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The FODcast
In the FODcast (The Future of #DigitalCommerce) we explore the real career stories of the people who have made it to the very top of the sector and those who are working at the cutting edge of innovation and change right now. Listeners to the podcast gain insight into the journeys industry leaders have taken to be where they are today, the challenges they are facing now and their aims for the future.
The FODcast
When AGI Lands, Your Business Model Might Vanish with Daniel Hinderink
AI, trade wars, and data sovereignty are reshaping European tech strategies - and businesses can no longer rely on yesterday’s playbook.
In this episode of The FODcast, we’re joined by Daniel Hinderink, Director of Strategy and Growth at TechDivision, to unpack the deep structural shifts happening across the digital landscape.
We cover:
- Why data sovereignty is now a board-level concern in pharma, manufacturing, and financial services
- What Switzerland can teach us about protecting intellectual property in cloud-first environments
- How AI is disrupting the traditional software licensing model - fast
- Why practical AI tools often beat cutting-edge features when it comes to ROI
- What the future holds for developers, service providers, and software vendors alike
- How change management can begin with technology (if you want to win hearts and minds)
If you're involved in digital transformation, evaluating your AI strategy, or rethinking your tech stack, this one is essential listening.
🎧 Tune in now
Simply Commerce is the leading supplier of talent into digital commerce across technology, digital marketing, product, sales, and leadership.
Find our more about our approach and our services within digital commerce recruitment here: https://simply-commerce.co.uk/
Hello and welcome to Season 7 of the podcast, the podcast focused on the future of digital commerce hosted by Simply Commerce. Season 7 promises to continue to bring you some of the industry's brightest minds across the globe as we unpick the sector and where it's heading From war stories to strategy and technology, deep dives to future trends we cover it all as we continue our journey to have one of the most popular podcasts in commerce. Before we start, if you enjoy our content, please do hit the subscribe button on whatever platform you're listening on, like and share on socials.
Speaker 2:Okay, welcome to another edition of the podcast, and on today's episode, I'm fortunate enough to be joined by Daniel Hindering. Have I got that pronunciation? Your surname right, daniel Almost, almost, almost. It was, uh, almost, almost, almost. It was a good attempt. It was a good attempt. It's a good, it's. It's a terrible surname, let's face it. Uh, daniel uh has kindly agreed to join us and he is the director of strategy and growth at tech division. Um, but, daniel, be really good if I could hand over to you to give us a bit more of a I could say, more fluent introduction to you and your background. Thank you very much, tim so.
Speaker 3:I am 56 now. I am from Munich, south of Germany. I am from Munich, south of Germany, home of the Oktoberfest, and I have three kids and studied to be an economist and I was fortunate enough that the Internet came about, or the World Wide Web as we used to call it back then in the beginning of the 90s when I was doing my studies and focusing on econometrics. When I was doing my studies and focusing on econometrics, so I was doing some market simulations at the supercomputing center of Munich University and that was my chance to take a look at the early internet. I got my first email address in 1993, internet.
Speaker 3:I got my first email address in 1993, which was not an ubiquitous commodity that everybody had back then, and somehow I felt very inspired by that. I thought this is going to be the platform for the exchange of ideas and the access to information everywhere and that promise was already clear. A lot of the ramifications and less positive side effects were not clear yet. So with all that optimism I started into the topic and after a brief stint in business consulting and one of the major consulting firms, I started working in that field of actually producing what was then called multimedia solutions and also the first websites really mostly of them, most of them in the field of NGOs in Germany and also on a European scale.
Speaker 3:Somehow I stuck with that, created my own company and had a rather successful phase there with implementing solutions based on web technology, which was still mostly intranet and some called extranet solutions for major players like Adidas and L'Oreal and other companies that are lesser known but have interesting problems to solve. And finally that brought me here where I am today, with a company called Tech Division. I brought a few of my team and some of my clients here a few years ago and joined the team. The founders of Tech Division and I have been friends for many years, so, and now here I am in charge of our company strategy and also strategic projects, which means a lot of business development, discovering new markets for us, discovering new topics that could be part of our portfolio, and also driving some of the initiatives that we use to spread strategic goals within the company get them implemented, first and foremost during the last few years on the topic of artificial intelligence.
Speaker 3:So I'm running our internal initiative considering that and it's also, thankfully, not a very new topic to me, because, apart from economics, I studied logic and scientific theory, and so I learned about the Turing test in 1992 or something, and most recently, like a few other people who now have to sort of get their head around all of this crazy developments that is storming in on us absolutely but that.
Speaker 2:Thank you for that. That's uh. It gives a real insight, uh, into your background and and how you found your way to where you are. I'm interested to know what tempted an economist into digital tech in the first place.
