FinancialForce CEO on Digital Transformation: The New Services Economy in the Cloud

FinancialForce CEO Tod Nielsen tells CXOTalk about digital transformation in the new services economy. More businesses are moving to cloud computing, focusing on speed and curated functions.

“Services are devouring the galaxy,” Nielsen says. “The economy of how consumers and businesses buy from other businesses is changing completely. The idea of having assets and owning physical goods will go away. There’s going to be a day when people literally won’t own anything.”

Nielsen adds that the premise of the “triangle” – people, processes, and technology – has changed as people and processes are as important if not more important than the tech itself. A partnership in the vendor-customer relationship “is no longer just a buzzword. It is an important imperative for successful projects.”

From the transcript:

Michael Krigsman:

(00:34) What is the service economy?

Tod Nielsen:

(00:36) So, I talked about the evolution our industry has been going through, and how our experience as consumers is changing from buying products to consuming everything as a service. And, we spent some time talking about the op-ed piece that Mark Andreessen wrote in 2011 saying how software was going to eat the world, and how in just six short years, we’ve not evolved into where more and more things are experienced as a service. And so, going forward, I laid out the premise that services are devouring the galaxy. And, the economy of how consumers and businesses buy from other businesses is changing completely. The idea of having assets and owning physical goods is actually going to go away. But, there’s going to be a day when people literally won’t own anything.

(01:29) If you look at WhatsApp, that Facebook bought for $19 billion, it was sixteen developers and then, 30 million users. How a company could have sixteen developers and 30 million users and be able to build this incredible service is something that we’re now seeing as reality. And it will be important going forward.

Michael Krigsman:

(01:53) And this is affecting companies in every industry. You gave the example of Boeing.

Tod Nielsen:

(01:58) Absolutely! You know, Boeing used to be known for “Hey, we’re going to build jet planes. Let’s go!” And they buy their parts, and they’re jet engines. And they’re finding from their suppliers that they actually are selling to Boeing the engines at cost and they’re making their money on the maintenance and the upkeep and all this stuff. And any classic hardware companies, quote-on-quite like Tesla, and now realizing they’re really a services company, and the hardware is simply a delivery vehicle for them to enhance their services.

(03:17) Second, with all the demanding changes, one of the phrases I said this morning was, “Speed is the new currency.” And, you know, businesses are saying “We need more, we need more, we need more,” and when they look to their back office, their back office team is saying, “Sorry. We can’t accommodate. We can’t move that fast.” It’s going to be viewed as slowing growth or preventing future progress. And so, the back-office teams are saying, “What can we do to transform ourselves to respond to the incredible demands that our businesses are giving us?”

(03:56) This issue of speed is so important. So, could you maybe elaborate on that dimension as well?

Tod Nielsen:

(04:01) Sure! So, speed is no longer the point of, "Hey, let's do a project that's going to take three years." So the idea of an SAP implementation that's going to take three years to go, that is so yesteryear. Now, businesses are saying, "What can we do to move fast?" And so, I think what you're finding is companies are saying, "Okay, I'm going to be less picky about the particular customization and I want to have a more curated path of technology that's going to meet my needs, so I can move fast."

(04:32) You know, every business I talk to is talking about incredible releases. In fact, in the software industry, it used to be… I grew up with Microsoft. We would do a release every year, or every two years. And then we went to quarterly releases, and that was a dramatic event. And now in the cloud computing, when I was running Heroku when I was at Salesforce, we were doing releases every day. So, there's a certain amount of responsiveness and iteration and “in-the-game” that’s important.