Desk Podcast. We’re on episode, I think, 38. I’m Robert Kramer and I’m joined by Melody Brue. We’re both VP and principal analyst, and we’re here to talk about ERP, enterprise data, modern work, HCM, CX. Lots of great stuff now, but we’ll be talking about tools, trends, trajectories, people, marketing technologies, enterprise apps. We always get the ERP CRM and the glue that holds it all together is data. Today we’re going to get into some really great things today, which is Alphabet, which is the parent company of Google, SAP, a few things on them actually, Zoho, Zoom and AI agents within ERP applications. Just a quick disclaimer and we’ll get started. This show is for information and entertainment purposes only. We will discuss, we will, while discussing publicly traded companies on this show, its content should not be taken for investment advice. But Mel, what do you think? We got some really good stuff. You have some things that you’d like to talk about, but first of all, how are you doing today?
Melody Brue: Good. I’m happy that we can hopefully, at least for a little while, get back into a regular cadence of podcasting not from the road, actually, being in our home offices or in the office. There’s been so much travel and everything lately, so happy to have a slight break from that. But how are you?
Robert Kramer: Good. We’re prepping for Halloween. I actually was going to ask you if we should wear an outfit, but we’ll save that for, maybe we’ll post some pictures and whatnot, but I’m excited for that. You said that your neighborhood, or specifically your house, partake in some of the friendly activities of Halloween and my area does too, so I’m looking forward to it.
Melody Brue: Yes.
Robert Kramer: But anyway, let’s get into it, I guess, a little bit. Let’s talk a little bit about parent company of Google and Alphabet. They had some Q3 earnings come out. How’d it go?
Melody Brue: They had very impressive Q3 2024 earnings, beat on all levels. I usually when talking about earnings like to break it down. I’ve seen some other analysts also do the same thing, which is great to see from different perspectives. From a modern work perspective, their customer engagement and workforce segments, they have their new customer engagement suite, which was just launched in Q3. That’s enhancing customer experiences across multiple channels. That’s online, mobile apps, call centers, retail stores. Volkswagen of America is one of their initial customers using their call center, their virtual agent, virtual assistant agent called myVW, never used it because I don’t have a VW, but I’ve used those types of things. Then they’re also reporting 75% of daily users of Gemini AI in Google Workspace have reported improved work quality. I use Gemini and I’m going to say I would agree with that. I think Gemini has improved pretty drastically. I would really love to find out, I’d love some user feedback on this so anybody who’s watching, give me your user feedback if you’re using Gemini. If people feel like, I’m 100% certain that Gemini has improved. I’m wondering also if people feel like the more they use it, the more they learn the prompts that will get them the results that they need.
Robert Kramer: That’s a good point.
Melody Brue: Are you seeing that at all?
Robert Kramer: Well, I think it’s a good point. I think what you put in is what you get out. I think the models have gotten a lot more trained as well. At the same time, when you put in those parameters, I think the output’s much stronger. But I think that’s consistent with many of the chat types of tools. But yes, for sure. Good point.
Melody Brue: I find that if I, little tricks and I pick these up here and there from people and just seeing, watch a tutorial or whatever, or read some of the blogs on Google Workspace, that things like you can ask it to ask you questions, clarifying questions. There are lots of things I think that really help that. I think that’s part of what’s driving that 75% of people saying that they’re finding an increase in their work quality. They don’t break out how much their customer engagement and workforce section or segment contributed to overall cloud growth. But they did say that they have seen strong growth fueled by the increasing adoption of Gen AI. Their Q3 revenue reached 11.4 billion, 35% year-over-year increase. They said that their technological leadership and AR portfolio are attracting new customers, securing larger deals and driving a 30% deeper product adoption among existing customers. That’s a big number, 30% among existing customers.
Robert Kramer: Agreed.
Melody Brue: A couple other things, Jason Anderson pointed out in his quick takes, was that the way that they’re telling their tech story is how they actually are using their own products. They reported that 25% of new code developed by Google internally was from their AI. That’s a huge amount of adoption just there. I think they’re really starting, another thing that Jason pointed out that I think is kind of clear across the board, is that they’re really starting to show the benefits of their investment in AI and research over the last couple of quarters, so good things all around.
Robert Kramer: Sounds good. Let’s keep on going, just so, but I agree with you on a lot of that AI because we’re going to be talking about AI throughout this whole, through everything we’re talking about today. But what about SAP?
