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2017 ENTERPRISE ALMANAC

USHERING IN A NEW ERA OF ENTERPRISE TECH

By Michael Yamnitsky

#2017Almanac

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IN A NEW ERA OF ENTERPRISE TECH By Michael Yamnitsky #2017Almanac 2017 ENTERPRISE ALMANAC // @WORK_BENCH

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PREAMBLE

INTRODUCING THE WORK-BENCH ENTERPRISE ALMANAC

PREAMBLE INTRODUCING THE WORK-BENCH ENTERPRISE ALMANAC

For the past four years at Work-Bench, we’ve been investing in a total reimagining of the enterprise technology stack.

We’re in the midst of a once in a decade tectonic shift of infrastructure that powers the Fortune 1000 and is unlike anything we’ve seen before. Whereas consumer tech has the Mary Meeker Internet Trends report for an aggregate view of industry trends, enterprise technology was missing a comprehensive overview of the key trends - so we’re launching the Enterprise Almanac to share our thinking on the trends reshaping enterprise technology.

Our primary aim is to help founders see the forest from the trees. For Fortune 1000 executives and other players in the ecosystem, it will help cut through the noise and marketing hype to see what really matters. It’s wishful thinking, but we also hope new talent gets excited about enterprise after reading this report. By no means will most of the predictions be correct, but our purpose is to start the discussion by putting this stake in the ground.

Please share any and all feedback via email at michael@work-bench.com or on Twitter at @ItsYamnitsky.

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@ItsYamnitsky . 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC MICHAEL YAMNITSKY Venture Partner, Work-Bench 2

MICHAEL YAMNITSKY Venture Partner, Work-Bench

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PREAMBLE

ABOUT WORK-BENCH

PREAMBLE ABOUT WORK-BENCH

About Us Work-Bench is an enterprise technology focused venture fund.

Our Thesis Customer-centricity. We make it our focus to deeply understand the business and IT needs of the Fortune 1000 in order to make more informed decisions in our search for the next enterprise giants. This is highly informed by our backgrounds in corporate IT at leading Wall Street banks and as Industry Analysts which is unique in the venture business.

Our Model Our model flows directly from our thesis. We leverage our deep corporate network in New York City and beyond as a way to identify trends, pick the winners, and secure customers for our portfolio companies.

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PREAMBLE

TABLE OF CONTENTS

PREAMBLE TABLE OF CONTENTS

I. 2017 Macro Perspective The Next Generational Shift In Enterprise Technology Has Arrived

II. Four Vertical Themes

1. Machine Intelligence

2. Cloud Native

3. Cybersecurity

4. Internet of Things (IoT)

III. Tips for Entrepreneurs

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PREAMBLE

SPECIAL THANKS

PREAMBLE SPECIAL THANKS

Special thanks to…

Team Work-Bench Jonathan Lehr, Jessica Lin, Vipin Chamakkala, Kelley Mak, Mickey Graham, and Dash Adam who added significant contributions and healthy debate for the content of this presentation.

Friends in the Enterprise Tech ecosystem Scott Coleman (Ignition Partners), Lenny Pruss (Amplify Partners), Lonne Jaffe (Insight Venture Partners), Frank Gillett (Forrester Research), Aaref Hilaly (Sequoia), Bradford Cross (Merlon Intelligence), Matt Turck (Firstmark Capital), Drew Conway (Alluvium), Diego Oppenheimer (Algorithmia), Greg Smithies (Versive), Tim Eades & Keith Stewart (vArmour), Divya Venkatachari (Cisco), Ed Anuff (Apigee/Google), and Winter Mead (Sapphire Ventures) for contributing their thoughts.

Work-Bench Founders and CEOs For keeping me honest and never failing to surprise us with with where technology can take us on this pale blue dot.

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PREAMBLE

SMALL DISCLAIMER

PREAMBLE SMALL DISCLAIMER

Our views are shaped by anecdotal evidence based on our interactions with entrepreneurs, corporate customers, and big tech leaders. Take that for what it’s worth. We’ve done our best to separate fact from opinion by highlighting opinionated perspectives in blue.

You’ll notice many qualitative details, but a dearth of data in this report. The trends we discuss are indeed early – they can’t be rigorously quantified in customer surveys ran by Forrester and Gartner, nor can they be segmented out of spending figures by IDC. CBInsights and Pitchbook provide valuable fundraising data, but since history has shown there’s a disequilibrium between market potential and fundraising in early market crests, we’ve decided to keep funding figures to a minimum. Our intent was to avoid cherry picking funding data to serve our purpose and make unfair claims of causality.

We have disclosed our investments where appropriate.

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2017 Macro Perspective

The Next Generational Shift In Enterprise Technology Has Arrived

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MACRO PERSPECTIVE

SPEED, SCALE, CX DEFINES VALUE IN TODAY’S POST-INTERNET ECONOMY

MACRO PERSPECTIVE SPEED, SCALE, CX DEFINES VALUE IN TODAY’S POST-INTERNET ECONOMY

The top 5 most valuable US public companies in 2017

Market leadership requires a combination of customer experience, scale, speed, standards, and insight

of customer experience, scale, speed, standards, and insight 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC 8
of customer experience, scale, speed, standards, and insight 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC 8
of customer experience, scale, speed, standards, and insight 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC 8
of customer experience, scale, speed, standards, and insight 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC 8

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of customer experience, scale, speed, standards, and insight 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC 8

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MACRO PERSPECTIVE

STARK EVIDENCE OF THIS AS 3 OF THEM TRANSFORM ENTERPRISE TECH

MACRO PERSPECTIVE STARK EVIDENCE OF THIS AS 3 OF THEM TRANSFORM ENTERPRISE TECH
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The core tenants of these powerful companies (speed, scale, standards) led them to expose their internal capabilities to global companies around the world and evolve into “megaclouds” dominating growth in the enterprise IT market

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MACRO PERSPECTIVE

MEGACLOUDS ARE FIGHTING TO BE #1 PLUMBING FOR DIGITAL BUSINESS

MACRO PERSPECTIVE MEGACLOUDS ARE FIGHTING TO BE #1 PLUMBING FOR DIGITAL BUSINESS

Besides a few serious regional players like Alibaba, global enterprises have 3 main marketplace bazaars to choose from to power their digital transformation

bazaars to choose from to power their digital transformation PLAYER #1 (CATEGORY LEADER): MOMENTUM AND BRAND

PLAYER #1 (CATEGORY LEADER):

MOMENTUM AND BRAND NAME

$17.1 Billion (2017 Revenue Est.) 40% YoY Growth

PRODUCT STRATEGY The monocloud that’s good enough for most things, not amazing for anything. Heading down proprietary path as most services are integrally tied to their public cloud architecture.

GTM STRATEGY Aggressive enterprise sales: lock-in, land-and-expand.

BIG EXISTENTIAL QUESTION Amazon can’t allocate 30 top PhDs to solve a single problem. Who will hit Amazon in the achilles heel?

a single problem. Who will hit Amazon in the achilles heel? PLAYER #2 (FOR NOW): ENTERPRISE

PLAYER #2 (FOR NOW):

ENTERPRISE HERITAGE

$6.1 Billion (2017 Revenue Est.) 81% YoY Growth

PRODUCT STRATEGY Play to internal strengths: Underserved enterprise workloads like legacy Microsoft products, platform and application services for modern enterprise apps.

GTM STRATEGY Strong enterprise support model.

BIG EXISTENTIAL QUESTION Will enterprise chops trump Amazon’s scale and scope?

Will enterprise chops trump Amazon’s scale and scope? PLAYER #3 (KILLER PRODUCTS): BUT WHERE’S THE ENTERPRISE

PLAYER #3 (KILLER PRODUCTS):

BUT WHERE’S THE ENTERPRISE LOVE?

$950 Million (2017 Revenue Est.) 75% YoY Growth

PRODUCT STRATEGY Google shines strength in machine learning, developer tools, and container orchestration (Kubernetes).

GTM STRATEGY Historically Google hasn’t catered to the enterprise with sales & support. They’re apparently trying to change this though.

BIG EXISTENTIAL QUESTION Can Diane Green, Sam Ramji, and the first-class GTM team from Apigee bring Google from enterprise 0 to hero?

Source: Estimates from Bank of America Merrill Lynch’s “Server & Enterprise Software: Cloud Wars 9: AI : From faster to smarter powered by ABC.” May 8, 2017. Revenue includes PaaS & IaaS.

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… The opportunity is massive, so megaclouds have gotten a little bit territorial…

Darth vader death grip?

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MACRO PERSPECTIVE

TECHNOLOGY GIANTS ARE CRUMBLING AT THE HEELS OF MEGACLOUDS

MACRO PERSPECTIVE TECHNOLOGY GIANTS ARE CRUMBLING AT THE HEELS OF MEGACLOUDS
TECHNOLOGY GIANTS ARE CRUMBLING AT THE HEELS OF MEGACLOUDS Software division spin out in 2016 20

Software division spin out in 2016

THE HEELS OF MEGACLOUDS Software division spin out in 2016 20 straight quarters of YoY revenue

20 straight quarters of YoY revenue decline

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MACRO PERSPECTIVE

ENTREPRENEURS IN SILICON VALLEY AREN’T IMMUNE EITHER

MACRO PERSPECTIVE ENTREPRENEURS IN SILICON VALLEY AREN’T IMMUNE EITHER

Megaclouds put tremendous pressure on startups within the cloud ecosystem — the Amazon clan will either build it on their own or make it difficult for startups to scale

Amazon mines the startup ecosystem and replicates their most popular software tools…

and replicates their most popular software tools… Amazon’s ReInvent is a startup bloodbath Amazon Lightsail
and replicates their most popular software tools… Amazon’s ReInvent is a startup bloodbath Amazon Lightsail

Amazon’s ReInvent is a startup bloodbath Amazon Lightsail = DigitalOcean killer? AWS X-Ray = testing and debugging startup killer? Amazon Pinpoint = mobile analytics startup killer? The list goes on…

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…And makes it difficult to create a tech company around deep IP by hosting the latest open source software at a fraction of anyone else’s cost

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… But the rules are about to change again with the resurgence of Artificial Intelligence

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MACRO PERSPECTIVE

AI STARTUP FUNDRAISING AT RECORD HIGHS

MACRO PERSPECTIVE AI STARTUP FUNDRAISING AT RECORD HIGHS
MACRO PERSPECTIVE AI STARTUP FUNDRAISING AT RECORD HIGHS Source: CBInsights “The 2016 AI Recap: Startups See

Source: CBInsights “The 2016 AI Recap: Startups See Record High In Deals And Funding”

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MACRO PERSPECTIVE

TECH POWERHOUSES ARE PLAYING DEFENSE WITH ACQUI-HIRES

MACRO PERSPECTIVE TECH POWERHOUSES ARE PLAYING DEFENSE WITH ACQUI-HIRES

Race for AI: top acquirers of AI startups

WITH ACQUI-HIRES Race for AI: top acquirers of AI startups Source: CBInsights “The Race For AI:

Source: CBInsights “The Race For AI: Google, Twitter, Intel, Apple In A Rush To Grab Artificial Intelligence Startups”

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MACRO PERSPECTIVE

STRATEGY IS TO KEEP AI ON A LEASH BY DEMOCRATIZING IT

MACRO PERSPECTIVE STRATEGY IS TO KEEP AI ON A LEASH BY DEMOCRATIZING IT

Democratizing AI retains its disruptive power, allowing megaclouds to maintain their power grip through sheer scale of delivering

maintain their power grip through sheer scale of delivering Source:

Source: https://www.wired.com/2017/05/sundar-pichai-sees-googles-future-smartest-cloud/

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“One of the most exciting things we all can do is demystify machine learning and AI. It’s important for this to be accessible by all people” Sundar Pichai, CEO of Google

It’s important for this to be accessible by all people ” Sundar Pichai, CEO of Google

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It’s important for this to be accessible by all people ” Sundar Pichai, CEO of Google

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MACRO PERSPECTIVE

JEFF BEZOS ADMITS AI VALUE IS IN REAL WORLD APPLICATION IN OPERATIONS

MACRO PERSPECTIVE JEFF BEZOS ADMITS AI VALUE IS IN REAL WORLD APPLICATION IN OPERATIONS
ADMITS AI VALUE IS IN REAL WORLD APPLICATION IN OPERATIONS “But much of what we do

“But much of what we do with machine learning happens beneath the surface. Machine learning drives our algorithms for demand forecasting, product search ranking, product and deals recommendations, merchandising placements, fraud detection, translations, and much more.