Speaker 3:Well, that's difficult to answer. Insofar as that I'm asking myself what tempted me into economics in the first place, because I was really a Commodore C64 kid. My father was an engineer, so technology has always been near and dear to my heart, and economics was something that I thought would be a systematic approach to explaining the dynamics of society. And it failed to do that for me, so I needed to find something that would be more befitting to my interests, and I felt that the Internet was exactly that a technology that lends itself to spreading ideas and to sharing information and to accessing all sorts of resources across the globe, which was unthinkable until then.
Speaker 3:I remember that in the beginning of the 90s, when I visited a friend in Los Angeles, I loved one of the radio stations that he was listening to. I visited a friend in Los Angeles. I loved one of the radio stations that he was listening to, and it was basically I just taped all of those hours of that radio station just listening back to it when I was back home, but it was only three or four years later that I could listen to the same radio station over the internet, and that is like a very simple example of what I found so very intriguing about the medium, and so now that is a given. You know there's nothing special anymore, but to me it offered endless possibilities, and I think we're not even now even nearly the end of what it can do.
Speaker 2:No, agreed, and that's a throwback to I guess most of our audience will be able to relate to is actually recording stuff on the radio and waiting for your song to come on. Get it recorded, make sure you've got the start of it, not going too long, not getting the adverts in.
Speaker 3:They weren't the good old days right, that's the bad sign for the demographics of this podcast.
Speaker 2:Yeah, you might. They were the good old days, right? That's the bad sign for the demographics of this. Yeah, it might be right, um, but you also founded your own agency, um, and we spoke about that. Uh, as we've had calls in the run-up to the, the podcast what, what were the um things you learned? Is there one single thing you learned from founding your own agency that you've taken with you into future?
Speaker 3:um, future work um, I think, uh, one of the things that I found uh most inspiring and and that I really loved about the work that we had been have been doing, um, within that phase of my career, is the magic of cooperation. I have to say I discovered very early on that cooperating with other small and medium players in the market be it on the basis of open source projects, where we were heavily invested and dedicated a lot of our time and attention.
Speaker 3:But also in terms of all kinds of trade associations. I helped found one of these and I always thought that the power of collaboration in a competitive market what is often called coopetition and also in terms of the so-called other cooperative structures has so much to give, and it's so interesting. I always felt that people who are players in the market who only focus on the competitive side of the business often miss focus on the competitive side of the business, often miss out on the bigger picture. So, whereas as digital agencies we are, of course, competing, but the challenges to our business and the substitutes to what we're offering are not always only coming from other competitors. It's very often coming from overall changes in the market, and I think the best example for that, or the most recent and most powerful, is probably AI.
Speaker 3:With AI, we see that all of us the vendors, the service providers, everybody is in exactly that kind of risky position where what we offer might be substituted.
Speaker 3:Maybe not today, but it will certainly happen when AGI is around not to speak of artificial superintelligence around, not to speak of artificial superintelligence and since, by most accounts, that will happen within the next few years or rather short timelines, we'll be looking at situations like that, where companies will probably be able to do a lot of the individualization and development work themselves by using AI, but also even software that we are using today to implement our solutions might be substituted in some cases, because companies will also or clients will also ask themselves whether they should be paying license fees for using some kind of software if they can generate an analogous solution that only does what they actually need from scratch. So all of that, I think it's not going to happen tomorrow, but that is the promise of what AGI could do, but that is the promise of what AGI could do, and it might even not need AGI. I think agentech AI solutions that are focused on building software are very close to doing that.
Speaker 2:Corporation you mentioned at the start was a key thing that you've learned over these years of having your own business. Is that a German thing? Do you see that more with German companies and the cooperation it might be.
Speaker 3:There is a tendency to cooperate, there is a tendency to unionize, so to speak, and there is a tendency to define standards and operate along these standards. That certainly is a German, or let's say a German-speaking country's thing. I wouldn't say it's particularly German. It's particularly German, it's just as prevalent in Switzerland and Austria. And well, it's in my mind at least, not a very Anglo-Saxon thing.
Speaker 2:I've heard a lot more talk about fierce competition from companies and people in the UK and the US than I hear it over here or even in Asia.
Speaker 2:I'd probably say that that feels about right to me, but I think over the years I've seen more collaboration with competitors, both in terms of our clients and how they are winning projects and collaborating to support each other's weaknesses to provide the solution to the end client, but also with us in recruitment and actually realising that the market is big enough for us to potentially work together to find. So that's interesting and I do think you're right, it's less of a regular occurrence in the UK market, from my experience at least. We talked about Germany specifically and we talked about, but before the podcast we talked about the trade wars and the tariffs etc. And we also talked about the kind of european software stacks bit. So I think it'd be really good to get your take on that, particularly as, since we last had a conversation, things have changed a little bit again, right, surprise, eh, yeah, it would be good to get your take on that.