Melody Brue: This week, the last three days has been SAP Success Connect Virtual.
Robert Kramer: Success Connect.
Melody Brue: There might be some people, I think there’s some people in person, but it was not in the US, actually it was in Portugal. There were people in person because I saw it.
Robert Kramer: It was in Lisbon, I think, right?
Melody Brue: Yeah. I tuned into quite a few of the sessions. I thought that there were some really interesting … I tuned in last year also to a bunch of the sessions. What I saw that was a difference this year, of course, there’s all of the technological innovations, but what was different here a little, I think a lot actually this year, was a lot surrounding the workforce challenges and how productivity and engagement with AI driven capabilities is going to change the workforce. We saw this with SAP, with their own workforce, how they made a shift. I think this is not just SAP. We’ve seen this with so many different companies where they’ve had restructuring where it’s not necessarily a financial restructuring. There’s layoffs because the company’s in trouble or for any reason. It’s a matter of AI has changed the way businesses are working and so things have to be moved around and adjust. They talked a lot of things about talent strategy, about meeting the needs of employees, upscaling different, and at the same time Cisco is having their partner summit. There’s been a lot of talk of those same types of things for partners, so actually helping their partners, they said, go back to school, relearn some of these things that AI has changed in the workforce.
One of my highlights of, well actually one other thing I thought was very interesting, and you’ll be interested to hear this because you’ve covered this as well, is they have now integrated WalkMe in SuccessFactors, which was one of their big acquisitions that closed I think in September. That has really helped with the adoption of SuccessFactors. WalkMe, I think, is a little bit of a sneaker surprise. I think it is more successful within a lot of the SAP applications than people thought it was going to be. I think it is really helping to drive adoption. The product from when I was first introduced to WalkMe in, I’m going to say 2016-2017, around the, while back, I wouldn’t have said that this is the thing that is going to change how enterprise software is adopted. I think that it has actually made quite a dent with SuccessFactors. Then last thing is today they had Amal Clooney on and she was quite a tweet, a treat, a tweet, shoot, maybe a tweet. It was a treat.
Robert Kramer: Trick or treat.
Melody Brue: She talked a lot about her work in human rights and all these different significant cases that she’s worked in. I mean, she’s had an impressive career besides being George Clooney’s wife and the mother of his children, which that is impressive too. But she actually had some really great things to talk about in terms of what AI can help with, vulnerable communities, AI in legal tech and things like people who need to fill out forms, but they can’t because it’s not in their language, how AI can really help with that. Just advancing justice and I think it just felt like it was one of those, I’m going to call her a celebrity keynote that was actually so on brand and on par with the technology, the leadership, the types of the things that SAP stands for, that it was just really refreshing and really nice. I think, unless you have something to add too, it’s actually a really good segue as always. We seem to find these boom boom things into your next topic, which is SAP’s sustainability.
Robert Kramer: Sustainable. Well, real quick, I just want to ask you a quick question about the success factors. It seems like employees, and even on the other side, that the employers might not always hire the best person. I think that this is a really great way to not only hire maybe the right person to find the gaps in those resumes that you’re not actually looking at, but I think it’s a balance between the human and the robot helping get the right person, but also I think that companies don’t give the employees the full circle chance to be successful because they’re not giving them the tools that they need to be what they need to be or they might need to change their role at their specific company, so looking at their skills or the retraining or to just better learning and development tools that can help them. What do you think about all that, just real quick?
Melody Brue: I think this is somewhere, I think why AI has been such a focal point in HCM in general, is that there are so many ways that it can improve the practice of not only fair hiring, but also finding the gaps in the employees where you can actually help to upscale someone, where you can find that talent within your own organization instead of searching for it somewhere else.
Robert Kramer: Right.
Melody Brue: The massive numbers of resumes rather than somebody just going hand leafing through by hand. Also drilling down into the data to find out what skills you’re missing within an organization and filling in those gaps. The ability to ingest all of that data so quickly that where a human can create, can have errors. AI of course can have errors. If it’s trained with bias, it’s going to have bias too. But definitely, there are a lot of really great points where it can help with filling in those gaps, finding those places for opportunity within organizations, and then also freeing up those people in HR to do the work that they actually want it to be there doing, not combing through thousands of resumes.
Robert Kramer: All the help they can get because I’m sure they’re flooded with lots of different resumes and you want to be able to hone in on the best one. What types of technologies are the best to get to that point to hire the best person? Sorry for that way to.
Melody Brue: That’s great.