Though less visible, much of the impact of machine learning will be of this type — quietly but meaningfully improving core operations.

Source: http://www.businessinsider.com/jeff-bezos-shareholder-letter-on-ai-and-machine-learning-2017-4

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MACRO PERSPECTIVE

WE BELIEVE A “MINI” AI CRASH IS IMMINENT

MACRO PERSPECTIVE WE BELIEVE A “MINI” AI CRASH IS IMMINENT
PERSPECTIVE WE BELIEVE A “MINI” AI CRASH IS IMMINENT Large tech companies are ending their talent

Large tech companies are ending their talent shopping spree, leaving many AI startups with inflated valuations and no real business in the dust. Salesforce is already showing signs it’s getting over acqui-hires as it pivots to internally developing Einstein after gobbling up startups in 2015 and 2016.

Too many competitive Series A & B deals in AI that have come across our desks at Work- Bench over the past year have had valuations in the high double digits, with many even $100M+. This can’t last long.

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MACRO PERSPECTIVE

LIKE THE INTERNET ECONOMY, AI VALUE WILL BE CREATED AFTER THE CRASH

MACRO PERSPECTIVE LIKE THE INTERNET ECONOMY, AI VALUE WILL BE CREATED AFTER THE CRASH

After the crash…

AI VALUE WILL BE CREATED AFTER THE CRASH After the crash… 2017 ENTERPRISE ALMANAC // The

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The successful companies will focus on using AI to enable business process transformation

The successful companies will focus on using AI to enable business process transformation @WORK_BENCH // #2017ALMANAC

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MACRO PERSPECTIVE

AI COMPANIES WILL CREATE VALUE THROUGH SYSTEMS OF INTELLIGENCE

MACRO PERSPECTIVE AI COMPANIES WILL CREATE VALUE THROUGH SYSTEMS OF INTELLIGENCE

Systems of Intelligence are highly focused analytical systems intended to solve business challenges and objectives (i.e. increase revenue and customer experience, improve operations, reduce risk)

Value created by: • Designing products from data capabilities up to user experience and not
Value created by:
• Designing products from data
capabilities up to user experience
and not the other way around
• Software UI as invisible as possible >
fancy GUIs. Name of the game is
making the workflow as seamless as
possible.
Value created by:
• Embedding domain experts into the
debugging and hyper-parameter
tuning process
• Incorporating feedback from human
experts into the system of record (SOR)
Value created by:
• Integrating data from multiple
sources include non-tradition
information rich channels
• Novel new forms of data capture
• Cleverly optimizing the data
preparation and AI training process

Original Framework Source: Jerry Chen’s “The New Moats - Why Systems of Intelligence are the Next Defensible Business Model”

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MACRO PERSPECTIVE

EXAMPLES OF SYSTEMS OF INTELLIGENCE

MACRO PERSPECTIVE EXAMPLES OF SYSTEMS OF INTELLIGENCE

Manufacturing: predictive maintenance on factory equipment in a manufacturing facility

Insurance: Automation of consumer car insurance filing claims

Pharmaceuticals: Optimization of R&D resource allocation for a portfolio of drug candidates in clinical trial

Financial services: Automated customer interactions with retail banking “chat bots” in natural language

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Systems of Intelligence are like Ford Assembly Lines and Toyota Production Systems – powerful weapons for competitive process advantage.

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MACRO PERSPECTIVE

SYSTEMS OF INTELLIGENCE BARRIER TO ENTRY LIES IN TIGHT INTEGRATION

MACRO PERSPECTIVE SYSTEMS OF INTELLIGENCE BARRIER TO ENTRY LIES IN TIGHT INTEGRATION

Cloud moat = unbundling “capabilities” into individually deployed “microservices” for scale advantage

deployed “microservices” for scale advantage • Systems of intelligence moat = bundling

Systems of intelligence moat = bundling “capabilities” into processes advantage

Data
Data
Processes to maintain and enhance data AI
Processes to
maintain and
enhance data
AI
Data-driven product design Turning the intelligence into action anchors product design
Data-driven
product design
Turning the
intelligence into
action anchors
product design
Domain expertise
Domain
expertise
into action anchors product design Domain expertise Domain expertise baked into product / operational lifecycle

Domain expertise baked into product / operational lifecycle

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MACRO PERSPECTIVE

BUILDING A SYSTEM OF INTELLIGENCE REQUIRES GETTING INTO THE DETAILS

MACRO PERSPECTIVE BUILDING A SYSTEM OF INTELLIGENCE REQUIRES GETTING INTO THE DETAILS

Deep domain expertise

REQUIRES GETTING INTO THE DETAILS Deep domain expertise Rich, highly relevant data sets 2017 ENTERPRISE ALMANAC

Rich, highly relevant data sets

DETAILS Deep domain expertise Rich, highly relevant data sets 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC

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…Achilles heel of megaclouds = lack of focus on the details of real-world applications…

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Next-generation of successful entrepreneurs will build systems of intelligence 2017 ENTERPRISE ALMANAC // @WORK_BENCH //

Next-generation of successful entrepreneurs will build systems of intelligence

of successful entrepreneurs will build systems of intelligence 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC 27
of successful entrepreneurs will build systems of intelligence 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC 27

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Still scared of this guy?

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Vertical Theme #1

Machine Intelligence

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TL;DR

MACHINE INTELLIGENCE PREDICTIONS

TL;DR MACHINE INTELLIGENCE PREDICTIONS
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1
2
2
3
3
4
4
5
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Vertical AI continues to be a disruptive force in the enterprise, with ‘niche’ markets presenting massive opportunities.

One caveat: complex vertical AI operating models = protracted path to product/market fit.

Invisible apps will ride consumerization wave faster than Slack.

Technology advances enable AI applications to expand beyond the limitations of large, well-labeled data sets.

There won’t be a Twilio, but there will be a Github of AI.

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Misalignments Cloud Native disruption

can’t be stopped

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MACHINE INTELLIGENCE

…BETWEEN TALENT AND OPPORTUNITY…

MACHINE INTELLIGENCE …BETWEEN TALENT AND OPPORTUNITY…

Most AI talent works here…

TALENT AND OPPORTUNITY… Most AI talent works here… … to optimize the output of… 2017 ENTERPRISE
TALENT AND OPPORTUNITY… Most AI talent works here… … to optimize the output of… 2017 ENTERPRISE
TALENT AND OPPORTUNITY… Most AI talent works here… … to optimize the output of… 2017 ENTERPRISE
TALENT AND OPPORTUNITY… Most AI talent works here… … to optimize the output of… 2017 ENTERPRISE
TALENT AND OPPORTUNITY… Most AI talent works here… … to optimize the output of… 2017 ENTERPRISE

… to optimize the output of…

AI talent works here… … to optimize the output of… 2017 ENTERPRISE ALMANAC // Meanwhile the
AI talent works here… … to optimize the output of… 2017 ENTERPRISE ALMANAC // Meanwhile the
AI talent works here… … to optimize the output of… 2017 ENTERPRISE ALMANAC // Meanwhile the

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Meanwhile the world changing opportunities are out here…

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of… 2017 ENTERPRISE ALMANAC // Meanwhile the world changing opportunities are out here… @WORK_BENCH // #2017ALMANAC
of… 2017 ENTERPRISE ALMANAC // Meanwhile the world changing opportunities are out here… @WORK_BENCH // #2017ALMANAC
of… 2017 ENTERPRISE ALMANAC // Meanwhile the world changing opportunities are out here… @WORK_BENCH // #2017ALMANAC

#2017ALMANAC

of… 2017 ENTERPRISE ALMANAC // Meanwhile the world changing opportunities are out here… @WORK_BENCH // #2017ALMANAC
of… 2017 ENTERPRISE ALMANAC // Meanwhile the world changing opportunities are out here… @WORK_BENCH // #2017ALMANAC
of… 2017 ENTERPRISE ALMANAC // Meanwhile the world changing opportunities are out here… @WORK_BENCH // #2017ALMANAC

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MACHINE INTELLIGENCE

…HYPE AND POTENTIAL…

MACHINE INTELLIGENCE …HYPE AND POTENTIAL…

Hype: “Chatbots” rose and fell in the course of 9 months…

“Chatbots” rose and fell in the course of 9 months… …no one wanted to talk to
“Chatbots” rose and fell in the course of 9 months… …no one wanted to talk to

…no one wanted to talk to a real human, why would they want to talk to a bot?

Potential: 30 years ago Michael Porter predicted an IT automated value chain we’re yet to fully achieve

an IT automated value chain we’re yet to fully achieve Source: Michael Porter, “How Information Gives

Source: Michael Porter, “How Information Gives You Competitive Advantage” HBR

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MACHINE INTELLIGENCE

… EXPECTATIONS AND REALITY…

MACHINE INTELLIGENCE … EXPECTATIONS AND REALITY…

What the press thinks of AI entrepreneurs…

AND REALITY… What the press thinks of AI entrepreneurs… 2017 ENTERPRISE ALMANAC // How entrepreneurs really

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How entrepreneurs really feel right now…

AI entrepreneurs… 2017 ENTERPRISE ALMANAC // How entrepreneurs really feel right now… @WORK_BENCH // #2017ALMANAC 34

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Bridging the gap…

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MACHINE INTELLIGENCE

THE OPPORTUNITY IS GETTING MORE OBVIOUS…

MACHINE INTELLIGENCE THE OPPORTUNITY IS GETTING MORE OBVIOUS…

Fortune 1000 CEOs…

OPPORTUNITY IS GETTING MORE OBVIOUS… Fortune 1000 CEOs… AI Entrepreneurs… 2017 ENTERPRISE ALMANAC // @WORK_BENCH
OPPORTUNITY IS GETTING MORE OBVIOUS… Fortune 1000 CEOs… AI Entrepreneurs… 2017 ENTERPRISE ALMANAC // @WORK_BENCH
OPPORTUNITY IS GETTING MORE OBVIOUS… Fortune 1000 CEOs… AI Entrepreneurs… 2017 ENTERPRISE ALMANAC // @WORK_BENCH
OPPORTUNITY IS GETTING MORE OBVIOUS… Fortune 1000 CEOs… AI Entrepreneurs… 2017 ENTERPRISE ALMANAC // @WORK_BENCH
OPPORTUNITY IS GETTING MORE OBVIOUS… Fortune 1000 CEOs… AI Entrepreneurs… 2017 ENTERPRISE ALMANAC // @WORK_BENCH
OPPORTUNITY IS GETTING MORE OBVIOUS… Fortune 1000 CEOs… AI Entrepreneurs… 2017 ENTERPRISE ALMANAC // @WORK_BENCH
OPPORTUNITY IS GETTING MORE OBVIOUS… Fortune 1000 CEOs… AI Entrepreneurs… 2017 ENTERPRISE ALMANAC // @WORK_BENCH
OPPORTUNITY IS GETTING MORE OBVIOUS… Fortune 1000 CEOs… AI Entrepreneurs… 2017 ENTERPRISE ALMANAC // @WORK_BENCH
OPPORTUNITY IS GETTING MORE OBVIOUS… Fortune 1000 CEOs… AI Entrepreneurs… 2017 ENTERPRISE ALMANAC // @WORK_BENCH
OPPORTUNITY IS GETTING MORE OBVIOUS… Fortune 1000 CEOs… AI Entrepreneurs… 2017 ENTERPRISE ALMANAC // @WORK_BENCH
OPPORTUNITY IS GETTING MORE OBVIOUS… Fortune 1000 CEOs… AI Entrepreneurs… 2017 ENTERPRISE ALMANAC // @WORK_BENCH
OPPORTUNITY IS GETTING MORE OBVIOUS… Fortune 1000 CEOs… AI Entrepreneurs… 2017 ENTERPRISE ALMANAC // @WORK_BENCH
OPPORTUNITY IS GETTING MORE OBVIOUS… Fortune 1000 CEOs… AI Entrepreneurs… 2017 ENTERPRISE ALMANAC // @WORK_BENCH
OPPORTUNITY IS GETTING MORE OBVIOUS… Fortune 1000 CEOs… AI Entrepreneurs… 2017 ENTERPRISE ALMANAC // @WORK_BENCH
OPPORTUNITY IS GETTING MORE OBVIOUS… Fortune 1000 CEOs… AI Entrepreneurs… 2017 ENTERPRISE ALMANAC // @WORK_BENCH
OPPORTUNITY IS GETTING MORE OBVIOUS… Fortune 1000 CEOs… AI Entrepreneurs… 2017 ENTERPRISE ALMANAC // @WORK_BENCH

