- 06 Jul 2022
- Managing the Future of Work
Can we automate our way to better decision making?
Bill Kerr: In the enterprise software feedback loop, applications catalyze business change and are, in turn, shaped by that change. That’s been the case from business process reengineering through to software robotics. But events of the past several years have highlighted that dynamic. Business applications—many accessed through the cloud—gave organizations a degree of adaptability in making the Covid-induced switch to remote and hybrid work. And after decades of PowerPoint slides illustrating dysfunctionally isolated stovepiped departments, enterprise apps seem to be playing a role in tightening cross-functional coordination. This promise of better decision making comes as businesses contend with supply-chain problems, climate change, and other disruptions. Is it time to recalculate the ROI of business software? And what are the workforce implications?
Welcome to the Managing the Future of Work podcast from Harvard Business School. I’m your host, Bill Kerr. I’m joined today by Juergen Lindner, Senior Vice President and CMO for Oracle Cloud applications. Juergen spends a good deal of time thinking about partnerships. That includes the C-suite and interdepartmental variety, vendor customer collaboration, and the interplay of business and society. We’ll talk about the evolution of the enterprise and what that means in terms of workforce and skills. We’ll also discuss Oracle’s commitment to environmental, social, and governance goals. Could we be on the brink of an AI-augmented breakthrough in this fragmented and difficult-to-assess domain? Welcome to the podcast, Juergen.
Juergen Lindner: Thank you so much for having me.
Kerr: Juergen, why don’t you begin by giving us a little bit of your background and your career path to Oracle?
Lindner: Gladly. So I had a pretty blue-collar upbringing in Germany. I started out in Deutsche Bank. During my business studies, I had this opportunity to really be exposed to software implementations at large and medium-sized corporations. And I was just mesmerized with the change impact it had on business processes, on the change it had for businesses at large. I actually got, then, the chance to really work for the corporation, the software that was implemented, SAP. I found myself in the lucky situation where I could help out building the Silicon Valley presence of SAP, and that led me through new endeavors, like online marketplaces, software as a service, as it got started. I was able then to lead also from a platform perspective, analytics, integration platforms, operations security types of topics. And that led to my last role at SAP, where I was leading all of what we typically refer to as “sales plays” across applications and infrastructure. Then about six years ago, I got this tremendous opportunity here at Oracle to help reshape the growth of Oracle’s cloud applications. We’re at the cusp of something really big here and helping customers—to pick up on the word you said, to “partner” with customers—in a very different way than we could before.
Kerr: Many of our listeners will know software as a service—or SaaS—in at least some broad terms. But let’s ground the conversation by giving us a little bit more of what does that model entail? What’s your product area responsibility look like?
Lindner: Yeah, so I look at business functions. So really making sure that all of your finance operations, supply chain, human capital management types of challenges are properly addressed—and how that reflects on the customer experience at large, as well. Cloud, at large, as a fundamental enabler for the ability to really outpace change and stay ahead of change is something that a lot of customers have embarked on, but the strategies are still being refined. So certain parts of their line-of-business functions have potentially been moved to cloud-based offerings. And about a decade ago, we decided to do a fundamental re-architecture, a complete rewrite of any business application. And with that, we have now a true software-as-a-service business. What that means is really that every 90 days we are in the position to react very swiftly to changing market conditions and help our customers to stay ahead of that. So the innovation partnership is so much stronger through a true software-as-a-service type of model, but with that can also differ in sets of responsibility, because you are a service, you are replaceable. So I do think it holds us both more accountable and have a partnership unlike anything we could ever do in the on-premise type of world.
Kerr: So I’d love for you to describe how you see the skills and workforce needs differing in the more traditional enterprise IT versus today—and that’s both on the Oracle side and also on the client side. How does that composition look different if we’re in the cloud-based SaaS world?
Lindner: When we think about the skills and the partnership in the SaaS model, I think we are just in a fundamentally better position to work with customers around the bigger themes that are going on right now. It’s really about managing a business responsibly and sustainably. But then you have also very fundamental changes right now with oftentimes phenomena such as the Great Resignation and then supply chain. So with SaaS, we were able to partner with customers very differently and complement their skill sets. I’ll give you one example: Through the pandemic, a lot of companies for the very first time had to close their books remotely, ourselves included. So I do think what we are seeing right now in terms of skill sets is that, if you look specifically to finance functions or HR functions, for example, you need to think very differently how you can lean into technology advances much, much more decisively. So I do think we’re seeing a lot of functions really evolve very rapidly, and certain skills are valued very differently. Like, for example, soft skills become much, much more critical; the ability to work with other business partners becomes so much more critical, because all of those business decisions are intertwined.