Robert Kramer:… to to SAP sustainability data exchange that is just recently released or going to be released is it manages the carbon data in supply chains. If everybody’s familiar with COP 29, it’s a global climate meeting that’s taken place this coming month in November that really focuses on climate action. The sustainability data exchange is really to focus on managing really the scope three carbon data across the value chain, to really understand what your suppliers, what their emissions are doing and how do you report that because this was really done manually in the past. It was really a challenging part because you didn’t have standard data, you didn’t have a weight process to do it, and this was a very inconsistent calculation that really caused a lot of problems. With this new tool or this new solution, which actually integrates with SAP’s HANA Cloud, so you’re going to need to be, most likely you’re going to be in the cloud to be taking advantage of this, but this will give you the ability to create standards to adhere to some of these regulations that are probably most likely going to be in Europe right now, but to the United States at some point. But it also integrates with SAP’s control tower and their footprint management to really give you the end-to-end platform to report some of these things. You can collect, analyze, report all this data about your supply chain to have a more valuable emissions carbon footprint practice. I do think this is a big deal because as I’ve said in the past, sustainability is not necessarily a metric that we’re only going to need to adhere to, but it’s a practice. It’s ability to actually run your business really to report the standards that are going to be out there. If you’re not able to do it’s going to be a really cumbersome type of practice to adhere to.
Melody Brue: I’m sure you’re hearing this too from vendors that increasingly people are including sustainability practices in RFPs. They want to know people. It’s not just a matter of this isn’t a thing that you just put in the corner of your website anymore. It’s actually something that really needs to be public shared data across vendors and how they interact with other vendors. It’s no longer kind of a vanity metric. It’s really a necessary one. I think you can see this with multiple OEMs where it’s being, sustainability is now part of design. HP is absolutely designing with sustainability as a mandate. Cisco is designing with sustainability as what they would actually refer to as an almost impossible mandate where the requirements for sustainability in their new products are so stringent, self-imposed, so stringent that the engineers have to really, the designers and engineers have to really work at it. I don’t think it’s something that companies are going to just be looking at as that’s sustainability thing and this is separate. It’s just part of business. It’s no longer an opinion, which that I love. I don’t want to hear anybody’s opinion about whether is this a political thing or not? This has nothing to do with that.
Robert Kramer: No.
Melody Brue: This is just about, there was a lot of that with the green washing and then green hushing, and this is really truly just about good practices.
Robert Kramer: It actually will allow you to identify the best transportation methods from up in the mission perspective, suppliers from raw materials, from the best approach for manufacturing. It’s going to give you, from all these different angles, how to get your missions in a way that it matches the standards that you’re putting forth for the regulatory that’s expected. I think it’s a big deal to start at some point. Not a lot of the ERP companies today have inherent in it these type of features, and I think they’re starting to, but I would advise companies to get there. But when we get into the AI agents of ERP, we’ll talk a little bit more about the foundational aspects that’s needed for these ERP companies to take advantage of this. But as you go out and come back like a year out and then come back to today to get to this innovation of using things like sustainability and in the AI agents, you’re going to need to have your ERP in a certain place to take advantage of these advanced features.
Melody Brue: I’d be curious to see a demo of this and just see how kind of easy it is to implement it. A lot of these things, they sound lovely and sometimes they’re quite complicated, which of course that’s just part of it, but be interesting.
Robert Kramer: It’s interesting because it always does come back to the data because we talked about this in the intro, the glue that holds it together. You can’t pick the best vendor to ship unless you have your data in order. You can’t pick the right raw material to produce that’s green or to matches the emissions control that you want it to be at unless you have your data in order. You don’t know which suppliers have the best transportation routes unless you have that data. The impact of data will carry through to all this and AI will be able to help you with the data being at the right level. But I know that Zoom launched their AI companion 2.0, so good segue to that with the data. Tell us a little bit about that.