AI Entrepreneurs…

GETTING MORE OBVIOUS… Fortune 1000 CEOs… AI Entrepreneurs… 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC 36
GETTING MORE OBVIOUS… Fortune 1000 CEOs… AI Entrepreneurs… 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC 36

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MACHINE INTELLIGENCE

REFLECTING ON LESSONS LEARNED FROM THE RECENT PAST…

MACHINE INTELLIGENCE REFLECTING ON LESSONS LEARNED FROM THE RECENT PAST…

Your smartest people + our smartest people in a room?

Your smartest people + our smartest people in a room? 14 months, 150 consultant “ERP” projects
Your smartest people + our smartest people in a room? 14 months, 150 consultant “ERP” projects
Your smartest people + our smartest people in a room? 14 months, 150 consultant “ERP” projects

14 months, 150 consultant “ERP” projects

in a room? 14 months, 150 consultant “ERP” projects Action Jack’s black box? AI Masquerade Ball

Action Jack’s black box?

150 consultant “ERP” projects Action Jack’s black box? AI Masquerade Ball Is it Ava? Or Jake

AI Masquerade Ball

projects Action Jack’s black box? AI Masquerade Ball Is it Ava? Or Jake from State Farm?

Is it Ava?

Or Jake from State Farm?

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Something in between?

Ball Is it Ava? Or Jake from State Farm? 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC
Ball Is it Ava? Or Jake from State Farm? 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC

?

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MACHINE INTELLIGENCE

…AND DIGGING INTO THE ARCHIVES TO SEE WHAT WORKED IN THE PAST…

MACHINE INTELLIGENCE …AND DIGGING INTO THE ARCHIVES TO SEE WHAT WORKED IN THE PAST…

Artificial intelligence…

1960s

1970-1980s

1990-2000s

Late 2000s

Mid 2010s

2016

9 6 0 s 1970-1980s 1990-2000s Late 2000s Mid 2010s 2016 An algorithmic dream AI winter
9 6 0 s 1970-1980s 1990-2000s Late 2000s Mid 2010s 2016 An algorithmic dream AI winter

An algorithmic dream

AI winter

Internet

Big Data

14 months, 150 consultant “ERP” projects

AI Masquerade Ball

months, 150 consultant “ERP” projects AI Masquerade Ball … meets business process re-engineering Is it Ava?
months, 150 consultant “ERP” projects AI Masquerade Ball … meets business process re-engineering Is it Ava?
months, 150 consultant “ERP” projects AI Masquerade Ball … meets business process re-engineering Is it Ava?

… meets business process re-engineering

AI Masquerade Ball … meets business process re-engineering Is it Ava? Or Jake from State Farm?
AI Masquerade Ball … meets business process re-engineering Is it Ava? Or Jake from State Farm?
AI Masquerade Ball … meets business process re-engineering Is it Ava? Or Jake from State Farm?

Is it Ava?

Or Jake from State Farm?

1985

2017+

Is it Ava? Or Jake from State Farm? 1985 2017+ Sybase PowerBuilder AI-powered business process revolution
Is it Ava? Or Jake from State Farm? 1985 2017+ Sybase PowerBuilder AI-powered business process revolution

Sybase PowerBuilder

Ava? Or Jake from State Farm? 1985 2017+ Sybase PowerBuilder AI-powered business process revolution 2017 ENTERPRISE

AI-powered business process revolution

2017+ Sybase PowerBuilder AI-powered business process revolution 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC 38

2017 ENTERPRISE ALMANAC

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MACHINE INTELLIGENCE

… TO WRITE THE FUTURE PLAYBOOK FOR BUSINESS PROCESS AUTOMATION

MACHINE INTELLIGENCE … TO WRITE THE FUTURE PLAYBOOK FOR BUSINESS PROCESS AUTOMATION

2 winning personas for AI-powered enterprise software invisible apps move faster; vertical AI is more complex to implement but stickier

Operating model

Data source

Strategy

Value prop

Buyer persona

Invisible apps

Packaged software to automate common business processes

AI

Packaged software to automate common business processes AI Human Biz app APIs (i.e. Gmail, Salesforce) ID
Packaged software to automate common business processes AI Human Biz app APIs (i.e. Gmail, Salesforce) ID
Packaged software to automate common business processes AI Human Biz app APIs (i.e. Gmail, Salesforce) ID

Human

Biz app APIs (i.e. Gmail, Salesforce)

ID the killer app, ride on top of established data set, create a data label moat to protect against new entrants

Automate a business ‘task’

protect against new entrants Automate a business ‘task’ Employee V e r t i c a

Employee

Vertical AI

Hybrid app/services to automate company-specific processes.

Operating model

AI

to automate company-specific processes. Operating model AI Human Data source Proprietary IT systems Strategy Value
to automate company-specific processes. Operating model AI Human Data source Proprietary IT systems Strategy Value
to automate company-specific processes. Operating model AI Human Data source Proprietary IT systems Strategy Value

Human

Data source Proprietary IT systems

Strategy

Value prop

Buyer persona

Implement with pilot customer, facilitate niche search and user exploration in app to train the AI, ID MVP that can scale with respect to customer implementation and sell that before expanding scope

Eliminate headcount, make those remaining more efficient

Eliminate headcount, make those remaining more efficient BU leader/CxO 2017 ENTERPRISE ALMANAC // @WORK_BENCH //

BU leader/CxO

2017 ENTERPRISE ALMANAC

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MACHINE INTELLIGENCE

INVISIBLE APPS HAVE A MORE OBVIOUS TRAJECTORY

MACHINE INTELLIGENCE INVISIBLE APPS HAVE A MORE OBVIOUS TRAJECTORY

Buyer persona

INVISIBLE APPS HAVE A MORE OBVIOUS TRAJECTORY Buyer persona Employee • Impact: Dominant force disrupting the

Employee Impact: Dominant force disrupting the workforce over the next five years because of deadly combination of task automation + wide reach, ease of deployment of consumerized SaaS • Key distinction: end-to-end automation of a business task so the value proposition is cost reduction. Otherwise merits of AI = more efficient UX and it’s just a productivity play like any other SaaS app. • GTM differentiation: Shorter AI training periods leveraging structure and rich semantics of biz app data. Busy execs, consultants and sales people will purchase and expense access to invisible apps in true consumerized fashion.

2017 ENTERPRISE ALMANAC

Prediction: By 2018 at least one breakthrough invisible app will grow faster than the early days of Slack or Salesforce

Invisible apps
Invisible apps

Examples of invisible apps:

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@WORK_BENCH

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Salesforce Invisible apps Examples of invisible apps: // @WORK_BENCH // * #2017ALMANAC * Work-Bench portfolio company

*

Salesforce Invisible apps Examples of invisible apps: // @WORK_BENCH // * #2017ALMANAC * Work-Bench portfolio company

#2017ALMANAC

* Work-Bench portfolio company

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MACHINE INTELLIGENCE

VERTICAL AI IS TRICKIER GIVEN THE MORE COMPLEX OPERATING MODEL…

MACHINE INTELLIGENCE VERTICAL AI IS TRICKIER GIVEN THE MORE COMPLEX OPERATING MODEL…

Feedback loop

Feedback loop

Invisible apps

Defensibility driven by the data moat

Algorithm

Algorithm

Algorithm
Algorithm
apps Defensibility driven by the data moat Algorithm Action Annotation Note: there is some
apps Defensibility driven by the data moat Algorithm Action Annotation Note: there is some
apps Defensibility driven by the data moat Algorithm Action Annotation Note: there is some

Action

apps Defensibility driven by the data moat Algorithm Action Annotation Note: there is some “human-in-the-loop” in
apps Defensibility driven by the data moat Algorithm Action Annotation Note: there is some “human-in-the-loop” in

Annotation

driven by the data moat Algorithm Action Annotation Note: there is some “human-in-the-loop” in that the

Note: there is some “human-in-the-loop” in that the user’s interactivity with the software drives model refinement, but the onus is not on the customer to explicitly “train” the AI like in many cases of vertical AI

2017 ENTERPRISE ALMANAC

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Vertical AI

“Lock-in” dynamic with integration services and customer side annotation

Algorithm

Algorithm

Algorithm
Algorithm
integration services and customer side annotation Algorithm Action Vendor Annotation Customer Annotation Deals
integration services and customer side annotation Algorithm Action Vendor Annotation Customer Annotation Deals
integration services and customer side annotation Algorithm Action Vendor Annotation Customer Annotation Deals

Action

services and customer side annotation Algorithm Action Vendor Annotation Customer Annotation Deals with
services and customer side annotation Algorithm Action Vendor Annotation Customer Annotation Deals with

Vendor

Annotation

side annotation Algorithm Action Vendor Annotation Customer Annotation Deals with routine discrepancies
Customer Annotation
Customer Annotation
Customer

Customer

Annotation

Annotation

Algorithm Action Vendor Annotation Customer Annotation Deals with routine discrepancies Deals with sensitive

Deals with routine discrepancies

Customer Annotation Deals with routine discrepancies Deals with sensitive information and drives functionality

Deals with sensitive information and drives functionality changes requiring company-specific process expertise. Note: not all vertical AI have customer annotation.

@WORK_BENCH

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MACHINE INTELLIGENCE

…AND HARDER TO GET TO DATA SETS…

MACHINE INTELLIGENCE …AND HARDER TO GET TO DATA SETS…
MACHINE INTELLIGENCE …AND HARDER TO GET TO DATA SETS… Structured data Invisible apps are intelligence systems
MACHINE INTELLIGENCE …AND HARDER TO GET TO DATA SETS… Structured data Invisible apps are intelligence systems

Structured

data

Invisible apps are intelligence systems riding on top of SoRs

apps are intelligence systems riding on top of SoRs Unstructured data Vertical AI require customization to
apps are intelligence systems riding on top of SoRs Unstructured data Vertical AI require customization to
apps are intelligence systems riding on top of SoRs Unstructured data Vertical AI require customization to
apps are intelligence systems riding on top of SoRs Unstructured data Vertical AI require customization to
apps are intelligence systems riding on top of SoRs Unstructured data Vertical AI require customization to

Unstructured

data

Vertical AI require customization to get to legacy systems and unstructured data

2017 ENTERPRISE ALMANAC

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MACHINE INTELLIGENCE

…SO THEY’RE SUBJECT TO TOUGHER REQT’S FOR PRODUCT/MARKET FIT

MACHINE INTELLIGENCE …SO THEY’RE SUBJECT TO TOUGHER REQT’S FOR PRODUCT/MARKET FIT

Invisible apps

Does it automate a task end-to-end with a high degree of accuracy?TO TOUGHER REQT’S FOR PRODUCT/MARKET FIT Invisible apps Is it easy for employees to use? Vertical

Is it easy for employees to use?automate a task end-to-end with a high degree of accuracy? Vertical AI Does it significantly augment

a high degree of accuracy? Is it easy for employees to use? Vertical AI Does it

Vertical AI

Does it significantly augment humans?