Speaker 3:Yeah, I looked at the notes of our previous preparatory conversations about this podcast and thought well, that has changed, at least the last weekend. Right, and there's this notorious photograph of Mr von der Leyen and Mr Trump there shaking hands in Scotland. What a surprise. Attacks on US American companies that are selling their services, such as Microsoft and Amazon, ws and so on, in Europe is off the table. I don't think this is final. I think, if we've learned anything about the recent occupant of the White House, that there is nothing that can be relied on very much. So it could be changing, but at least it is a step in the right direction, and even if many governments within the EU are rather unhappy with the actual outcome of the deal, I mean, one of the things that everybody is agreeing on is at least offer some stability, and that stability is particularly relevant for us in the digital business. So what I think you were referring to earlier with your question was that during the last few months, we have seen a rather serious uptick in demand and questions about how can we produce whatever solution we need, speaking for a client that is not reliant on US American vendors, and obviously we've tried to find some answers to that and obviously we've tried to find some answers to that. Luckily, we have a tech step and a skill set that allows us to offer purely European bread and paste solutions.
Speaker 3:But at the same time, I feel the market is dividing a little bit.
Speaker 3:When it comes to the actual hard business of intellectual property, relevant and critical data and so on, the need for a purely European solution is very large and the emphasis lies on those solutions and on those topics and assets. So the answer to that mostly is taking the storage of that most critical data out of US-based solutions and transporting it, shifting it somewhere else into private AI solutions in German cloud certified surroundings, or even going back to on-prem, which everybody thought was dead and now sees a little bit of a revival because of that. But when it comes to the more general business applications like Microsoft Word or something like that, or even an e-commerce platform and stuff like that, there I feel our clients, at least, or the kind of demand that I am getting from the market, that I'm hearing from prospective clients, is a little less sensitive, a little less panicky, and I think the deal that we've seen in the last weekend is helping along the way of stabilizing that business along the way of stabilizing that business.
Speaker 2:It is, but like you alluded to at the beginning, there are no guarantees with trump and whether or not this is the final position.
Speaker 2:So I guess the there's two questions here, one's a bit a bit broader, the first one is how you, how do you balance particularly when you're doing the advisory and the pre-sales with clients and talking about what you could do with them how do you balance local data sovereignty with the global scalability which most companies are either wanting to do now or will want? And also, interestingly, in what instances would you advise an on-prem solution, Because I haven't heard about an on-premise solution for a long time.
Speaker 3:You don't have a lot of Swiss clients, I believe.
Speaker 2:No, no idea.
Speaker 3:There is a certain preference, let's say, among Swiss clients, always has been. It's maybe shifting a little bit, but even then some of the very sensitive in those topics, like in pharmaceuticals and so on, are a few brands that spring to mind and also some of the banking giants from Switzerland. They have never accepted anything outside of Switzerland. Even if it's not on-premise or even if it's a cloud provider, it must be operated within Switzerland. So it's not such news to us. But now we're seeing it from a different client base, not only from pharmaceuticals and from banks and so on. We're also hearing the same demand now from companies that are in the regular industry.
Speaker 3:Regular industry sometimes have security, sensitive topics and products, but not always. We're not only talking about defense and stuff like that. It's also companies that are running or producing materials and have invented certain solutions and products and they're rather sensitive now about protecting that IP and guarding that from even coming in contact with platforms that allow them to scale globally. So, as you said, so how do they separate it? Well, when it comes to everything that's really very close to production, very close to materials, very close to everything that is on the engineering side that is happening within protected environments. That is happening, at least in the EU, and sometimes even on-prem. When it comes to everything that has to do with customer service, that has to do with spare parts business, that has to do with managing different storage facilities all over the globe and logistics and so on, that is gladly based on some kind of global platform.
Speaker 2:There, all of the reservations do not apply to to these kinds of challenges okay, and we talked about, uh, change and transformation as well, and we and we I mean that's a big part of the topic conversation you're having with clients at the moment. When you look at the people, the processes, processes or the platform or the technology stack whatever you want to refer to, as there are three big ones which pillar is the most important for you when you're talking about change and transformation management?
Speaker 3:if you can choose one, yeah Well, in the end I would probably say people. But that doesn't mean that would be the only way to address transformation. Sometimes changing a platform or reinventing a process is the easiest and best way to actually approach people. So it's sometimes much more easier to discuss a new technical solution with all stakeholders stakeholders and in that process changing the way they work and changing the way they operate the business in some particular aspect. And I feel very often on the client side management knows that and does that with much education. They actually choose to say well, let's implement some new software in that area for that kind of process so we can change people's minds in that part of the business. And sometimes that works.
Speaker 3:And the other way around the little prince idea of motivating people to telling them about the ocean, then they will start building boats and so on. That is a very beautiful metaphor, but it also means management must be really good at telling people about the ocean. And from my experience, talent varies when it comes to communication and not everybody is so gifted in that department. And so I believe changing or addressing people first, trying to sort of capture their spirit and get them aboard for a certain journey, for a certain transformation, transformational idea, even concept for the company is possible, but you will need leadership that has those qualities, and those are rare qualities, let's face it. So I would say, as a humanist, I would always say people first, right.