Kerr: We want to come back and talk about some of those management positions. But let’s stay on the pandemic for a minute. Maybe you can tell us a little bit of the experience and what was obviously an enormous shock, but also one that had multifaceted impacts on a business. How did that impact the SaaS world? And then also, how did Oracle respond to the pandemic and the shift to remote work?
Lindner: Yeah, so what was fascinating to my point earlier is that we felt we could be a very different partner to our customers. It was really about how can we make sure that our customers are making it safely through the pandemic. That had to do with spinning up, like, furloughing and rehiring employees. We quickly decided to extend software for free, because we felt if our customers cannot have the planning flexibility they need, they might not be around tomorrow, right? I give you a very tangible example: Chipotle. It was really something where, in November 2020, they had seen their sales triple—the online sales—triple through the pandemic. And they, for the very first time, created what was called their first “digital kitchen.” So a completely new business model, a completely new challenge, but it was catering entirely to online orders. They had a pickup lobby only, and they could do that very quickly because they automated just about any forecast in their supply chain. So before they could do this, maybe a couple of forecasts a week for suppliers, and now they could knock out those forecasts for all suppliers in a day, and that allowed them to really have 30 percent reduced forecast times. They could really quickly pivot back when this online demand surged in, and they had full visibility into inventory levels, into anything from farm to distribution to restaurants. So what I meant earlier is that it’s oftentimes risky to look at technology partnerships and business partnerships in isolation, where I’m just going to pick one supply for finance, one for HR, one for supply chain types of topics. We felt that the interconnectivity between those functions—like what is the supply chain impact on my financial store? [What] does furloughing, rehiring employees, do to the bottom line of my HR investments?—is so critical. They understood that “decision making in isolation” could be suboptimal. And, hence, having everything on one single data model on one platform helped them to respond very differently. And that was interesting. Or they brought eight manufacturing supply facilities in Southeast Asia live during the pandemic remotely in a 30-day period.
Kerr: Juergen, I’m curious. You mentioned earlier the compensation side of the business.
Lindner: Yes.
Kerr: As you move toward SaaS models, as you move toward the partnerships, does that part of the relationship further change as well? I mean, you can go to one extreme—in some partnership models, you might even be compensated based upon the performance of the partner’s business all the way, and in others, could be a more traditional relationship.
Lindner: What we have seen is that our commercial model is constantly evolving. We certainly have parted with the traditional big, one-time transaction type of model into something that is really, as I said earlier, a complete service-driven model. And a service means exactly that, it means you’re replaceable, potentially. So the skin in the game is very different for us. It means that we are participating and making us part of our customers’ success, because if the customer is not happy with our service and how we are providing it, they might not be renewing it. Gone are also those big, one-time big-bang implementations. It’s really something where you can pick a business process, a line of business, a region, so it’s much, much more modular and bite sized. We might not be the only vendor that they have. In reality, in 90 percent of the case, we are not the only vendor that they have, right? So we also need to integrate ourselves from the thought process into their investment mix. And obviously we’re keen on earning their trust for more. But we have to think about business acquisition, business partnerships very, very differently in the SaaS world.
Kerr: Some of the leaders we’ve had on this podcast have also talked about the challenge of transformation when you have a lot of legacy systems. So is there a lot of bespoke trying to have the SaaS model connect in with the legacy infrastructure or even the internal IT division of the company you’re working with?
Lindner: The answer is, absolutely yes. We’d like to think that cloud is hopefully the leading investment that customers do. That said, every company moves at their own pace in accordance to their business needs and all a certain, also the certain data residency needs, for example, right? So we always have to account as to what is the strategy, what are the data regulations, potentially, that kick in?
Kerr: I can say as Harvard Business School undergoes its own digital transformation, which is happening live as we speak in 2022, there are the considerations that have been brought in, and then there’s the move of what can we do different and new in the cloud, and that’s a delicate step. In some of your thought leadership pieces that you’ve written, you’ve emphasized the role of the Chief Financial Officer, the CFO, and the degree of integration that that role needs to have. Dwell upon a little bit about that particular role, why it’s so important to you and what are you advocating for in the integration?