Is the UX intuitive and enjoyable to use?to use? Vertical AI Does it significantly augment humans? This is arguably the trickiest part to

augment humans? Is the UX intuitive and enjoyable to use? This is arguably the trickiest part

This is arguably the trickiest part to building vertical AI and thus where startups should differentiate

s h o u l d d i f f e r e n t i
s h o u l d d i f f e r e n t i

Does the AI require the customer’s intervention? Who? Data scientists? Business analysts?s h o u l d d i f f e r e n t i

What level of abstraction from the guts of the system will the UX need?intervention? Who? Data scientists? Business analysts? 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC 43

2017 ENTERPRISE ALMANAC

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MACHINE INTELLIGENCE

VERTICAL OPPS ARE MASSIVE: EX. FINANCIAL SERVICES

MACHINE INTELLIGENCE VERTICAL OPPS ARE MASSIVE: EX. FINANCIAL SERVICES

Buyer persona

OPPS ARE MASSIVE: EX. FINANCIAL SERVICES Buyer persona Business process: Compliance workflows (i.e. KYC, AML)

Business process: Compliance workflows (i.e. KYC, AML) Industry: Financial Services

BU leader/CxO There’s a multi-billion dollar differential in investment bank cost structure, and compliance is dominating expenditure post 2008 financial regulation.

Regulation is such a powerful force on Wall Street that compliance officers seem to be running the business and driving divisional efficiency initiatives.

the business and driving divisional efficiency initiatives. Vertical AI can help firms reduce compliance headcount by
the business and driving divisional efficiency initiatives. Vertical AI can help firms reduce compliance headcount by

Vertical AI can help firms reduce compliance headcount by automating the mind numbingly repetitive tasks within compliance:

*
*
the mind numbingly repetitive tasks within compliance: * Outcome: increase speed, reduce human overhead 2017
the mind numbingly repetitive tasks within compliance: * Outcome: increase speed, reduce human overhead 2017
the mind numbingly repetitive tasks within compliance: * Outcome: increase speed, reduce human overhead 2017

Outcome: increase speed, reduce human overhead

2017 ENTERPRISE ALMANAC

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#2017ALMANAC

* Work-Bench portfolio company

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MACHINE INTELLIGENCE

VERTICAL OPPS ARE MASSIVE: EX. PHARMA

MACHINE INTELLIGENCE VERTICAL OPPS ARE MASSIVE: EX. PHARMA Buyer persona Business process: Pre-clinical informatics

Buyer persona

VERTICAL OPPS ARE MASSIVE: EX. PHARMA Buyer persona Business process: Pre-clinical informatics research (i.e.

Business process: Pre-clinical informatics research (i.e. drug predictions) Industry: Pharmaceuticals

BU leader/CxO Massive pre-clinical research cost ($1B+), vast timeline (3-4 years), high failure rates

(99.5%).

Opportunity to simulate pre-clinical processes by identifying molecule combinations most likely to succeed in clinical trial.

combinations most likely to succeed in clinical trial. + some startups innovating here Outcome: increase speed,
+ some startups innovating here
+ some startups innovating here
succeed in clinical trial. + some startups innovating here Outcome: increase speed, decrease R&D expenditure

Outcome: increase speed, decrease R&D expenditure

Vertical AI can help firms speed the development pipeline and focus clinical trial efforts on drugs with higher likelihood of success by automating informatics research.

Service-provider business model

informatics research. Service-provider business model Proprietary drug pipeline business model Source: Joseph A.
informatics research. Service-provider business model Proprietary drug pipeline business model Source: Joseph A.
informatics research. Service-provider business model Proprietary drug pipeline business model Source: Joseph A.
informatics research. Service-provider business model Proprietary drug pipeline business model Source: Joseph A.
informatics research. Service-provider business model Proprietary drug pipeline business model Source: Joseph A.
informatics research. Service-provider business model Proprietary drug pipeline business model Source: Joseph A.
informatics research. Service-provider business model Proprietary drug pipeline business model Source: Joseph A.
informatics research. Service-provider business model Proprietary drug pipeline business model Source: Joseph A.

Proprietary drug pipeline business model

business model Proprietary drug pipeline business model Source: Joseph A. DiMasi, Henry G. Grabowski, Ronald W.
business model Proprietary drug pipeline business model Source: Joseph A. DiMasi, Henry G. Grabowski, Ronald W.
business model Proprietary drug pipeline business model Source: Joseph A. DiMasi, Henry G. Grabowski, Ronald W.
business model Proprietary drug pipeline business model Source: Joseph A. DiMasi, Henry G. Grabowski, Ronald W.
business model Proprietary drug pipeline business model Source: Joseph A. DiMasi, Henry G. Grabowski, Ronald W.

Source: Joseph A. DiMasi, Henry G. Grabowski, Ronald W. Hansen “Innovation In The Pharmaceutical Industry: New Estimates of R&D Costs”; Harvard Business School “The Medicines Case”

2017 ENTERPRISE ALMANAC

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MACHINE INTELLIGENCE

VERTICAL OPPS ARE MASSIVE FOR A REASON…

MACHINE INTELLIGENCE VERTICAL OPPS ARE MASSIVE FOR A REASON…

Source: Factset

VERTICAL OPPS ARE MASSIVE FOR A REASON… Source: Factset Higher margins = larger margin differential across

Higher margins = larger margin differential across firms = wider gap for AI to be used as a competitive advantage

2017 ENTERPRISE ALMANAC

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New forces extend the possibilities in enterprise AI

2017 ENTERPRISE ALMANAC

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MACHINE INTELLIGENCE

UNSTRUCTURED DATA PREP = MORE USE CASES, FASTER TO MARKET

MACHINE INTELLIGENCE UNSTRUCTURED DATA PREP = MORE USE CASES, FASTER TO MARKET

70% of time in AI development spent on data prep

Automated data prep has historically only worked for the 10% of structured data…

historically only worked for the 10% of structured data… * Now automated data prep possible for

*

historically only worked for the 10% of structured data… * Now automated data prep possible for
historically only worked for the 10% of structured data… * Now automated data prep possible for
historically only worked for the 10% of structured data… * Now automated data prep possible for
historically only worked for the 10% of structured data… * Now automated data prep possible for

Now automated data prep possible for the 90% of unstructured data in large enterprises…

for the 90% of unstructured data in large enterprises… Result: expansion of possible uses cases within
for the 90% of unstructured data in large enterprises… Result: expansion of possible uses cases within

Result: expansion of possible uses cases within enterprises as data prep is an initial step in any AI process

* Work-Bench portfolio company

2017 ENTERPRISE ALMANAC

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MACHINE INTELLIGENCE

INDUSTRIALIZED DATA ANNOTATION = MORE ACCURATE AI

MACHINE INTELLIGENCE INDUSTRIALIZED DATA ANNOTATION = MORE ACCURATE AI

Deep learning common among AI elite; special sauce turning to data annotation in ebb/flow pattern between data and algos

Data Deep Machine annotation learning Industrialization of data annotation learning Yellow brick road towards
Data
Deep
Machine
annotation
learning
Industrialization of data
annotation
learning
Yellow brick road towards
autonomous AI
2014
2015
2016
2017
Level of

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Industrialization of data annotation

From a single highly tuned data annotation console …

From a single highly tuned data annotation console … …to many highly-tuned data annotation consoles… Modular

…to many highly-tuned data annotation consoles…

console … …to many highly-tuned data annotation consoles… Modular enough to be outsourced… #2017ALMANAC 49
console … …to many highly-tuned data annotation consoles… Modular enough to be outsourced… #2017ALMANAC 49
console … …to many highly-tuned data annotation consoles… Modular enough to be outsourced… #2017ALMANAC 49
console … …to many highly-tuned data annotation consoles… Modular enough to be outsourced… #2017ALMANAC 49

Modular enough to be outsourced…

#2017ALMANAC

console … …to many highly-tuned data annotation consoles… Modular enough to be outsourced… #2017ALMANAC 49
console … …to many highly-tuned data annotation consoles… Modular enough to be outsourced… #2017ALMANAC 49
console … …to many highly-tuned data annotation consoles… Modular enough to be outsourced… #2017ALMANAC 49
console … …to many highly-tuned data annotation consoles… Modular enough to be outsourced… #2017ALMANAC 49
console … …to many highly-tuned data annotation consoles… Modular enough to be outsourced… #2017ALMANAC 49
console … …to many highly-tuned data annotation consoles… Modular enough to be outsourced… #2017ALMANAC 49

49

MACHINE INTELLIGENCE

DEEP LEARNING SUBSTITUTES = MORE INFERENCE, LESS DATA + EASIER TO USE

MACHINE INTELLIGENCE DEEP LEARNING SUBSTITUTES = MORE INFERENCE, LESS DATA + EASIER TO USE

Deep Learning and more exotic forms of AI are great in theory, but difficult to implement in practice due to the intensive parameter tuning and amount of data required to train an algorithm… New trend: make AI methods that require less data more accessible by adding representation schemes from “traditional” ML.

by adding representation schemes from “traditional” ML. Example: Hierarchical temporal memory Combining exotic

Example: Hierarchical temporal memory Combining exotic bayesian networks with common decision tree structure of neural nets to bring deep-learning like algos to natural language understanding.

deep-learning like algos to natural language understanding. Example: Deep Forest Ensemble method in the woodworks that
deep-learning like algos to natural language understanding. Example: Deep Forest Ensemble method in the woodworks that

Example: Deep Forest Ensemble method in the woodworks that limits the number of hyper-parameters relative to deep learning and adds common (albeit vast, pun intended) decision tree structure.

common (albeit vast, pun intended) decision tree structure. Ease the training curve Lower the level of

Ease the training curve

intended) decision tree structure. Ease the training curve Lower the level of expertise required Expand the

Lower the level of expertise required

the training curve Lower the level of expertise required Expand the possibilities: More elastic anomaly detection

Expand the possibilities:

More elastic anomaly detection

Learning from fewer examples

Transfer knowledge between tasks

Put language into context

2017 ENTERPRISE ALMANAC

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MACHINE INTELLIGENCE

BAYESIAN LEARNING = PARTICULARLY PROMISING AS COMPLEXITY RISES

MACHINE INTELLIGENCE BAYESIAN LEARNING = PARTICULARLY PROMISING AS COMPLEXITY RISES

As the industry continues to explore more complex machine learning challenges…

to explore more complex machine learning challenges… … The need for easier to use substitutes for

… The need for easier to use substitutes for deep learning like bayesian learning will rise

Deep learning Bayesian learning Expert human effort
Deep learning
Bayesian learning
Expert human effort

Problem difficulty

2017 ENTERPRISE ALMANAC

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MACHINE INTELLIGENCE

COMPETITIVE FORCES IN AI-POWERED SOFTWARE ARE CHANGING

MACHINE INTELLIGENCE COMPETITIVE FORCES IN AI-POWERED SOFTWARE ARE CHANGING

Competitive forces will be in flux as the AI landscape continues to develop at rapid speed. Here is where things currently stand and directionally where they are going:

currently stand and directionally where they are going: Data moat? Algorithmic differentiation? Weaker: still a
currently stand and directionally where they are going: Data moat? Algorithmic differentiation? Weaker: still a
currently stand and directionally where they are going: Data moat? Algorithmic differentiation? Weaker: still a

Data moat?

stand and directionally where they are going: Data moat? Algorithmic differentiation? Weaker: still a significant
stand and directionally where they are going: Data moat? Algorithmic differentiation? Weaker: still a significant
stand and directionally where they are going: Data moat? Algorithmic differentiation? Weaker: still a significant
stand and directionally where they are going: Data moat? Algorithmic differentiation? Weaker: still a significant
stand and directionally where they are going: Data moat? Algorithmic differentiation? Weaker: still a significant
stand and directionally where they are going: Data moat? Algorithmic differentiation? Weaker: still a significant

Algorithmic differentiation?