Speaker 2:But, sometimes it is not to the best of the people to put people first if the um, if if all the, the surrounding factors are not the right ones sometimes it's better to start with technology and and you talked briefly about your I'm assuming you've seen this clients put in place, uh, a piece of technology to try and change the minds or convince a team or people to use it and have different behaviors. Um, that's that sounds to me, and tell them please tell me if I'm wrong that like that's the wrong way around, right?
Speaker 3:I'm thinking surely you understand what the business problems are and start from there to then look at what the actual solution is it depends on who you're talking to really, and I agree with you, obviously, um, but I would say sometimes it's a good conversation starter. Sometimes it's easier to talk about the details and intricacies of some technical solution and then broaden the view and gather again a bigger perspective with people who are not ready to talk about the bigger perspective in the very beginning and those people exist in growths, to be honest, and so I find it's a possibility. I'm not promoting it, I'm just saying, as somebody who has been in charge of transformational processes and has been witnessing so many of them, has been consulting so many companies within the storm of transformation inside those companies, but also driven by outside forces, I feel it takes a very large set of different tools and different approaches to carry the ball across the line and sometimes you will need a different approach. And when you talk to the IT department, you will need a different approach. When you're talking to the CFO and you will still another one. When you're talking to somebody who's in charge of production, and especially in those tech-minded surroundings that we very often meet, it's much easier to talk and start talking about technology and then slowly scaling up and obviously the business sense in it all and the business model behind it and the opportunities and risks that are sort of existing within that transformation challenge need to be addressed and they should be addressed on a management level, and that's where you start talking about it very often. But when you start the conversation on all other levels and with all other stakeholders always from that kind of perspective, I often feel it's a bit of a skip intro situation.
Speaker 3:To a hark back to our earlier conversations about the early days of the web. You know, people have heard that mumbo-jumbo a little bit and they go well, what does that mean for me? How does that change my work? That mean for me? How does that change my work? And then you arrive at that point and at some point within the conversation somebody stands up and says well, stop, so I've understood what you're trying to do and this is going to change the way we work substantially.
Speaker 3:And I'm not sure if I like it. Why are we doing this? And then you can go back to the intro and the actual motivation. And now people are listening to it. Now they're saying, ah, now I get it and now that makes sense. So this is what it means in practice and this is why we're doing it and now I'm fine with it. I can work with that. I might challenge the exact thing that you want to do, that you want to change, but then we have a meaningful and productive and constructive conversation about the means of change, about the actual changes that are about to happen or that should be happening, and very often that will let people in on the process. That will let them so sort of co-design, the transformational process, and the more ownership they have, the better they will be and actually implementing it and and bringing the success to the project.
Speaker 2:So that's why I'm saying obviously it's always people, but the process to reaching people's hearts and minds not too seldomly goes through technology, surprisingly yeah, agreed and and we talked about how data will underpin a lot of the decisions around uh, the business problems and how we might resolve them, and also understanding what they are. It the the description you gave about winning uh over the hearts and minds of stakeholders. Is that part of the reason why you had the? The description you gave about winning uh over the hearts and minds of stakeholders. Is that part of the reason why you had the? The spin-off that we talked about, which is digital experience labs?
Speaker 3:I'm actually. This is the spin lab. I'm. I'm in it right now.
Speaker 2:Um no, not really Okay tell me where that came from then.
Speaker 3:Yeah, like many things many good things in life it was born out of frustration. What happened was that our company, tech Division, was one of the early adopters of Magento and started to push that in the market and was rather successful winning clients based on that e-commerce platform. And eventually Magento became Adobe, or at least Adobe created Adobe Commerce on the basis of Magento and has been driving it Adobe commerce ever since. And so for Tech Division that meant that suddenly we came in contact with a whole suite of products from the Adobe Experience Cloud, which was previously known to us, but it was rather exclusive to huge projects in the digital experience world for the top companies in the world and it's very expensive software. And suddenly all of that became accessible and we could look at the whole suite and start to think about how we could adapt that and offer it to the kind of clients that we have, who are mostly what we call Mittelstand in Germany, which is mostly a structural description of businesses that are very often family-owned and owner-managed in a certain scale. They sometimes do have rather large numbers of employees and drive more than a billion euros in turnover, but they still have that kind of structure and they are interesting to us. They are the kind of clients that we mostly have. So how do these clients purchase solutions? They are not that interested in looking at, only looking at what's possible and what's the latest and greatest from the perspective of the vendors. But they are very often quite pragmatic. So they want to see solutions they can relate to, and in the Adobe world, all those different parts of the suite were not integrated in one demo where you could actually understand how they all work together, and the reason why they didn't have that is that when they pitch some solution to Volkswagen or Henkel or one of those giants, they usually build a demo that incorporates all kinds of products from their side but also all of the requirements that the customer brings, and obviously that is not something a company like Tech Division with 160 people can do for every client.