Lindner: The CFO always has been very strategic—though oftentimes been bogged down with mundanity and routine and repetitive types of tasks. Technology has come a long way of really being a catalyst for liberating the CFO function at large to be simply a more strategic role, where you don’t just come to the finance department and say, “Okay, can you help me with this next budgetary type of cycle?” It’s really something where we have seen that the role has drastically evolved from just the financial steward of the business to really become a corporate strategist and a change agent—like incubating new business models, having a very consultative type of approach with the line of businesses. Take the current HR situation that every company is in, where this phenomenon of the Great Resignation requires us to think fundamentally different. How we do investment strategies? Where do we acquire talent? Where does it reside? What is the impact on my bottom line, on my budgets? If we do not acquire the same set of skills tied to a headquarter, for example, but they can work from anywhere, this has profound, profound implications as to what that means for office real estate, right? And office real estate is such a big block of a lot of companies. So if your talent acquisition is remote—and oftentimes it’s fantastic because you’re not constrained by certain types of geographical locations—it means that whatever your campus strategy looks like this might be very different. It’s also that the CFO has a lot of say if it comes up to all of the supply chain challenges that we’re seeing right now. So you want to model those types of supply chain changes quickly on with the finance department. You might have to hire very different skill sets and different locations you never thought about, because supply chains need to be repatriated or changed. So we just feel that the nexus of just about any business conversation and investment decision always comes down to the CFO. And if they can be really taking advantage of those automation steps oftentimes brought on through machine learning and other types of algorithm help.
Kerr: So I’m trying to unpack this a little bit. Is it that the SaaS model and the cloud infrastructure and the innovation cycles and the advantages that you described early in the session are providing more high-quality investment opportunities, and that’s why the CFO needs to be closer to the decision making more real time involvement around that? Like, the integrative aspect is remarkable. I guess I could ask in slightly different way: Should the CFO have been even more involved back in the on-premises world? Or what’s extra and different now about the cloud environment?
Lindner: So the answer is, yes, it would’ve been preferable for the CFO to be always this business adviser function. Oftentimes, however, distinct processes were really slowing them down and preventing a more strategic role. I’ll give you an example. Here at Oracle, for example, we’re using the precise same software as any of our customers would use. What we have been able to do through automation is that we shaved off 15 days of our closing process, and now are the fastest filer in the S&P 500. How did we do that? We actually used machine learning algorithms, process optimizations, to really achieve that. And with that, we have 15 days every quarter that our finances team can use to work with the line of business to say, “Okay, we need to do potentially another acquisition. How do we do location strategy differently? How do we think about all of the HR challenges that we are doing right now?” So to your point, technology helps us to really have repetitive tasks weeded out more or less completely. And with that, it becomes a much, much more liberating opportunity for our finance team to work with the line of business on those business decisions. And that is knowledge we’re extending into our customer base. And we have seen great success in them following those examples, as well.
Kerr: That’s great. That’s a great segue to also thinking about some other aspects of kind of employee talent and skills development and similar. There’s a big and robust conversation going on about the college degree, the four-year traditional college degree, the extent to which that is kept up with the skills demands, and whether we should be shedding that degree requirement in a number of cases and just doing skills-based hiring. Tell us where Oracle is in that skills acquisition phase. And also maybe we can just build into this, where is Oracle right now in terms of thinking about return-to-work strategies and kind of reaching out to remote employees as the pandemic goes into its second year?