Weaker: still a significant barrier, but it’s faster to develop and thus harder to sustain a data moat.

faster to develop and thus harder to sustain a data moat. Weaker: tough to sustain with

Weaker: tough to sustain with open source, but there is some value in novel training, profiling, debugging, and testing processes.

training, profiling, debugging, and testing processes. Locus of focus shifting from the quantity you own to

Locus of focus shifting from the quantity you own to the process you use to sustain these assets*

Direction = whether this factor will be more or less significant 12-24 months from now

*For more on this topic, see Matt Turck’s “The Power of Data Network Effects”

see Matt Turck’s “The Power of Data Network Effects” Data product differentiation? Stronger: The key value
see Matt Turck’s “The Power of Data Network Effects” Data product differentiation? Stronger: The key value
see Matt Turck’s “The Power of Data Network Effects” Data product differentiation? Stronger: The key value
see Matt Turck’s “The Power of Data Network Effects” Data product differentiation? Stronger: The key value
see Matt Turck’s “The Power of Data Network Effects” Data product differentiation? Stronger: The key value
see Matt Turck’s “The Power of Data Network Effects” Data product differentiation? Stronger: The key value

Data product differentiation?

Stronger: The key value driver moving forward is developing products bottoms up, from data and analytical capabilities to features and user experience, and creating a virtuous loop between the two.

Example: Merlon intelligence designs its automated compliance workflow software to BOTH shorten insights to action and gather feedback from users as new data that feeds into the models.

2017 ENTERPRISE ALMANAC

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MACHINE INTELLIGENCE

FORGET AI ELITISM, MAINSTREAM NOW BETTER EQUIPPED/EAGER TO BUILD AI

AI ELITISM, MAINSTREAM NOW BETTER EQUIPPED/EAGER TO BUILD AI After missing out on the internet and

After missing out on the internet and struggling with mobile, Corporate America wants in early on AI

Ambitious attitudes: “AI is a competitive differentiator. We want to own the model, we don’t want Palantir to own it.”

Smart recruiting tactics: Avoiding talent wars with the web- scales by sourcing data scientists in India rather than US, and Masters-levels rather than PhDs.

…But some skepticism, particularly around deep learning:

“We have lots of existing regression models that are finely tuned. Deep learning is just going to be incremental and more expensive right?”

Source: Quotes from interviews with machine learning executives at top-tier Wall Street banks

2017 ENTERPRISE ALMANAC

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“Suits and Hoodies” at Goldman Sachs

Wall Street banks 2017 ENTERPRISE ALMANAC // “Suits and Hoodies” at Goldman Sachs @WORK_BENCH // #2017ALMANAC

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MACHINE INTELLIGENCE

WITH A PLETHORA OPEN SOURCE IT WILL BE EASY, RIGHT?

MACHINE INTELLIGENCE WITH A PLETHORA OPEN SOURCE IT WILL BE EASY, RIGHT?

Widely available backend computing libraries…

EASY, RIGHT? Widely available backend computing libraries… Out-of-the-box deep learning with differentiated AI training

Out-of-the-box deep learning with differentiated AI training

Out-of-the-box deep learning with differentiated AI training Good for recursive neural nets Good for convolutional neural

Good for recursive neural nets

differentiated AI training Good for recursive neural nets Good for convolutional neural nets, speedy/flexible but no
differentiated AI training Good for recursive neural nets Good for convolutional neural nets, speedy/flexible but no
differentiated AI training Good for recursive neural nets Good for convolutional neural nets, speedy/flexible but no
differentiated AI training Good for recursive neural nets Good for convolutional neural nets, speedy/flexible but no

Good for convolutional neural nets, speedy/flexible but no support for Keras

neural nets, speedy/flexible but no support for Keras 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC …

2017 ENTERPRISE ALMANAC

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… Intuitive interfaces

no support for Keras 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC … Intuitive interfaces Higher-level APIs

Higher-level APIs

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MACHINE INTELLIGENCE

WELL THERE’S A STEEP LEARNING CURVE…

MACHINE INTELLIGENCE WELL THERE’S A STEEP LEARNING CURVE…

It takes more experience to debug AI efficiently than to debug ‘traditional’ software

Root-cause analysis in AI is vastly more complex than regular software…

Implementation Algorithm design
Implementation
Algorithm design

Two dimensions of investigation:

Algorithm design Implementation

Source: S. Zayd Enam, Stanford AI Lab

Four dimensions of investigation:

Algorithm design Implementation

Choice of model

Data

2017 ENTERPRISE ALMANAC

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@WORK_BENCH

+ longer time cycle testing the fix

Software development = hours

time cycle testing the fix Software development = hours Machine learning = days Why? • Re-training

Machine learning = days

Why?

Re-training algorithm on dataset is time consuming, pushing a code change to production is not.

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MACHINE INTELLIGENCE

…AND BRICK WALLS SILOING INTERNAL EFFORTS = LACK OF LEVERAGE

MACHINE INTELLIGENCE …AND BRICK WALLS SILOING INTERNAL EFFORTS = LACK OF LEVERAGE

• Enterprise data science functions are decentralizing to get more funding/buy-in from across the enterprise. • Most organizations lack culture of collaborative data exchange, and data governance teams slow projects down.

Siloed data science initiatives

Business Unit #1

• Data • Algos

Business Unit #2

• Data • Algos

Business Unit #3

• Data • Algos

+

Data governance overlords

Unit #3 • Data • Algos + Data governance overlords Common organizational processes mean algos can
Unit #3 • Data • Algos + Data governance overlords Common organizational processes mean algos can
Unit #3 • Data • Algos + Data governance overlords Common organizational processes mean algos can
Unit #3 • Data • Algos + Data governance overlords Common organizational processes mean algos can

Common organizational processes mean algos can be used across business units to solve different use cases

= Enterprise are not getting leverage with their data science efforts

2017 ENTERPRISE ALMANAC

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MACHINE INTELLIGENCE

DISPARATE DATA SCIENCE OPERATIONS = NEED FOR SEAMLESS PIPELINE

MACHINE INTELLIGENCE DISPARATE DATA SCIENCE OPERATIONS = NEED FOR SEAMLESS PIPELINE

APIs

App Dev

SCIENCE OPERATIONS = NEED FOR SEAMLESS PIPELINE APIs App Dev IT ops Product owners How do

IT ops

Product owners

How do you keep everyone up to speed on latest model commits and updates? •
How do you keep everyone up to speed
on latest model commits and updates?
Domain expertise

‘Central intelligence’

• Small group of high paid technical experts responsible for initial model development

Training data
Training data

Domain experts responsible for application of models in BUs

This role is the newest addition to the enterprise data science function highly underserved from

This role is the newest addition to the enterprise data science function highly underserved from a SW perspective

This role is the newest addition to the enterprise data science function highly underserved from a
This role is the newest addition to the enterprise data science function highly underserved from a

Backend AI trainers

• Less sophisticated/cheaper/ often internationally based data science support function responsible for preparing data and hyper-parameter tuning models developed by ‘central intelligence’

Production-ready models

by ‘central intelligence’ Production-ready models How do you manage resources and costs running complicated
by ‘central intelligence’ Production-ready models How do you manage resources and costs running complicated

How do you manage resources and costs running complicated deep learning models?

How do you manage resources and costs running complicated deep learning models?
How do you manage resources and costs running complicated deep learning models?
How do you manage resources and costs running complicated deep learning models?

• Infrastructure owners responsible for deploying models in a cost- efficient manner

2017 ENTERPRISE ALMANAC

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MACHINE INTELLIGENCE

ML PIPELINES EVOLVING INTO A PLATFORM TO BUILD & DEPLOY ML

PIPELINES EVOLVING INTO A PLATFORM TO BUILD & DEPLOY ML ML platforms help enterprises centralize, reuse,

ML platforms help enterprises centralize, reuse, and deploy their models at scale.

Value will be in tight integration of ML workflows spanning the entire pipeline.

integration of ML workflows spanning the entire pipeline. Historical lineage of ML models ready to be

Historical lineage of ML models ready to be leveraged across the org

lineage of ML models ready to be leveraged across the org Git push like model employment

Git push like model employment with smart orchestration and serverless computing

= area for differentiation for vendors

serverless computing = area for differentiation for vendors * Collaboration * Tools to build, optimize, language-

*

* Collaboration

Collaboration

* Collaboration
= area for differentiation for vendors * Collaboration * Tools to build, optimize, language- convert, containerize,
*

*

= area for differentiation for vendors * Collaboration * Tools to build, optimize, language- convert, containerize,

Tools to build, optimize, language- convert, containerize, and data connect ML models. Level of abstraction varies depending on the role targeted (i.e. less sophisticated data scientists vs. hardcore deep learning engineers)

*

Algos

Data lake

Data lake

Data

vs. hardcore deep learning engineers) * Algos Data lake Data Data store, version control, parallel processing

Data store, version control, parallel processing

* Work-Bench portfolio company

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MACHINE INTELLIGENCE

WHAT IT MEANS: FUTURE = GITHUB + HEROKU FOR AI, FUTURE TWILIO FOR AI

MACHINE INTELLIGENCE WHAT IT MEANS: FUTURE = GITHUB + HEROKU FOR AI, FUTURE ≠ TWILIO FOR
FUTURE = GITHUB + HEROKU FOR AI, FUTURE ≠ TWILIO FOR AI YES NO * Collaboration

YES

NO

*

* Collaboration

Collaboration

* Collaboration
FOR AI, FUTURE ≠ TWILIO FOR AI YES NO * Collaboration * * Algos Data lake

*

*
AI, FUTURE ≠ TWILIO FOR AI YES NO * Collaboration * * Algos Data lake Data
AI, FUTURE ≠ TWILIO FOR AI YES NO * Collaboration * * Algos Data lake Data

*

*

Algos

Data lake

Data lake

Data

= area for differentiation

* * Algos Data lake Data = area for differentiation With deflationary pressure from open source,
* * Algos Data lake Data = area for differentiation With deflationary pressure from open source,
* * Algos Data lake Data = area for differentiation With deflationary pressure from open source,
* * Algos Data lake Data = area for differentiation With deflationary pressure from open source,

With deflationary pressure from open source, we expect MLaaS or “Twilio for AI” vendors with differentiated IP and talented teams will try to pivot towards ‘Github for AI’, but will most likely get acqui-hired or resort to selling their data sets to sustain their business.

resort to selling their data sets to sustain their business. acquired by Cisco * Work-Bench portfolio
resort to selling their data sets to sustain their business. acquired by Cisco * Work-Bench portfolio
resort to selling their data sets to sustain their business. acquired by Cisco * Work-Bench portfolio

acquired by Cisco

their data sets to sustain their business. acquired by Cisco * Work-Bench portfolio company 2017 ENTERPRISE

* Work-Bench portfolio company

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Vertical Theme #2

Cloud Native

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TL;DR

CLOUD NATIVE PREDICTIONS

TL;DR CLOUD NATIVE PREDICTIONS
1
1
2
2
3
3

2017 is shaping up to be a pivotal year for Fortune 1000 deployments of cloud native infrastructure.