Speaker 3:So what we did in this room and with all the setup that we have here, is we built a stable demo that is integrating all of the software from Adobe and also some others, like Akeneo for product information management and OneStock for order management a few others into one comprehensive story, and so what we can do is we invite prospects and clients over here, we give them a tour. And it's not vaporware, it's actual software, it's running licenses, so we can show people things, but they can also interact with it. So we try to bring them into a position where they can try out what it would be like to be working with all of those tools at their hands and actually trying it out and seeing how it would work it out and seeing how it would work. And so we've got a story here of a fictitious company with all of those use cases that are easy to relate to. That they can then transfer to their kind of challenges and try out.
Speaker 3:And this has been very insightful for us and, I would say, also quite successful in terms of the clients and prospects, because we do get a lot of very positive feedback. Um, paraphrasing can be paraphrased basically like uh, well, I I couldn't imagine what it would be like before actually touching the mouse and doing it myself and see how it all works together. And that is an exclusive setup that we've built here with the help of the vendors, but also a lot of work on our part. And even later on, after we opened it, we found out that it's unique. Actually, adobe doesn't have that at their own premises, neither in London nor in San Jose, nor somewhere else, so they often send their own people over here so we can show them their solutions, which is also a fun exercise.
Speaker 2:Yeah, absolutely. It's unique, so I've never heard of that being available before. But it makes so much sense because it's about as close as you can get to actually having the implementation or the product or the integration without having to go through the process of having to do it. So, I mean it makes a lot of sense to me Is there any one particular piece of software, one particular integration that really like grabs people? They're like, wow, okay, I need that.
Speaker 3:Yeah, one thing before I answer your question, a thing that has crossed my mind a few times is actually I, from a client's perspective, I would wish there would be such a lab, independently of any vendor and of any service provider, where you can just tell the lab operator, you know, build those solutions for me based on this and that software, so I can test drive it in a neutral environment, without any of the salespeople, before I make a decision, because very often those platform decisions do have massive impact on the adoption and then also on the business case, on the adoption and then also on the business case. And so that's I. I would, even when we come back to the cooperation part, sometimes I think that would be cool. So, um, back to your question. Um, the, the thing that grabs people.
Speaker 3:Funnily enough, um, at least to me, since we built this and we started using it almost three years ago now, and there are a number of really simple AI solutions and little helpers within the Adobe stack, and they have been there for a very long time, long time. One of them is a little tool within the digital asset management suite and what it does is that it automatically props images and videos to the different viewports to the different. If you use a telephone or a tablet or something, so the image will have the right size, but it not only sort of crops them down to the right size. It is intelligent enough to identify what the image is about, so it shifts the focus, so it does the cropping symmetrically if needed, or it follows a certain topic or a certain subject in a video. If you want to look at it on your phone, you don't have enough screen real estate to see what's happening If you just take another part of the image on a probable video, part of the image on the probable video, and it sounds like a really simple thing. But we have so many clients that are struggling with that and where people really waste time doing that. It's an old solution, it's years old, it's from the Adobe Sensei early days really. But it still amazes people and it's a constant reminder to me that within our industry, and especially also on the vendor side, we keep talking about things way ahead of the adoption curve, way, way ahead my personalization, some of the topics that the DXP world has been talking about for I don't know, is it 10 years now and when we start talking to customers, to clients and to consumers.
Speaker 3:How much of personal, meaningful personalization is there really out there and is implemented and is working in favor of the consumers? It's not a lot, so sometimes it is not the latest shit, so to say, that is really wooing people. It's often those basics that take out some of the boring and hard work and a lot of the also the what we often call data share power work, where you have one source of data and you need to match it with another source of data and it can't really be done with a rule-based approach. But it can easily be done now by use of some AI agent or some little tool that you conjure up there, and it saves people so much of the stuff that they don't want to do anymore and that's so boring to them. That's where I feel we get the most dependable reaction, something that works every time.
Speaker 3:But of course, there are some cutting edge topics as well, where, where clients look at that and go, wow, I haven't seen that before. Um, like, uh. When, when we show them the whole interaction from somebody that has an sap system in the back, some erp that is driving product data through to the pim and the pim is then driving data through to the PIM and the PIM is then driving that through to the commerce system and the commerce system is then doing something with that in conversation with previous clients and actually showing that to somebody in the context of a customer service situation. So all of these integrated use cases they are, and I can just say people love those because, again, that takes out some of the work that they can't do themselves or don't want to do any longer, like transporting information from one system to another. It's just boring.
Speaker 2:Yeah, it makes sense and it must be great to be able to show them that in real time. You obviously touched on how AI is making some of those changes easier from a technology standpoint and, again, since we first started speaking, we've seen, or I've seen, the release of a few new AI models across some of the different vendors and the increasing cost of access. So how do you see the total cost of ownership playing out with the adoption of AI? Because at the moment, we're just seeing the cost go up and up and up.
