On this episode of The Main Scoop, Hosts Greg Lotko and Daniel Newman sit down with Patrick Moorhead, founder and CEO of Moor Insights & Strategy, to talk current IT investment trends across platforms and how to maximize business value through strategic investment.
It was a great conversation and one you don’t want to miss. Like what you’ve heard? Check out all our past episodes here, and be sure to subscribe so you never miss an episode of The Main Scoop™ series.
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Transcript:
Greg Lotko: Hi, folks. Welcome to the next installment of The Main Scoop. I’m Greg Lotko. I’m joined by my co-host here, Dan Newman. Nice to see you again.
Daniel Newman: Greg, it’s good to be with you.
Greg Lotko: Good to be here in person.
Daniel Newman: We are back in person. It’s been a little while. We’ve been on the road quite a bit, but…
Greg Lotko: We’ve been doing the virtual.
Daniel Newman: … It’s been a busy year.
Greg Lotko: Yeah, it has. It has. It’s been a productive year. A lot of things going on. A lot of things going on in the market. A lot of things going on with companies and what they’re doing with IT. And we’re going to kind of marry those two things here today. We’re going to talk about trends in IT, investment. And so what do you think? What are you seeing out there?
Daniel Newman: Yeah, first of all – I don’t want to tease this because people probably don’t even read the YouTube titles, but we got a pretty interesting guest at this show, but we’re not going to tease that just yet. Look, the AI trend has taken all the oxygen out of the entire tech industry over the last year. We’re having debates about CapEx investments every single day. How much should these companies be spending? And then of course you have enterprise IT saying, “Well, where do I do this? Am I going to do this on prem? Am I going to do it in the cloud? Do I do it on edge?” And then of course, we’ve got new form factors and new kinds of devices that are supposed to help our workforce become more productive. And then after all that, we’re trying to figure out how do we secure all this stuff? We’ve had some big events with security. We’ve had some big events related to availability of the cloud. And by the way, you and I have talked about these things on shows here on The Main Scoop. So there’s a lot going on. But if you’re in it and you’re trying to figure out where do I spend money and where’s the best place to put a dollar to get a return? I mean, in the end, it’s all about productivity gains.
Greg Lotko: Well, it’s about driving value for the business, right? So you’re right. I mean, AI is sucking a lot of air and a lot of investment out of the room, but the reality is it’s a hybrid world out there. So we know that companies are using a variety of different technologies, and it’s not like you can just stop the everyday. It’s not like you can stop protecting it or you don’t have to invest to be able to handle the volumes of data and transactions that are going on. So these businesses have to make decisions. They see the patterns, they see the trends, they see what’s going on in their business, and they have to decide where to spend the dollars they have and where to maybe expand and spend the next dollar.
Daniel Newman: Yeah, absolutely. So you and I, of course, we love to chat about this stuff, but we have a guest today.
Greg Lotko: We can go on all day.
Daniel Newman: We have a guest today.
Greg Lotko: We do, we do. So with us, we have Patrick Moorhead from Moor Insights, which does that mean he has more insights than us? Less insights?
Daniel Newman: Let him explain it because he always explains it. It’s many insights, but only a single strategy. And this is a lot of fun for me. It is a lot of fun for me because for everybody out there that doesn’t know, you and I have The Main Scoop, Patrick and I have The Six Five, and that was actually the first podcast that I ever launched. Well, I would say the first podcast that I ever launched in the traditional sense-
Greg Lotko: But as we said, we’re not going to make this about you. Let’s turn to Patrick. So tell us about yourself, what you do at Moor Insights. And if you wanted to code for everybody the meeting behind Six Five, we can maybe hold that to the end.
Patrick Moorhead: No, I appreciate that. So first of all, I’ve had many years of FOMO watching The Main Scoop and not being a part of it. So here I am, baby. I am on The Main Scoop. Typically, Dan and I are doing the interviewing, but here I am in the hot seat. But listen, this is the price that I have to pay to get on here. No. Backstory is I’m founder, CEO and Chief Analyst of Moor Insights & Strategy. We’re an advisory firm. We put a lot out there without a paywall to educate enterprises on strategies they can take, technologies they should be using. I had a real job before that. I spent, I guess almost 15 years as a corporate executive in big tech companies running strategies. I ran products, product marketing. So hopefully this makes us better recommenders of things for enterprise IT. But anyways, guys, thank you for the invitation.