Container orchestration is the ‘VMware’ anchoring the cloud native ecosystem. Exactly who will play this critical role will become clearer this year.

Cloud native is reshaping databases, middleware, big data, developer tools, and business models.

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CLOUD NATIVE

APPLICATION INFRASTRUCTURE TRANSFORMATION = WELL UNDER WAY

CLOUD NATIVE APPLICATION INFRASTRUCTURE TRANSFORMATION = WELL UNDER WAY

The container disruption = slowly shifting enterprise infrastructure away from virtual machines (VMs)

Yesterday

Apps on VMs

away from virtual machines (VMs) Yesterday Apps on VMs Today Containers on VMs 2017 ENTERPRISE ALMANAC
away from virtual machines (VMs) Yesterday Apps on VMs Today Containers on VMs 2017 ENTERPRISE ALMANAC

Today

Containers on VMs

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Containers on VMs 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC Tomorrow Containers orchestrated on bare metal
Containers on VMs 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC Tomorrow Containers orchestrated on bare metal

#2017ALMANAC

Tomorrow

Containers orchestrated on bare metal

62

CLOUD NATIVE

WHY CONTAINERS OVER VMS?

CLOUD NATIVE WHY CONTAINERS OVER VMS?

Container are simply a better unit of deployment for the cloud than VMs

Containers are lighter — 10’s-100’s of MBs vs. multiple GBs, just the right size for component based lighter — 10’s-100’s of MBs vs. multiple GBs, just the right size for component based microservices

Containers are faster — they can be spun up and down in seconds vs. minutes to realize the true agility, resilience, and portability of cloud computingContainers are faster

Containers are more efficient — you can fit 4-8 times as many app components (or microservices) on more efficient — you can fit 4-8 times as many app components (or microservices) on a bare metal container server than you can on a VM because of the way containers share OS resources to free up space

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CLOUD NATIVE

A NEW CLOUD NATIVE STACK IS BEING DEVELOPED AROUND CONTAINERS

CLOUD NATIVE A NEW CLOUD NATIVE STACK IS BEING DEVELOPED AROUND CONTAINERS

Developer crave for speed and simplicity combined with 4-8X potential server efficiency gains across $726B in global IT infrastructure spend more than justifies the new economy of container-centric IT infrastructure dubbed “cloud native”

IT infrastructure dubbed “cloud native” Sources: Forrester Research, Cloud Native Computing

Sources: Forrester Research, Cloud Native Computing Foundation/Redpoint Ventures

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CLOUD NATIVE

WHY THIS MATTERS FOR THE FORTUNE 1000

CLOUD NATIVE WHY THIS MATTERS FOR THE FORTUNE 1000
CLOUD NATIVE WHY THIS MATTERS FOR THE FORTUNE 1000 World’s largest custodian of assets to be

World’s largest custodian of assets to be largest non web- scale to go cloud native Use case: mission critical internal workloads and partner facing developer platform called “NEXEN” • Business case: transactional velocity, cost cutting • Tool & vendors: Apache Mesos, Kubernetes, OpenStack, Docker

& vendors: Apache Mesos, Kubernetes, OpenStack, Docker Major media company goes “no-ops” with self-service

Major media company goes “no-ops” with self-service cloud native PaaS Use case: rapid-application development platform to meet demands of its deadline-driven business • Business case: developer productivity • Tool & vendors: Kubernetes, Docker

productivity • Tool & vendors: Kubernetes, Docker Major education company goes cloud native to efficiently

Major education company goes cloud native to efficiently scale its growing customer base Use case: core digital learning platform • Business case: rapid scalability • Tool & vendors: Kubernetes, Docker

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CLOUD NATIVE

FORTUNE 1000S WANT DEVELOPMENT AGILITY LIKE THE WEB-SCALES…

CLOUD NATIVE FORTUNE 1000S WANT DEVELOPMENT AGILITY LIKE THE WEB-SCALES…

Microservices fulfills on the promises of service-oriented architecture by decoupling apps into single-purpose services that communicate with other microservices via APIs or messages

communicate with other microservices via APIs or messages Speedier app delivery Rapid cycle times and easier

Speedier app delivery

Rapid cycle times and easier updatesmicroservices via APIs or messages Speedier app delivery Higher code-to-server density ratio Sources: PWC “Agile

Higher code-to-server density ratioSpeedier app delivery Rapid cycle times and easier updates Sources: PWC “Agile coding in enterprise IT:

times and easier updates Higher code-to-server density ratio Sources: PWC “Agile coding in enterprise IT: Code

Sources: PWC “Agile coding in enterprise IT: Code small and local”

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CLOUD NATIVE

…AND TO SCALE AS EFFICIENTLY AS THE WEB-SCALES TOO

CLOUD NATIVE …AND TO SCALE AS EFFICIENTLY AS THE WEB-SCALES TOO

Average server utilization by type of environment

Sources: Gartner, Codeship

Hallmark vendor

Infrastructure type

Example users

Codeship Hallmark vendor Infrastructure type Example users 5-10% Non-virtualized 10-15% Virtualized ? 50-70%

5-10%

Non-virtualized

Infrastructure type Example users 5-10% Non-virtualized 10-15% Virtualized ? 50-70% Cloud-native 2017 ENTERPRISE
Infrastructure type Example users 5-10% Non-virtualized 10-15% Virtualized ? 50-70% Cloud-native 2017 ENTERPRISE

10-15%

Virtualized

type Example users 5-10% Non-virtualized 10-15% Virtualized ? 50-70% Cloud-native 2017 ENTERPRISE ALMANAC // @WORK_BENCH
type Example users 5-10% Non-virtualized 10-15% Virtualized ? 50-70% Cloud-native 2017 ENTERPRISE ALMANAC // @WORK_BENCH

?

50-70%

Cloud-native
Cloud-native
5-10% Non-virtualized 10-15% Virtualized ? 50-70% Cloud-native 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC 67

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CLOUD NATIVE

DESPITE ORGANIZATIONAL HURDLES ENTERPRISES NEED TO OVERCOME…

CLOUD NATIVE DESPITE ORGANIZATIONAL HURDLES ENTERPRISES NEED TO OVERCOME…

The cloud native organizational disconnect = ops getting the short end of the stick

disconnect = ops getting the short end of the stick Devs “Why the f&ck don’t we

Devs

“Why the f&ck don’t we use Kubernetes?”

stick Devs “Why the f&ck don’t we use Kubernetes?” Tech leadership to ops “We’re going to

Tech leadership to ops

“We’re going to be placing you on a special projects team to migrate all of our workloads over to Kubernetes… After that, we’re going to have to let you go.”

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that, we’re going to have to let you go.” 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC

Ops

“…”

68

CLOUD NATIVE

…2017 IS SHAPING UP TO BE A PIVOTAL YEAR FOR CLOUD NATIVE ADOPTION

CLOUD NATIVE …2017 IS SHAPING UP TO BE A PIVOTAL YEAR FOR CLOUD NATIVE ADOPTION

• Container adoption is crossing the chasm: 11% of global developers reported using Docker containers for deployments in late 2016.

• Megaclouds are increasing their integration and support for container orchestration: Amazon natively integrates with Mesos, Microsoft Azure container services supports Kubernetes, Docker Swarm, and Mesos, Google naturally integrates with Kubernetes, and even Oracle now supports Kubernetes!

Developers are embracing new programming models like functional pipelines (i.e. serverless) and the agent model to ease their migration to microservices.

“Serverless” on Google Trends
“Serverless” on Google Trends

Sources: Forrester Research, Google Trends

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“I want in, where do I invest?”

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CLOUD NATIVE

ORCHESTRATION = CENTRAL NERVOUS SYSTEM OF CLOUD NATIVE = $$$

CLOUD NATIVE ORCHESTRATION = CENTRAL NERVOUS SYSTEM OF CLOUD NATIVE = $$$

Container orchestration tools are the data center operating systems of the future. They automate container deployments by spinning up and managing deployment of containers in production applications to fully realize the agility, resiliency, and portability benefits of containers.

Major OSS container orchestrators

benefits of containers. Major OSS container orchestrators À la carte option for running micro services on

À la carte option for running micro services on existing infrastructure

• Individual open source projects for service scheduling, discovery, and secrets management that together are competitive to Kubernetes

• Existing companies with legacy inertia use Nomad for service discover and secrets management

• Managed by Hashicorp

discover and secrets management • Managed by Hashicorp Most mature solution for scale out apps •

Most mature solution for scale out apps

• More mature project than Kubernetes and Nomad

• Integrates well with existing Hadoop stack

• Not so self-service: bring your own service discovery, highly skilled operators, and maintenance staff

• Major Partners: Microsoft, HP

and maintenance staff • Major Partners: Microsoft, HP Best bet for greenfield apps • Largest open

Best bet for greenfield apps

• Largest open source initiative by Google

• Fully featured orchestrator for enterprise apps

• Several commercial vendors in ecosystem as with Hadoop

• Major Partners: Google, Rackspace, RedHat, Intel, CoreOS, Oracle

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CLOUD NATIVE

CONTAINER ORCHESTRATION VENDORS ARE THE NEXT BIG IT VENDORS

CLOUD NATIVE CONTAINER ORCHESTRATION VENDORS ARE THE NEXT BIG IT VENDORS

Commercial software vendors bring container orchestration to life

LEGACY

vendors bring container orchestration to life LEGACY V I R T U A L I Z

VIRTUALIZED SERVERS

TRANSITION

R T U A L I Z E D S E R V E R S

EXISTING PAAS PLATFORMS ADDING CONTAINER SUPPORT

FUTURE

*
*

NEW PLATFORMS BUILT GROUND UP FOR CONTAINERS

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Kubernetes is a disruptive pirate ship — built by Google, with sails set straight for Amazon

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CLOUD NATIVE

A FEW REASONS WHY KUBERNETES WILL WIN THE RACE FOR DATA CENTER OS

CLOUD NATIVE A FEW REASONS WHY KUBERNETES WILL WIN THE RACE FOR DATA CENTER OS

#1. Maximizes ease of use as the industry’s most fully-featured orchestrator

#2. Vibrant open source community

orchestrator #2. Vibrant open source community #3. Like with Hadoop, lack of vendor dominance encourages
orchestrator #2. Vibrant open source community #3. Like with Hadoop, lack of vendor dominance encourages

#3. Like with Hadoop, lack of vendor dominance encourages the community to freely innovate on OSS foundation

#4. Technically sophisticated stack built from the ground up with the right level of abstractions for users to build and deploy applications using containers

for users to build and deploy applications using containers Kubernetes-first OSS projects emerging “Istio currently

Kubernetes-first OSS projects emerging

“Istio currently only supports the Kubernetes platform, although we plan support for additional platforms such as Cloud Foundry, and Mesos in the near future.”

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Cloud Native disruption can’t be stopped

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CLOUD NATIVE

DATABASES FINALLY CATCHING UP WITH DEMANDS OF CLOUD NATIVE

CLOUD NATIVE DATABASES FINALLY CATCHING UP WITH DEMANDS OF CLOUD NATIVE

Cloud native needs databases that can keep up. Problem = databases are sluggish beasts that never quite benefitted from the pace of innovation the rest of the industry enjoyed.

Former Google VP of Infrastructure Eric Brewer summarized the engineering challenges of developing database infrastructure with the CAP Theorem: you can only achieve two of the following guarantees for your database: 1) transactional integrity, 2) availability, 3) and scalability.