Speaker 3:Well, again, I guess that's one of the rare instances where my economist side is stronger than the technology side. I feel that AI solutions are way too cheap right now. Ai solutions are way too cheap right now. So, unless AI or somebody else, humans maybe find the unlimited supply of energy, a kind of bubble that we're seeing now, where investment is pouring in from governments, but also from the markets, into AI development, financing unsustainable business models. To be honest, right For the sake of winning the race for AGI, that is not going to be a scenario that lasts forever.
Speaker 3:And the prices will then go up. There are quite a few people in the analyst sphere who believe that if that goes on for too long, we might see go a few of the bigger players go bankrupt and go bust over in the process, right. When the promise of AGI is too far off and the business model is still not there. I mean, neither OpenAI nor any of the others make substantial money from subscriptions.
Speaker 3:They don't drive their business model. It's purely investment-based. They don't drive their business model, it's purely investment-based, and so at some point it will be more expensive than it is right now, and so that's going to be a rather interesting situation, because there are multiple possible scenarios. One of them is that the open-source models that are now there, that you can use in your own environment, can be used for a lot of the questions and tasks and workflows that are relevant to companies right now, and they will sort of take the demand away from those large offerings, from OpenAI and others, and that would then obviously drive prices down or would change the situation a little bit.
Speaker 3:Another scenario is that this is never going to be catching, or can't catch up with, what the bigger players and the bigger models are offering, and in that sense, that would mean that prices will have to go up when those companies will want to, and will need to, make money eventually from an actual business model, sustainable one, and at that point, I think that for everyone in the market, the main question will not be so much which model do I choose, based on what it does, because competition will be fierce and the functionality will be very advanced with every one of them already, but it will be very much about where do I get the best value for money, from which model and from which vendor, so to speak, service provider.
Speaker 3:And obviously they will all try to create some kind of locked-in situation, be it Microsoft or Google or OpenAI or whoever will always try to provide more and more services and lock the client into that ecosystem. They're creating hand for the companies consumers, so to speak. They will need to make combined choices where they go with one solution for a certain part of their task, another solution for another part and so on. They balance that out and they will shift around a lot and they will need to navigate that space and combine different offerings to make it work financially but also in terms of functionality, and I think that's going to be a job of the future. It's going to be such a kind of purchasing director of AI services.
Speaker 2:Well, this is it, and the question I was going to ask next is how are you going to convince or how are you currently convincing the CFOs, presumably, who are involved in these decisions that the increasing cost of AI is still going to produce a return on investment?
Speaker 3:return on investment. I think, that's.
Speaker 3:We are now in a phase where a lot of trial and error and a lot of waste is happening when it comes to investing in AI, when it comes to learning about it, and that's normal, that's a given. That's what's happening with any new technologies. That's normal, that's a given. That's what's happening with any new technologies. We're adopting them and we're making errors in applying, and I believe that part of the business perspective on using AI is a question that we ask ourselves now, but we will not ask that question as much in a rather short amount of time, because we will have learned where to use AI and where not to use AI, and I think that process is already happening. I don't know if you've been following that, but if you look at the papers the most influential papers in terms of transformation management when it comes to the adoption of AI from about let's define very specific business cases, let's make sure there is a good set of KPIs, let's make sure it is a very controlled environment it was, I'd say, classic business administration thinking about how to adopt a new technology, thinking about how to adopt a new technology, and it was mostly coming from a mindset of, hey, let's not go crazy about this right, so we're not going to waste a lot of time. And in the meantime, if you now read about what has been published, let's say, in the last six months about what's working and what is not working, last six months about what's working and what is not working, a lot of that general approach has gone away. It's now mostly about, rather, decide about, make or buy, trust the AI-added functionality from your given vendors or will you create your own stuff? If you create your own stuff, make sure you get stakeholders from all sorts of the business um, give them some leeway and um and and and try to try to make them learn as much as possible.
Speaker 3:And it's a it's a little bit of a more relaxed approach right now, I'd say in the overall transformation science, so to speak, and I think that that will also apply to the business perspective that your question was about. There was a very narrow expectation on how to prove the business case. It has softened a little bit. It is more about how do we get it to be adopted in different parts of the business who are the drivers and not so much about control right now, and I think the control part will come again a little later, maybe in a year or so, when it has settled in a little bit, and all the little AI functionality, all the little agents after the first wave of disappointment, so to speak, will have proven their value. And then we will see business value calculators all over the place that are putting the cost of purchasing and building those agents and running them in perspective with the overall business goals.
Speaker 2:And we kind of touched on it briefly there. But what does that mean for the vendors? Are we going to lose vendors? Are they going to lose vendors? Are they going to have to just completely adapt their business models? And also, how does the talent pipeline, the types of hires that they're going to need to make, play into this?
Speaker 3:Well, two big questions.
Speaker 2:Two big questions, very true. We can separate them out, though, for sure.