Melody Brue: Are we onto Zoom yet? I thought we were going to the … Actually this is a fun one because I was at Zoomtopia, which is their big kind of customer and also they combine it a little bit with an analyst event, a couple weeks ago. I feel like time is just kind of in a vacuum these days. But they showed it to us then. It was sort of launched. But now as of, I think last week is now GA. As you probably know, Zoom has its AI companion free, which is actually at no extra charge. It’s not free, it’s free to users, to paid users. But I think that I say this a lot and so I’m going to repeat myself if so, if you’ve heard this, Zoom’s AI is I think vastly underestimated. If you’ve ever been on a Zoom call and somebody says, “Oh my gosh, I’m so sorry about my dog,” you’ve probably said, “What? What dog?” You can’t hear their dog. You do not hear the dog. The noise cancellation is better than any that I’ve heard. If you’ve ever gotten a call summary from somebody from a Zoom call that you weren’t on, the call summaries are quite accurate. AI Companion 2.0 kind of takes this a little bit further so you can actually, during the meeting you can ask questions to better understand what’s being discussed. I’m sure this has happened to you because it happens to us all. Actually, Pat and I used to do a funny thing called acronym of the week because there’s so many acronyms in our business and if somebody is just rattling something off and they’re using some acronym and you don’t know what it is, you can actually ask Zoom Companion, AI Companion, what that acronym is.
Robert Kramer: I love that.
Melody Brue: ..During the meeting. You don’t have to go off and open another tab and do everything. It also, of course, it’ll catch you up on the things you missed. One thing that it has coming, which I think a lot of people are excited about now, I think I’ll be interested to see how this goes, is basically a task builder. Throughout your day, whether it’s in chat or anywhere in Zoom workplace, if you’re in a meeting, in chat throughout whiteboards, all of the different things within Zoom Workplace, anything that becomes like a to-do for you, Zoom should be able to capture it. I say should because I haven’t used it yet, but because of the quality of their AI, I’m going to give them the benefit of the doubt that you should have a pretty good summary at the end of the day. You shouldn’t at the end of the day be like, “Oh shoot, I told Robert I was going to send him that email.” It’s going to remind you. It’s going to say, “Hey, you told Robert you’re going to send him that email, and you haven’t sent that email yet.”
It’s starting to get to that more, kind of, it’s not going to do it for you, so not AI , but where it really is kind of that personal assistant, not just a note taker. That’s where it’s evolving. I’m excited to use some of the products. I think Zoom, as I said, I think some of the benefits of their AI have been, and the quality, including the leadership and the research behind their AI team has not been communicated entirely the way that it is in the analyst community. I know very well how good their AI is and who the leadership is and where they come from and how many years they’ve spent researching and building models, but I don’t think that the average customer does. When they’re giving away, they do have a lot of different AI features. They have different AI features that they do charge for, like their revenue accelerator, which is their sales coach AI. But I do think it’s very important for them to presume to continue to show the benefit and the impact of the AI beyond just meeting summary because they will continue to develop these types of advanced features that eventually they will likely charge for. That’s my only little piece of but of this. I think Zoom Companion 2.0, it’s a fairly significant upgrade from Zoom Companion AI.
Robert Kramer: Well, it sounds good. Zoho is actually doing something significant as well with their AI with partnering with NVIDIA and Nemo to build LLM. How do you see that enhancing Zoho’s capabilities of AI within their platform?
Melody Brue: Actually this one I think was kind of a big deal. Look around and you see, yes, you see all the big companies partnering with NVIDIA. Zoho is a privately held company, fairly small in comparison to all of the companies that have had Jensen up on stage and doing the dog and funny show and all of that. For Zoho to have this partnership with NVIDIA to build and deploy it’s LLMs and in its SaaS applications, I think seems like a pretty big deal for me.
Over the past year, Zoho has invested 10 million in NVIDIA’s technology, which isn’t a huge number, certainly in comparison to some of the other vendors that we’ve seen. But I definitely think it signifies that they are upping, they’re ramping up their speed to deployment. I think that they’re putting their foot on the gas, I guess is a good way to say it. I think Zoho has also invested quite a lot in AI and built some of their own models. They’ve talked about how this bring your own models similar to Zoom, like a federated AI approach. This, I think, will really help them to accelerate what they can build for their customers within their applications.
Robert Kramer: I agree, it’s very timely because I think Zoho’s expanding. I mean we were at Zoholics, it’s almost like a cult following with their customers and giving them these types of features with AI, the customers that are using it throughout multiple types of solutions within the platform. This will be a very much of an added value for them. As we continue to talk about AI and what the advantages are, it’s a big deal. Zoho is a very, very significant up and coming for small businesses and trying to go into the medium sized businesses. I think they’re definitely making a play, like you said, for a private company.