Until now. New solutions emerging that dispel CAP Theorem:

Until now. New solutions emerging that dispel CAP Theorem: Microsoft Cosmos Google Spanner * CockroachDB T

Microsoft Cosmos

solutions emerging that dispel CAP Theorem: Microsoft Cosmos Google Spanner * CockroachDB T r a n

Google Spanner

that dispel CAP Theorem: Microsoft Cosmos Google Spanner * CockroachDB T r a n s a

*

CockroachDB

CAP Theorem: Microsoft Cosmos Google Spanner * CockroachDB T r a n s a c t

Transactional integrity

2017 ENTERPRISE ALMANAC

n a l i n t e g r i t y 2017 ENTERPRISE ALMANAC Availability

Availability

n t e g r i t y 2017 ENTERPRISE ALMANAC Availability Scalability // @WORK_BENCH //

Scalability

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76

CLOUD NATIVE

APPLICATION MONITORING CATCHING UP AS WELL

CLOUD NATIVE APPLICATION MONITORING CATCHING UP AS WELL
Buoyant *
Buoyant
*

New problems…

Latency in event time stamping
Latency in event time stamping

+ new enablers…

Distributed tracing techniques and community support
Distributed tracing techniques and
community support
Interbred app-service dependencies
Interbred app-service dependencies
Powerful stream processing Machine learning
Powerful stream processing
Machine learning
Network-riddled app logs
Network-riddled app logs

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77

CLOUD NATIVE

CLOUD NATIVE MONITORING VIA MULTI-VENDOR TOOL CHAIN…

CLOUD NATIVE CLOUD NATIVE MONITORING VIA MULTI-VENDOR TOOL CHAIN…

Common cloud native monitoring configurations…

CHAIN… Common cloud native monitoring configurations… + + + + 2017 ENTERPRISE ALMANAC // @WORK_BENCH //

+

CHAIN… Common cloud native monitoring configurations… + + + + 2017 ENTERPRISE ALMANAC // @WORK_BENCH //

+

Common cloud native monitoring configurations… + + + + 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC
Common cloud native monitoring configurations… + + + + 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC
Common cloud native monitoring configurations… + + + + 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC

+

+

Common cloud native monitoring configurations… + + + + 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC
Common cloud native monitoring configurations… + + + + 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC

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CLOUD NATIVE

… POINT TO ANOTHER ROUND OF APM CONSOLIDATION?

CLOUD NATIVE … POINT TO ANOTHER ROUND OF APM CONSOLIDATION?

Will new monitoring entrants evolve standalone or will APM leaders AppDynamics/New Relic lead the charge?

On-premise: fragmented APM

Relic lead the charge? On-premise: fragmented APM Cloud: consolidated APM Cloud Native: early monitoring

Cloud: consolidated APM

Cloud Native: early monitoring fragmentation

APM Cloud Native: early monitoring fragmentation Buoyant Either way, both categories expand with shift to
APM Cloud Native: early monitoring fragmentation Buoyant Either way, both categories expand with shift to

Buoyant

APM Cloud Native: early monitoring fragmentation Buoyant Either way, both categories expand with shift to cloud
APM Cloud Native: early monitoring fragmentation Buoyant Either way, both categories expand with shift to cloud
APM Cloud Native: early monitoring fragmentation Buoyant Either way, both categories expand with shift to cloud
APM Cloud Native: early monitoring fragmentation Buoyant Either way, both categories expand with shift to cloud

Either way, both categories expand with shift to cloud native

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?

79

CLOUD NATIVE

WITH CLOUD NATIVE, SOFTWARE EATS MIDDLEWARE

CLOUD NATIVE WITH CLOUD NATIVE, SOFTWARE EATS MIDDLEWARE
Middleware
Middleware
 

• Then: App servers, complex event processing servers, and ESBs were complex new technologies in the first generation of cloud requiring dedicated servers to manage them.

   
 
 

• Now: many of these functions are now distributed directly across the application code, thinning the traditional middleware layer in the stack.

are now distributed directly across the application code, thinning the traditional middleware layer in the stack.

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CLOUD NATIVE

NEW PROGRAMMING MODELS ABSTRACT MIDDLEWARE FUNCTIONS INTO CODE

CLOUD NATIVE NEW PROGRAMMING MODELS ABSTRACT MIDDLEWARE FUNCTIONS INTO CODE

Middleware, once a core layer of the IT stack, is shedding significant weight as middleware functions now reside in distributed code.

Functional pipelines (aka “serverless”) = no more complex event processor

Ephemeral snippets of code govern app data traffic, rendering the need for dedicated services for business rules obsolete.

the need for dedicated services for business rules obsolete. Iron.io Google Cloud Functions Amazon AWS Lambda

Iron.io

for dedicated services for business rules obsolete. Iron.io Google Cloud Functions Amazon AWS Lambda IBM Bluemix

Google

Cloud

Functions

for business rules obsolete. Iron.io Google Cloud Functions Amazon AWS Lambda IBM Bluemix OpenWhisk Microsoft Azure

Amazon

AWS

Lambda

obsolete. Iron.io Google Cloud Functions Amazon AWS Lambda IBM Bluemix OpenWhisk Microsoft Azure Functions Pivotal

IBM Bluemix OpenWhisk

Cloud Functions Amazon AWS Lambda IBM Bluemix OpenWhisk Microsoft Azure Functions Pivotal Cloud Foundry Spring Cloud

Microsoft

Azure

Functions

AWS Lambda IBM Bluemix OpenWhisk Microsoft Azure Functions Pivotal Cloud Foundry Spring Cloud Services Serverless 2017

Pivotal Cloud Foundry Spring Cloud Services

Azure Functions Pivotal Cloud Foundry Spring Cloud Services Serverless 2017 ENTERPRISE ALMANAC // Actor model =

Serverless

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Actor model = no more bloated app servers

Software actors implement concurrency via asynchronous messages and spread proxies across physical servers to manage consistency. App servers are thus relieved of resiliency duties.

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App servers are thus relieved of resiliency duties. @WORK_BENCH // Microsoft Azure Service Fabric #2017ALMANAC 81

Microsoft Azure Service Fabric

#2017ALMANAC

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81

CLOUD NATIVE

SERVICE MESHES ABSTRACT NETWORK FUNCTIONS VIA LIGHTWEIGHT PROXIES

CLOUD NATIVE SERVICE MESHES ABSTRACT NETWORK FUNCTIONS VIA LIGHTWEIGHT PROXIES

Service meshes are lightweight network proxies governing service-to-service communications for tasks such as service discovery, load balancing, and monitoring in highly complex distributed systems

Service discovery is the new IP address and DNS

New system of dynamically routing services to manage latency in large scale distributed systems

to manage latency in large scale distributed systems LinkerD Buoyant 2017 ENTERPRISE ALMANAC gRPC and REST

LinkerD

to manage latency in large scale distributed systems LinkerD Buoyant 2017 ENTERPRISE ALMANAC gRPC and REST

Buoyant

2017 ENTERPRISE ALMANAC

gRPC and REST are the new TCP/IP

Service meshes use new protocols developed for communications at the service level rather than underlying network

for communications at the service level rather than underlying network // I s t i o

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Istio

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CLOUD NATIVE

MIDDLEWARE MARKET ISN’T DEAD, IT’S JUST EVOLVING

CLOUD NATIVE MIDDLEWARE MARKET ISN’T DEAD, IT’S JUST EVOLVING

Replacing middleware pipes is a new software-human middleware layer tackling the more specialized functions of complex modern apps:

Systems of engagement

Next-generation middleware Helping data scientists add intelligence and automation to software Streaming platform
Next-generation middleware
Helping data
scientists add
intelligence and
automation to
software
Streaming platform
ML pipeline
Ingesting and
interpreting real-time
information from
around the world

Infrastructure

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CLOUD NATIVE

STREAMING IS THE NEW COMPLEX EVENT PROCESSING SERVER & ESB

CLOUD NATIVE STREAMING IS THE NEW COMPLEX EVENT PROCESSING SERVER & ESB

Business logic as distributed code

Data stack

ML pipeline

code “ D a t a s t a c k ” ML pipeline Code Next-gen

Code

Next-gen ESB Next-gen complex event processing server Streaming platform Messaging Stream system processing
Next-gen ESB
Next-gen complex
event processing server
Streaming platform
Messaging
Stream
system
processing
Streaming platform Messaging Stream system processing Code Data lake/distributed database 2017 ENTERPRISE ALMANAC
Streaming platform Messaging Stream system processing Code Data lake/distributed database 2017 ENTERPRISE ALMANAC

Code

platform Messaging Stream system processing Code Data lake/distributed database 2017 ENTERPRISE ALMANAC //
platform Messaging Stream system processing Code Data lake/distributed database 2017 ENTERPRISE ALMANAC //
platform Messaging Stream system processing Code Data lake/distributed database 2017 ENTERPRISE ALMANAC //
platform Messaging Stream system processing Code Data lake/distributed database 2017 ENTERPRISE ALMANAC //
platform Messaging Stream system processing Code Data lake/distributed database 2017 ENTERPRISE ALMANAC //

Data lake/distributed database

system processing Code Data lake/distributed database 2017 ENTERPRISE ALMANAC // @WORK_BENCH // Cloud Native stack
system processing Code Data lake/distributed database 2017 ENTERPRISE ALMANAC // @WORK_BENCH // Cloud Native stack
system processing Code Data lake/distributed database 2017 ENTERPRISE ALMANAC // @WORK_BENCH // Cloud Native stack
system processing Code Data lake/distributed database 2017 ENTERPRISE ALMANAC // @WORK_BENCH // Cloud Native stack

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Cloud Native stack

Lightweight network proxies for load balance and service discovery

Operations and container image management

External integrations

Container orchestration

Container engine

Container OS

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CLOUD NATIVE

THE RACE IS ON FOR STREAM PROCESSING

CLOUD NATIVE THE RACE IS ON FOR STREAM PROCESSING

It’s a story of multi-purpose convenience vs. purpose-built performance, with support for cloud-native schedulers becoming a must

Streaming native systems

Multi-purpose batch systems with streaming bolt-on

• Already considered “legacy” in Silicon Valley with Spark demonstrating considerably more more horsepower •
• Already considered
“legacy” in Silicon
Valley with Spark
demonstrating
considerably more
more horsepower
• Doesn’t work out of
the box at scale and
frustrating to set up
and manage
• New streaming
library on popular
distributed log with
mid-2016 release
• Unproven scalability/
stability, support for
cloud-native
schedulers
• New streaming
library developed at
Twitter with promise
of better scalability
and manageability
than Storm
• One stop shop for
batch, streaming,
and ML that plays
well with Hadoop
• Streaming and
batch in one
system incurs
latency
• Tied closely with
YARN architecture
• Latency issues as
a multi-purpose
system
• Architecture
supports cloud-
native schedulers
and Storm migration
• “Near” real-time
streaming is good
enough but not great
with respect to scale,
throughput, and
latency
• Limited
production use
cases and
unclear
development
path

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Cloud native stack

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Big data stack

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CLOUD NATIVE

STREAMING INTEGRATIONS = DATA AND APPS WILL LIVE IN ONE STACK

CLOUD NATIVE STREAMING INTEGRATIONS = DATA AND APPS WILL LIVE IN ONE STACK

Data and app stacks have been separate until now… Container orchestrators like Kubernetes and Mesos distribute data workloads better than Hadoop’s Yarn. Spark, Kafka, Herron and other new school stream processing engines all integrate directly with container orchestrators.