Speaker 3:I think, when it comes to the question on what's happening with the software vendors, I believe they're all staring down the barrel of AGI being at the ready, where some CEO one day wakes up and says you know what AGI? I've been paying SAP license fees for 10 plus years now or 20, and it's been very expensive. Why don't you analyze how our SAP implementation works and how people work with it, and why don't you recreate a new ERP with all the data in it and starts working tomorrow morning? I don't care how many tokens you burn in the process, because it's still going to be cheaper than the license cost and it's going to be our own custom-built ERP. There's no vendor that we send any more money to, and I think that's the most radical way to look at the fate of big software vendors, but also a lot of the small ones, Obviously, if you have just a rather trivial offering and that can be done by talking to Claude or some other programming-savvy solution- then those will be replaced in a moment's notice.
Speaker 3:So I think there's going to be a lot of movement on the vendor side. Then those will be replaced in a moment's notice. So I think there's going to be a lot of movement on the vendor side. On the other hand, the world doesn't look that much different for us on the service provider side, and it's coming from two directions. There are the clients, who will be doing a lot of the implementation work and the customizing and so on by just talking to some tool that they're using, and there's also going to be a lot of vendors who will complete their solutions with AI customizing engines. So that's already happening.
Speaker 3:If you look at Shopify and others, what they're doing, it's good news for the consumers, for the clients, but it's not always good news for the service providers, and I think that's the space that we have to navigate In the end. I feel if you look at it from a rather radical future standpoint, then an enormous part of what makes software heavy and slow and expensive today are interfaces made for humans, where humans are configuring it, where they're entering data or extracting data and so on. So imagine that a lot of that is no longer needed because you have some multimodal system that you're communicating with or that's even gathering information from your business directly without you having to prompt it in some way, and that is doing all of the configuration and that is doing all the synchronization of data between silos and that is doing a lot of the adoption. So you're losing such an enormous amount of excess baggage in the software, and that will make things a lot more effective and is this I?
Speaker 2:I think we touched on this, um, in some preliminary conversation is this the, the commerce versus service portals? Is that where you're going with this in terms of taking away some of the uh, human interaction element around how you might go and purchase a product or service?
Speaker 3:Yeah, I think that's one step along the way, but obviously there's also the next step beyond that, and that is the shifting of experiences and surfaces. So when you're using your agent to purchase something, you don't even interact anymore with the shop that somebody's running. Your agent goes shopping for you, so somebody else is now owning the interface.
Speaker 2:I find this hard to get my head around because maybe it's the ADHD in me, but in my shopping journey I'm never really super clear. So if I'm not super clear, and even when I get to the very end of the shopping process, I might or regularly change my mind, how does my agent know that it's my?
Speaker 3:question, the agent doesn't even have to know it, right? I mean you're in a conversation with the agent and the agent is keeping up that conversation and thinking ahead of what you're saying or interpreting in some way, is going to know you in a way, and we're already seeing that. I mean the traffic is. The Economist published an article last week I believe, which has been observing that the traffic for websites that are selling goods and services in the healthcare industry is down by more than 35% and that a lot more of the information is no longer gathered from all those websites by actually visiting those websites. But it's more like you start reading all the summaries, that you get even your Google interface, or you start searching with complexity or something else, and there is some kind of interaction there and at some point there is going to be a refined view of what you're saying. You know that purchasing consideration process is moving up to a certain point and when you've reached that point, then maybe you're still accessing that particular shop or some kind of vendor and you're still buying it. But how long is that going to happen?
Speaker 3:And I think those shopping experiences, they might exist for a long time for for items where you actually need or enjoy the experience. So in industrial context you might need it, and some information will not be readily available outside of actually logging in and checking out the information or in some other ways. You might really want to visit the Hermes website, right, Because you want to have some orange buttons to click on and whatnot, so, and that is a different case, but you would never do that to buy a type of washing agent, right. I mean, there is no fun in that. There is no experience. I cannot imagine Tim Rodel spending time enjoying the information that different makers of washing agent are offering to you and yet they're investing millions into that.
Speaker 3:I mean Eagle is one of the biggest clients using Adobe Experience Manager in Germany. I don't know, have you ever been visiting a page of a company that makes washing agent ever?
Speaker 2:It's not on top of my list. No, for sure.
Speaker 3:Maybe you should. Maybe it's a digital paradise and you and I don't know about it, right?
Speaker 2:Yeah, I see your point well made, which is there are differing degrees of consumerism and at one end it's going out to buy a nice pair of trainers just because you want to and you want to look at all the different types and just want to just have a see what's out there. You don't need them, but it would be nice to have a nice fresh new pair. But if I'm buying fairy liquid and dishwasher tablets, I just couldn't give a crap. Really, I just want them to turn up and be there before the old runs and run out. Yeah, that makes sense. That makes sense.