Greg Lotko: Delighted. Delighted to have you on. So I think what I heard you say there is you do the teaser outside the paywall to say, “Hey, look, we know what we’re talking about,” which people see, “Okay, they’re talking about these trends, these observations,” and you leave them wanting more. They want to have a deeper conversation. And I imagine that means, “Hey, you got to understand their business. You got to understand their strategy. You’re probably comparing and contrasting it to others in the same industry as well as across industries. But then every engagement, I got to imagine not only you’re advising, but you’re also getting out of it, right? You’re learning, you’re hearing what’s driving their business decisions. So macro level, what do you see out there? What do you see as the biggest trends in investment? And I don’t mean, let’s just talk about the latest hot thing macro, but is there a theme around the overall investment strategy?
Patrick Moorhead: So first of all, the good news is in the last 15 years, IT has become a better partner to the overall business. And you and I were both there 30 years ago where they’re really autonomous, kind of on their own tracks and only a forcing function would bring them together. But IT has really grown up and become more of a business partner to the lines of business. And technology is part of every business now. You can’t be a functioning business these days without having technology at your core. It may not be the business you’re in, but it’s delivering a lot of the end products and services. And yes, there are the buzzwords of generative AI. There’s keeping the lights on, and then there’s this in-between which is the, how can I get some low-hanging fruit to either… I mean, we’re in business. You either have to drive top-line revenue or reduce costs.
So things like automation that go into this. You’re not getting into generative AI without having a data management platform and a data management strategy. And you’re not going to be able to do that without high degrees of security. And the other part, and I’m glad, Daniel, you brought it up, resiliency. Sometimes we take this for granted except when it breaks. And the major cloud providers have had some recent outages that have made some pretty big differences. We saw what happened with airlines and hospitals with security outage. The downside of not paying special attention to the here, now and present can be very risky.
Greg Lotko: So a lot in there. I mean, every company on some level is an IT company because they have data, they have intelligence. It may not be their product, but they want to understand how their product is being used, the needs where it’s going, and then they have to think about where they’re spending and what do they use.
Daniel Newman: Yeah. It’s pretty interesting too, the sort of bifurcation, or even you call it a continuum between investing in the continued capabilities of the technologies you have. Of course you’re on The Main Scoop. It’s all about blending together, sort of the technologies that have anchored businesses for decades with these new trend lines that are popping up, whether it’s been hybrid and multi-cloud, whether it’s been…
Greg Lotko: Or even the trend lines of capabilities that cross platforms. It’s not just tying them together in isolation. It can be the approach of how you interact or you do your development or do your delivering.
Daniel Newman: And you advise, Pat at least one or two Fortune CIOs every week. You’re on the calls with these. I’m sure they’re coming to you and saying, “Hey, how much should I be investing in what we’ve built versus how much do I need to think about these new technologies and starting over, enabling to go faster?” How do you answer those questions when they come your way?
Patrick Moorhead: Yeah. So first and foremost, biggest recommendation is get on the hybrid multi-cloud. It was 15 years ago, we were on this, I don’t know, call it the drunken sailor path which is-
Greg Lotko: Rip and replace.
Patrick Moorhead: … just a only-cloud. Right?
Greg Lotko: Yeah.
Patrick Moorhead: And then we’re in a more mature place right now, which is not cloud-only or even cloud first, it’s a balanced approach. Let’s take cloud across all platforms and cloud should be irrespective of location. It can be in the public cloud, hybrid cloud, sovereign cloud, on-prem, on the edge. Get into more of a cloud model as defined by things like containers, as things like a DevOps type of process, which I know isn’t limited to a cloud model, but getting in those posture where you can grow and you’re not locked in, and then tap into these hybrid multi-cloud fabrics, a data fabric that you can leverage across platforms. Even a developer fabric that you can leverage where you’re not making investment in one place. And if you move it someplace, you’re not losing that investment. And by getting into a cloud posture, you’re speeding up the process as well. So if you want to get into a new business or dramatically modify a current product or service, or you want to go from selling a product to selling a service, you can offer those to your customers just so much more quickly in doing that.