Lindner: Absolutely. So I’ll start off by saying that whether to go to college or not is certainly a personal choice. I do think the focus on what is a more formal degree is a concept that is currently being revisited and looked at very differently, I think, from a skill set and acquisition strategy. So we definitely place a lot of focus on making sure that, when we seek out talent—or we see in our customer base when they seek out talent—they certainly look at experiences made through internships, through workforce changes, through gigs at other types of corporations to really see how that has helped. You ask the question as to how we think about talent acquisition at large and how the pandemic has changed that potentially for us. We have currently a strategy in place where we are not enforcing return to office. What that means is, our offices have reopened in most parts of the world, and employees are free to choose as to what they have learned over the course of the pandemic and what is their work-life preference. Over the pandemic, a lot of folks had time to really fundamentally rethink as to what is their calling in life, and we have seen remarkable career pivots come out of that. We’ve also seen that in the past, potentially, we have been extremely location, headquarter-centric or office-centric. So we are really leaning into—oftentimes, it’s referred to as a “hybrid” type of model. But every company around the globe right now is really trying to figure out what’s the right balance. Is there a necessity for teams to come together for certain tasks, for example? Like, if you want to do a strategy discussion, it’s likely better to sit in a room, whiteboard something, than doing that over a Zoom meeting. But then you can disperse once again once the strategy is set. So it’s really up to every line of business to make a decision as to what is best and where talent acquisition takes place. Over the course of the pandemic, we were able to acquire talent in various places that otherwise, potentially, we wouldn’t have looked at. So it’s been also quite liberating, quite educational for us, and quite humbling to really see how this new workplace reality unfolds for everyone.
Kerr: And you as a manager, a leader, have had a big variety of these experiences. You had an employee, if I recall correctly, that left because the campus wasn’t reopening fast enough.
Lindner: That is correct. This particular individual felt that, “Okay, I want to be on campus as quickly as possible. The oxygen for me for my career is to be with individuals being in the same room, feeding off their energy.”
Kerr: Another place that a lot of companies are thinking hard about is moving from a model that was very focused on full-time, 40-hour-a-week types of employment, toward as they take on more jobs and tasks to be using freelance workers to augment their skills base. Tell us a little bit about how you and also the customers you’re working with are managing that mix.
Lindner: So we do a lot of things actually in helping A) our own employees explore other avenues in their career. We have, for example, a software service, which is called “Opportunity Marketplace,” where we are posting internal opportunities for team members to, with part of their capacity, explore other career avenues. So we loan them to other teams in that capacity, for example. So this is something where a lot of our customers are trying to open up those internal opportunity marketplaces for talent to rotate, get experiences in other parts of the business, and that is often done very consciously. Then, of course, there are those situations where, based on corporate needs, you might have either skills that you don’t have and you need temporarily, where we open up completely for external workers to join us. This can be, I’ll give you an example, in the marketing function that I am in. Oftentimes you have digital skill sets that, for a given project, you might just quickly want to acquire, you want to burst that out to external types of resources. This can be filling certain short-term voids that you might have through maternity types of situations or other life events. So we often complement our own workforce with additional skills, and oftentimes we end up hiring those individuals as well then full time. So every company right now really tries to figure out within the constraints it also has obviously from a security perspective, from an intellectual property perspective, as to what is the right mix between permanent skills that you need to have on board and what are augmentation types of skills or exploratory types of skills that you can bring temporarily on board to really bring your corporation forward.
Kerr: And in your personal experience in work, has that ratio of gig-to-staff work been increasing over the last decade? Do you predict it to be a greater share of activity in the future?
Lindner: I can only talk about my function at this point in time. There I’ve seen we have been more open, simply because I think we have learned with technology also to be more flexible. Whereas in the past, potentially, we had, I don’t know, come to our campus type of policy, where you limit the pool of those types of candidates significantly. Now that we have learned to deal with technology very differently and found different ways of productivity, the inclusiveness of external team members has been elevated significantly. So we definitely look at the skills composition very differently than just a decade ago. And it’s so much easier to make a business case also to say, “Okay, I need temporarily this skill set, or I need to augment my skill set, and then we can see if it’s something that we want to bring on permanently or not.” So it has given us a lot of flexibility, yes.
Kerr: We haven’t yet spent much time on ESG—environmental, social, and governance—goals, but I know it’s very important both for you and Oracle. So tell us a little bit about your work in that space and the way that you also work with your clients.