Melody Brue: I think even going in a little bit higher up into up market into the smaller enterprises, this allows them to accelerate that deployment and build custom models so that people can keep that contained environment that they need for something like Zoho Analytics where your data has to remain in its safe environment. It’s definitely, Zoho has always made a very big focus on security privacy. This really allows them to build around those core tenants that they’ve always built the company around. They’ve always said they answer to their customers and that’s it. I think this is a good indicator of where they’re headed with AI and a great partnership for both of them actually, not just for Zoho. It’s a great partnership for NVIDIA too.
Robert Kramer: Then it moves into our next topic, and they weren’t organized on purpose this way, but AI agents for the future of ERP and major tech leaders like Microsoft and SAP, and then other applications like SalesForce and also Oracle throughout their data that they’re utilizing for all their different applications, from ERP to Workplace to CRM, et cetera. But how are these AI agents going to be successful? What are they doing for the ERP companies and the vendors and the customers? I think it’s helping them, the customers out tremendously because it’s going to help with a lot of those tasks that are probably like we talked about with Success Connect in that way, going to be able to help out the strategy workers to help do their job a lot better. It’s going to help with forecasting. It’s going to trickle down to customer satisfaction and making the ERP systems, and this is the one thing that’s going to make a big deal, making them more usable, more user-friendly and more standardizations for data exchange. I think that’s a big deal.
Then to enhance the supply chain where it’s used more of a proactive tool versus more of a static tool that just actually shows the tracking and traceability of the supply chain. Then it’ll all lead to the sustainability factors that we kind of talked about before. But I think this is a big deal for the future of ERP to understand what they need to do, the companies that are still on premise and getting their data in order to see, it’s one of the first times I’ve ever seen it where there’s so much innovation and if I can’t have that shiny new car, what do I get to do? How do I get there? It’s right in front of them, but I think there’s still a major problem with change management and data management for these ERP companies to be able to get to the point that I’m talking about. What do you think?
Melody Brue: I had to mute because, of course somebody came to my door. I should put a sign up like podcasts on when we’re live.
Robert Kramer: Closed for operation.
Melody Brue: I think that every vendor is, each vendor is talking about agent agentic AI slightly differently. I think that each one, even if they don’t talk about it exactly the same, there might not become an industry standard, but companies need to be really clear about what they’re talking about when they say, “This agent is going to do this for you,” Because in many ways that I’ve seen in ERP systems included, it’s actually not agentic AI, it is automation. I think we got to get really clear on that, whether if something’s automated, that’s just AI, and people have been doing that for many, many years. When the handoff is I’ve identified this, now I’m going to complete this task on your behalf, that’s where I think this next phase of AI is going to get really interesting. I’m curious to see how that’s going to affect things like ERP systems. For instance, I saw a system within a, I think it was an e-commerce ERP system, and now has an AI basically. It’s a bot. It’s not an agent. It’s a bot that will comb the data of the information and write the description. It’s basically, it’s the marketing bot within the ERP system. That is not an agent, but they’re talking about it like an agent. It wouldn’t be an agent if it then said, “Okay, well this salesperson is talking about this,” so maybe now I need to go through, find these things, offer this to the customer, and then take the order. There’s a little bit of work. We’re a little loose with the language still around what’s an agent. Then when you get into customer service, then we really get confusing with agents because people are like, “That’s an AI agent.” We’re actually just talking about an AI assistant, a customer service agent.
Robert Kramer: Maybe something needs to be done to show what do I have to do to be here, which is what you’re talking about, to clear it up. For my company to be here, this is take advantage of all these tools from an agent perspective, this is what the precursor. I think a lot of the places, the events that we go to show the finish line, but they don’t show how we get to the finish line. I think it’s a miscommunication to the people watching because it could be an enormous amount of data that needs to be fulfilled to get there and I’m not even close, so if I go back and I tell the owners, “Hey, this is …” I’m a customer. I tell the owners this is what we want to get to, and they say, “What do we got to do?” It could be a major transformation to get that company at that level. I think next year will be a year of more transformation, change management, data management, but getting these innovations where they could be utilized in a fashion that companies can have their ERPs as a differentiator versus a static operational platform.
Melody Brue: Well, as we are nearing the end of our podcast and also nearing the end of the year, we should do a what to look for for next year and come up with some predictions and maybe even ask some of the other analysts on the team what they see happening in all of our different worlds and swim lanes. But for now, I think we need to wrap this up. Thanks for all of your great insights. Thanks for everybody who has watched and joined in on the conversation. We love to hear feedback. We love to hear ideas for next topics, things you want to hear about, things you liked, things you didn’t like, all of those things. Thanks for joining us and we will see you on the next one.