Greg Lotko: And everything you said there is platform agnostic. You talked about using good DevOps practices, securing stuff, leveraging the data that you have. It’s really the way you interact with the systems you have and then deciding what the business imperative is. And then after you know what you’re doing as a business imperative, then based on runtime or operational characteristics, you can decide where across the IT landscape something is going to live.
Daniel Newman: Yeah. Think about what are the things that the technology must do for the business, right? With recent risk and outages and things we’ve seen, you have to be able to do basic functionality. People have to be able to buy a service. They have to be able to get a response. They have to be able to transact and put a credit. But then after that, you start to get into this business actualization where you’re starting to rationalize. And what I’m hearing from you guys is we rationalize an investment in next-generative AI platforms that allows you to do your booking for an airline ticket. But gosh, if the system isn’t stable.
Greg Lotko: I mean, what’s been displayed is that all these things are tied together, right? I mean, if you look at, I mean, the most recent thing, I know a lot of people are talking about it, that came out of the intent to provide a more secure environment, to provide a patch that was going to make something more secure. And with the focus on security, they forgot about using good DevOps practices. So you don’t do each of these things agnostically in a silo. You do them holistically and coordinated together and across platforms. We have to be ever vigilant in each of these motions with our systems.
Patrick Moorhead: And the great news is that a lot of technology providers, yours being won, is making it easier for people to go across these platforms.
Greg Lotko: You got to take advantage of it.
Patrick Moorhead: Oh, you have to.
Greg Lotko: It’s not enough to have the capability out there if you don’t exploit, if you don’t deploy, if you don’t use it.
Patrick Moorhead: One of the biggest mistakes that these companies are making, and I’m actually seeing this when it comes to AI, is they didn’t have systems of transactions and they didn’t have their data in alignment to do anything interesting with AI. And they were also thinking very myopically about where am I going to do this, right? Oh, I have to do this in the public cloud when they have infrastructure that might be on-prem, could be in a mainframe to be able to do things in areas that are a lot more efficient and secure, and oh, by the way, resilient to do that. And the other thing they’re doing, and I mentioned this a little in the preamble, they’re missing those middle type of investments. We sometimes like to think of, “Oh, there’s keeping the lights on.” And then there’s either the digital transformation fund, the CEO fund, the special CEO kiddie fund that works on the cool stuff. What we’re missing is this middle ground, which is how do I get more optimized with the investments that we have?
Things like DevOps, things like even infrastructure automation, software automation. How do we optimize there? Because the cost savings you can get doing that are extraordinary. How about moving the old code base to something that’s more modern? I have 10X efficiency on a developer posture. And by the way, it’s more secure. These are some of the investments that are being missed between keeping the lights on and maybe we’ll call it keeping the lights on better.
Greg Lotko: And I hate that term.
Patrick Moorhead: I do too, by the way.
Greg Lotko: It’s accurate. It’s accurate. There are people who think about, there’s this set of things I’m doing to just keep the lights on. And I can’t imagine in any business where somebody thinks, “Well, I’m just going to do the minimum I need to do to keep going.” No, we’re always trying to differentiate. So you want to make your day-to-day operations. You always want to get more efficient. You always want to get more secure. You always want to get more accessible. We should strike that from our vocabulary. Anything that just stays the static quo is stagnant. Just think of the pond with all that yucky green stuff growing on it. Nobody wants that.
Patrick Moorhead: Well, there’s no factory even, a factory that makes things that doesn’t-
Greg Lotko: Let’s just turn it out at the same number.
Patrick Moorhead: They’re not using 1920s technology. They update. They get more efficient. They get more precise, higher quality product coming out of the end.
Greg Lotko: They mine more information out of there. What’s going on? Figuring out how to be faster, better, more precise, develop a better quality end result product to their customers.
Daniel Newman: It’s like that continuous improvement.
Patrick Moorhead: Absolutely.