Data stack

Cloud Native stack

ML pipeline

Specialized processing libraries instead of all-in-one clusters tied to a specific scheduler Cloud native schedulers
Specialized processing libraries
instead of all-in-one clusters tied
to a specific scheduler
Cloud native schedulers take on
packaging and deployment of big data
workloads
Streaming platform
Operations and container image
management
Messaging
Stream
system
External integrations
processing
Messaging Stream system External integrations processing Code Code Data lake/distributed database Container

Code

Stream system External integrations processing Code Code Data lake/distributed database Container orchestration
Stream system External integrations processing Code Code Data lake/distributed database Container orchestration

Code

Stream system External integrations processing Code Code Data lake/distributed database Container orchestration

Data lake/distributed database

Container orchestration
Container orchestration

Container orchestration

Container engine

Container OS

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CLOUD NATIVE

MORE BROADLY, HADOOP IS LOSING ITS DOMINANCE

CLOUD NATIVE MORE BROADLY, HADOOP IS LOSING ITS DOMINANCE
CLOUD NATIVE MORE BROADLY, HADOOP IS LOSING ITS DOMINANCE Megaclouds ate Hadoop’s lunch • Megaclouds use

Megaclouds ate Hadoop’s lunch • Megaclouds use the Hadoop distribution in their cloud services, but by unbundling the underlying file system (HDFS) from the cluster manager (YARN) and making these components inter- changible with alternatives, Hadoop is losing it’s position as a central nervous system for the data stack.

Markets demands moving to machine learning, where Hadoop has no shine Spark > ML for Hadoop, and with cloud-based object store, you don’t need Hadoop for Spark. • ML is best run on highly specialized chips like Google’s TPUs and NVIDIA’s DGX-1 rather than the commodity hardware Hadoop was developed for.

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CLOUD NATIVE

SERVERLESS COMPUTING MAKES FINANCIAL SENSE OF MICROSERVICES…

CLOUD NATIVE SERVERLESS COMPUTING MAKES FINANCIAL SENSE OF MICROSERVICES…

Microservices = more shallow utilization across a wider footprint = uneconomical with sever-based units of measurement in “pay-as-you-go” business model

Spend per server: “pay-as-you-go” vs. serverless

Resource

utilization

“pay-as-you-go” vs. serverless Resource utilization idle time run time “Pay-as-you-go”: theoretical

idle time

run time

idle time run time
idle time run time

“Pay-as-you-go”: theoretical maximum utilization of infrastructure “Serverless”: actual instance run rate

infrastructure “Serverless”: actual instance run rate App components Serverless lowers operating costs for
infrastructure “Serverless”: actual instance run rate App components Serverless lowers operating costs for

App components

Serverless lowers operating costs for software vendors. Still TBD whether vendors decide to pass these savings down to customers.

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CLOUD NATIVE

…WILL IT FORTIFY MEGACLOUD LOCK-IN OR DISSOLVE IT?

CLOUD NATIVE …WILL IT FORTIFY MEGACLOUD LOCK-IN OR DISSOLVE IT?

Amazon sees Lambda as another form of lock-in. It wouldn’t be trivial for Amazon to change their posture because architecturally, functions are tied to AWS public cloud and it would take extensive work with partner VMware to extend functions into private cloud.

with partner VMware to extend functions into private cloud. 2017 ENTERPRISE ALMANAC // Google wants to

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Google wants to make functions more extensible to promote multi-clouds and combat Amazon’s lock-in grip. They hope to commoditize AWS by lowering switching costs with serverless.

@WORK_BENCH

They hope to commoditize AWS by lowering switching costs with serverless. @WORK_BENCH Google Functions // #2017ALMANAC

Google Functions

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CLOUD NATIVE

ML WILL SOON PLAY AN INTEGRAL ROLE FOR INFRA OPS AND APPDEV

CLOUD NATIVE ML WILL SOON PLAY AN INTEGRAL ROLE FOR INFRA OPS AND APPDEV

IT is by nature a data-driven organization, making it the perfect function to infuse with the power of AI

ML-powered cluster management Improving resource efficiency by adding a Netflix-like recommendation system to allocation of app components across resources

system to allocation of app components across resources Hyperpilot Examples in the market: ML-powered static code

Hyperpilot

to allocation of app components across resources Hyperpilot Examples in the market: ML-powered static code analysis

Examples in the market:

ML-powered static code analysis Analyzing code commits to figure out how to better allocate developer resources across the organization

*

allocate developer resources across the organization * ML-powered IT ops Bots for new employee on-boarding tasks

ML-powered IT ops Bots for new employee on-boarding tasks

* ML-powered IT ops Bots for new employee on-boarding tasks Electric.ai 2017 ENTERPRISE ALMANAC // @WORK_BENCH
* ML-powered IT ops Bots for new employee on-boarding tasks Electric.ai 2017 ENTERPRISE ALMANAC // @WORK_BENCH

Electric.ai

IT ops Bots for new employee on-boarding tasks Electric.ai 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC

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Vertical Theme #3

Cybersecurity

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TL;DR

SECURITY PREDICTIONS FOR 2017

TL;DR SECURITY PREDICTIONS FOR 2017
1
1
2
2
3
3
4
4

The security ecosystem is re-organizing itself into Systems of Intelligence (SOI). Systems of record (SORs) must become SOIs or risk being relegated to “plumbing.”

SecDevOps blurs the lines between networking and application security as the race for cloud-native security products intensifies.

Beyond the 1%: SOIs as consumable microservices will bring advanced security technology to the 99% of companies who previously couldn’t afford.

In the sweeping wave of industry consolidation, legacy security companies will buy up security analytics and Security Operations, Analytics, and Reporting (SOAR) companies in yet another bout to stay relevant.

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A bird’s eye view

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CYBERSECURITY

LAST 5 YEARS = EVOLUTION FROM SECURITY PRODUCTS TO SOR PLATFORMS

CYBERSECURITY LAST 5 YEARS = EVOLUTION FROM SECURITY PRODUCTS TO SOR PLATFORMS

It used to be about product oligopolies…

ANTIVIRUS
ANTIVIRUS
It used to be about product oligopolies… ANTIVIRUS SIEM FIREWALL DLP IAM MALWARE Now the center
SIEM
SIEM
It used to be about product oligopolies… ANTIVIRUS SIEM FIREWALL DLP IAM MALWARE Now the center
FIREWALL
FIREWALL
to be about product oligopolies… ANTIVIRUS SIEM FIREWALL DLP IAM MALWARE Now the center of attention
DLP
DLP
be about product oligopolies… ANTIVIRUS SIEM FIREWALL DLP IAM MALWARE Now the center of attention is
IAM
IAM
about product oligopolies… ANTIVIRUS SIEM FIREWALL DLP IAM MALWARE Now the center of attention is around
MALWARE
MALWARE
oligopolies… ANTIVIRUS SIEM FIREWALL DLP IAM MALWARE Now the center of attention is around a new

Now the center of attention is around a new breed of monopolistic Systems of Record platforms assembling themselves around layers of the IT stack…

ENDPOINT
ENDPOINT
NETWORK // HOST *
NETWORK // HOST
*

APPLICATION // CODE

?

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CYBERSECURITY

SECURITY ECOSYSTEM EVOLVING INTO A SYSTEM OF INTELLIGENCE

SECURITY ECOSYSTEM EVOLVING INTO A SYSTEM OF INTELLIGENCE SORs have a natural first mover advantage to

SORs have a natural first mover advantage to put all the pieces together

With new security tool overload and highly understaffed sec orgs, how do you make workflows
With new security tool overload and highly understaffed sec orgs,
how do you make workflows more seamless? How do you foster
collaboration amongst security teams? Can you use automation?
How do you make sense of and take action based on the wealth of new
information generated by modern security systems?
SORs are getting here…
How do you get the most comprehensive observability of IT systems
in the most seamless fashion?
*

Primary value driver**

Data-driven product design
Data-driven
product design

…and have a little bit of this

Domain expertise
Domain
expertise
AI
AI
Data
Data

**Note: each value driver is sized based on its ability to create sustainable competitive advantage. Original framework source: Jerry Chen (Greylock Partners) “The New Moats”

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CYBERSECURITY

SYSTEMS OF INTELLIGENCE PRINCIPLES BEHIND BREAKTHROUGH SORS

CYBERSECURITY SYSTEMS OF INTELLIGENCE PRINCIPLES BEHIND BREAKTHROUGH SORS

How do you create a System of Record platform?

Data
Data
Data-driven product design
Data-driven
product
design

First you land customers with a single product, the “thin edge of the wedge.” Designing a product starts with what type of data you can peek into:

Get better data…

…to build a better product:

How do you seamlessly instrument into IT systems?

ENDPOINT

• Traditional software agents

NETWORK

• Distributed sensors that act like agents but are decoupled from underlying hardware

• Traditional software agents

 

• Agents on web servers or application run-times

APPLICATION

• In-line forward/reverse proxy or agent

• Traffic access point off firewall or web proxy

 

• App APIs

point off firewall or web proxy   • App APIs How do you build great data-driven
point off firewall or web proxy   • App APIs How do you build great data-driven
point off firewall or web proxy   • App APIs How do you build great data-driven

How do you build great data-driven products with attributes CISOs really care about?

products with attributes CISOs really care about? Ease of implementation and management Scalability in complex

Ease of implementation and management

Scalability in complex IT environmentsreally care about? Ease of implementation and management Short time-to-value 2017 ENTERPRISE ALMANAC // @WORK_BENCH

Short time-to-valueand management Scalability in complex IT environments 2017 ENTERPRISE ALMANAC // @WORK_BENCH // #2017ALMANAC 97

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CYBERSECURITY

…AS THE BASIS FOR BEATING LEGACY CO'S AT PRODUCT OLIGOPOLY GAME

CYBERSECURITY …AS THE BASIS FOR BEATING LEGACY CO'S AT PRODUCT OLIGOPOLY GAME

You expand beyond the “thin edge of the wedge” by leveraging data/instrumentation advantages to extend product scope and displace product-centric companies in adjacent categories.

displace product-centric companies in adjacent categories. Instrumentation: lightweight endpoint agents collaborating

Instrumentation: lightweight endpoint agents collaborating in a distributed system

POLICY MGMT

OS PATCH MANAGEMENT
OS PATCH
MANAGEMENT

Land

CONFIGURATION

MGMT

INCIDENCE

RESPONSE

MANAGEMENT Land CONFIGURATION MGMT INCIDENCE RESPONSE VULNERABILITY MGMT Distributed security architecture is a

VULNERABILITY

MGMT

MGMT INCIDENCE RESPONSE VULNERABILITY MGMT Distributed security architecture is a common thread here
MGMT INCIDENCE RESPONSE VULNERABILITY MGMT Distributed security architecture is a common thread here

Distributed security architecture is a common thread here because it brings outsized speed & scale to the process of obtaining data to build a host of security “products.”

obtaining data to build a host of security “products.” Expand Expand * Instrumentation: distributed network sensor

Expand

data to build a host of security “products.” Expand Expand * Instrumentation: distributed network sensor system

Expand

*
*
to build a host of security “products.” Expand Expand * Instrumentation: distributed network sensor system POLICY

Instrumentation: distributed network sensor system

POLICY MGMT

MICRO- SEGMENTATION
MICRO-
SEGMENTATION

FIREWALL

DECEPTION

SECURITY

ANALYTICS

MICRO- SEGMENTATION FIREWALL DECEPTION SECURITY ANALYTICS Land Expand Expand * Work-Bench portfolio company 2017
MICRO- SEGMENTATION FIREWALL DECEPTION SECURITY ANALYTICS Land Expand Expand * Work-Bench portfolio company 2017

Land

SEGMENTATION FIREWALL DECEPTION SECURITY ANALYTICS Land Expand Expand * Work-Bench portfolio company 2017 ENTERPRISE
SEGMENTATION FIREWALL DECEPTION SECURITY ANALYTICS Land Expand Expand * Work-Bench portfolio company 2017 ENTERPRISE

Expand

Expand

* Work-Bench portfolio company

2017 ENTERPRISE ALMANAC