Lindner: So we really look at all aspects of our business practices and to also enable customers to have the right technology to address those truly generational challenges we have. We do that from: How do we operate our clouds? How do we work with our customers? And how do we also look at our own employee base, for example, to really help with diversity-inclusion types of topics. We just recently launched a study; it’s called “No Planet B.” It was a provocative study, where we wanted to see how ready are businesses to have AI help them in fundamentally tackling those types of challenges. So what we found are a couple of really interesting statistics here, like 94 percent of the population worldwide at this point in time really do not think that we have made enough progress on sustainability and social types of efforts. Then we found that 93 percent believe that it’s more important than ever now. And 78 percent are really frustrated with the progress made by businesses on those initiatives. When we then drilled down, okay, on “How ready are you to endorse the help of technology to help you address those challenges?” we were quite blown away that 93 percent of business leaders would trust a bot or an algorithm over a human to make sustainability and social decisions. So that said, it’s obviously far from the human’s role being obsolete in decision making, but it’s really the augmentation potential that we’re seeing dive up. And from a diversity-inclusion perspective, our mantra is really that we want every employee to be themselves here. That also has helped us recently to make a significant step-up in the Forbes list of best employers for diversity. We try to be extremely transparent, candid, in how we are assessing our progress. And I do think that’s one part of the equation. Once again, if it comes with technology, do you have the right technologies to really analyze where you are? This has to do with sustainability reports, and we have, for example, planning solutions and analytical solutions. But also in the line of business activity, do you have the right tool search, for example, to look into supply chain practices, hiring policies? And here we have a very interesting use case. For example, let me take SailGP. It’s a partnership from a catamaran sailing setup, and I’m constantly blown away if I look as to what they’re doing. So it’s oftentimes technology being used for, of course, making sailing more competitive, where we have 30,000 sensors on those types of boats, and every performance in the water is democratized as a knowledge to the next generation of athletes; that by itself is mesmerizing. But in the past, they needed to ship 28 containers of IT equipment to every race. Now we partnered up with them, they have one data center in London, and they only ship one container. They also collect with their sensors, environmental types of data in every race they’re doing. So there’s 14 billion data points per race that are being collected, some of them being water samples. And next time they’re sailing in the same location, they can compare those data points and see, okay, did the pollution go up, go down? So it’s really interesting to see what type of technology use cases help drive sustainable behavior within our customers, our partners, and what we do internally here as well.
Kerr: That’s a great, great example there. Juergen, the nature of many ESG goals is that one firm can’t do it alone. How does Oracle and the clients that you’re working with interface with other regulatory bodies, government agencies, and so forth?
Lindner: Yes. Great question, actually. It’s not that a single corporation in isolation can make a huge difference. By all means, we all need to hold ourselves accountable to the highest standards and have declared goals. That said, we all need to have an active hand in participating into the regulatory type of evolution of those standards, because those standards are constantly evolving. As a very recent example, we’ve seen that certain types of ESG metrics have become an integral part of financial reporting on Wall Street and other types of things, right? So to your point, yes, we are making sure that we have all of the tool sets in place that our customers can constantly comply with evolving regulatory types of decisions, but we also encourage companies to really be active in the conversation and help shape the regulations to the right proper outcomes, because they’re still evolving.
Kerr: Maybe as a final question, let me just broaden this back out to your thoughts as a business leader. How has the future of work been changing for you in the most recent period of years? But then, what are you also projecting for the future?
Lindner: I do think we need to be extremely cognizant as business leaders that the value system of just about any partner, customer, and employee has fundamentally shifted over the course of the pandemic. What I mean with that is that we found that a large majority of our employees—or the employees worldwide, actually—are assessing very differently which company they’re working for and want to be associated with. So it has massive repercussions for each and every company, what type of talent they will be able to attract, what type of business they will be able to strike. So we do see that ESG at large has become a very defining strategy and commitment for any corporation. We also feel that the constant change that we are experiencing right now, A) pandemic driven, but B) also as a result of the pandemic, we have created new business models. So we are going to see a very different way of assessing how quickly can you pivot based on market events and how responsive is the IT partnerships and business partnerships that you have struck. They will be decisive for corporate Darwinism, I would say. And certainly, how much can you automate in your current business to really liberate talent for more value-added types of tasks. So fundamental generational changes.
Kerr: Juergen Lindner is Senior Vice President of Software as a Service—or SaaS—at Oracle. Juergen, thanks so much for joining us today.
Lindner: Thank you so much for having me, I appreciate the dialogue.
Kerr: We hope you enjoy the Managing the Future of Work podcast. If you haven’t already, please subscribe and rate the show wherever you get your podcasts. You can find out more about the Managing the Future of Work Project at our website hbs.edu/managingthefutureofwork. While you’re there, sign up for our newsletter.