Speaker 3:I think there is a word for what will remain and what will keep being relevant, and that's curation. I think there's going to be a lot of curation around, and the more advanced it gets, the more luxurious it gets, the more insightful or complicated or demanding or complicated or demanding. Also, the more potential for an experience there is, the more curation there will be. And I think building out that experience, building out the curation experience, that's where the creativity will go to, that's where the technology will be applied, that's where the technology will be applied.
Speaker 2:That's where the fun is. Okay, I've got a couple of probably difficult to answer but interesting questions to ask just a round of our conversations. We've covered a lot of ground. So the first one for me is we've got we've already talked about it, but multimodal AI beats monolithic LLMs. Where do you stand?
Speaker 3:I don't think they're really opposites. I don't think they're really opposites, and so multimodal mostly means that there are. I don't know if you're referring to different ways of accessing or prompting an AI in the background and whatever it is, but most of the time it will be an LLM AI in the background and whatever it is, but most of the time it will be in LLM. It depends on where you're applying it. When it comes to agent networks and I think that's the kind of thing that we'll be doing mostly in business it works very much along those lines that I tried to point out earlier. Whenever it goes toward the hard questions within the business with critical data, then we're talking about that kind of application. We have a number of agents that are doing specialized business, specialized jobs within a protected, private AI environment and the more general applications, be it LLMs or data on more generalized models. They will have their field day for everything else and that will be the majority of tasks, but it will not be the critical ones.
Speaker 2:Okay, and another really hot topic and something we've already seen the impact of. But developers as we know them continue to exist or just disappear them.
Speaker 3:But, um, I think there is a very interesting uh research um around which has been cited cited quite a bit, um from canadian university I think it was cargory and they've been looking at companies that have been investing in automation for over the last 10 years, particularly robotics and so on.
Speaker 3:What they they found out was that the employment rate in all those companies that have been investing in automation went up and the companies that didn't invest in automation and robotics actually lost people and decreased the number of employees.
Speaker 3:And I believe that is, in a way, an answer to your question, because I think the developers of the future will mostly be coordinating AI tools and maybe AI co-workers and AI code generation and control and quality assurance instances, and in that sense, they will be hurting that flock and not so much writing the wrong code. At the same time, there was this great interview with Demis Sassabis by Alex Friedman a week ago where he said that he hopes that vibe coding will be so fast that he will be doing all the development work that he still wants to do in his spare time. That's now just too little Just by talking to some kind of appless automaton that then we'll be able to create code out of that and I believe that sounds like it's a trivial task and at some point my now well-aged aunt will probably talk to some device and then we'll create some kind of software solution for her and that will be possible in some scope.
Speaker 2:When it comes to the really hard problems, um, I believe there's going to be a relevance to a technical, deeper understanding for a long time okay, and so if we're looking in, maybe two, two and a half years ahead, by the end of 2028, the vendors, vendors, going back to the vendors conversation that will survive and thrive. What are they going to be doing? What have they done?
Speaker 3:They've saved money and bought a lot of infrastructure. They will have reduced interdependence. They will have created safeguards around data and around processes. I think it's going to be a lot about safety and about control over data on behalf of the client, but also to their own hands. The more they share with the hyperscalers, the faster their business model will be a thing of the past. So I think that's the short answer, okay.
Speaker 2:It's clear that you've got a real depth of knowledge and understanding of what's going on. So last question from me is what would be one actual step that you would suggest leaders take in this space next couple of quarters to redefine their position, Because a lot of people are trying to do that right now.
Speaker 3:From which perspective? From the perspective of the vendor.
Speaker 2:It'd be interesting to know the perspective of the vendor, for sure, yeah, and as well as the service provider.
Speaker 3:Well, the service provider. I feel you know our service providers. We have been professional explainers forever, right From the very beginning. That's what we did, and I believe the bits when it comes to just explaining things will get a lot of competition from AI there.
Speaker 3:Ai is really good at explaining things, so I think it's going to be a lot about trust. It's going to be a lot about helping customers to navigate the landscape, to talk about things like independence, to talk about risk awareness, to talk about understanding the value of data on a wholly different level that they are doing it right now, where they're either overprotective or they're very careless with it, but they don't have a thing like a data strategy very often and explaining that and helping customers to create their own data strategy and base a lot of their business on that data strategy. Making data strategy an integral part of strategy as an overarching topic for companies. I believe that can't be replaced. That's going to be a very, very essential part of what we're doing Not only explaining it, but bringing the methods, developing the methods, making that happen, because there are some decisions to be made within the next few months and years that are so crucial to the risks and opportunities that companies will be facing and you know it's crunch time, as they said in the Mighty Boosh.
Speaker 2:Absolutely Well. Look, it's been great talking to you. I think we could probably go on for another hour or so without any problems, but you know it's been a really good episode and I'm really pleased. So thank you very much for your time.
Speaker 3:Thank you very much for the opportunity and a really nice conversation. I've enjoyed it very much and looking forward to talk to you again Amazing.
Speaker 2:Thank you, Daniel.