Daniel Newman: Continuous development pipeline. Though companies need to think that way. And technology is an enabler. I just shared something on social that talked about the deflationary nature of technology. I mean, as businesses are under the stress to produce greater earnings, to produce more revenue growth, to stay innovative and disruptive in their category, tech is the enabler. It always has been. It always will be. That will not change. But of course, boards have more oversight to CIOs and tech now because tech is such an enabler. It used to be like, “Oh, we need a laptop to get that email out.” Now, it’s like the whole company runs on that, whether it’s the ERP system, whether it’s the sales administration system, HR.
Greg Lotko: If there’s an issue across industries.
Daniel Newman: Absolutely.
Greg Lotko: If the technology isn’t available, that brings things to a grinding halt.
Daniel Newman: It brings things to its knees. Now, Pat said something earlier that I think everybody here in The Main Scoop community would really enjoy, and he did allude to sometimes thinking about how it could be done on the mainframe. And so we talked a lot in this show, Pat, about the tech investments.
Patrick Moorhead: Sure.
Daniel Newman: I heard you allude a little bit about business continuity and resiliency, but where does the mainframe fit into this story in your mind as someone that’s always, we spend a lot of our time talking the leading edge. How are you thinking about that? How are you advising these CIOs and customers you’re talking to?
Patrick Moorhead: So first off thirty five years ago, I worked for a Unix server provider. I think they were called mini computers then. And back then, people were saying that the mainframe was going to die. And then 15 years ago when the cloud kicked off, all the public cloud folks were saying, we’re going to replace the mainframe. And I’m still waiting. By the way, I’m not-
Greg Lotko: There are workloads that can be moved off of the-
Patrick Moorhead: There are.
Greg Lotko: And it should be.
Patrick Moorhead: And I’m not a cloud denier, but to the credit of the mainframe, it is modernized each generation. It used to be water-cooling, proprietary frame. Heck, I can stick a rack in a non-water-cooled inside of a chassis. That’s the infrastructure. I can also run Linux if I want to. Heck, I can run containers if I want to and have that level of resilience and security that the mainframe is known for. Heck, I can do AI inference now on the mainframe. And I guess technically I could do that in CPU but I now have special circuitry that does it a lot more efficiently. So people, again, I know long preamble on that, but the way that people should look at the mainframe is when it has to be up and the most critical information in keeping your business running. You need to actually not look at what you can siphon off the mainframe, but what are some more things you can do on the mainframe. Today, we take data off the mainframe to do things like AI, and we can actually do it on the mainframe today. So it’s really-
Greg Lotko: It’s actually way more efficient. I mean, think about the old warehousing days, right?
Patrick Moorhead: Yes.
Greg Lotko: People who were proliferating copies and then when they were spending a lot of cycles on keeping these copies up to date, much more effective to bang that transaction directly at the mainframe.
Patrick Moorhead: Right. And pretty much everything we did with certain AI is we ETL it out and do it. Every time you move data, it’s expensive. You’re storing it in two different places. You’re having to manage that data, keep it going.
Greg Lotko: Opening up more security exposures,
Patrick Moorhead: A hundred percent there. And I just think a mature and high-functioning IT group can look at the pluses and the minuses of all the platforms and get into a posture. Again, back to where we started, independent of location, what you want to do at what kind of level of security, how much you want to pay for it, and then make your decision on where you’re going to deploy this.
Greg Lotko: Yeah. I mean, a lot of people don’t realize that if you look at just the last five years, I mean, I know mainframe has been touting for years, the percentage of transactional data that gets processed on the mainframe. It’s actually grown as a percentage of all the data. Obviously, there’s a lot of growth in data and growth in transactions, but mainframe as a percentage of carrying that workload has grown. Five, 10 years ago, we were talking 69, 70%. Now, it’s 74% of the transactional data is being processed on mainframes.
Patrick Moorhead: 85 to 75% of all enterprise data is still on-prem, and a lot of that is still inside of the mainframe. There’s a lot of consumer growth outside of that.
Greg Lotko: Actually that’s the big change. So it’s not just inside. It’s on the mainframe and it is open and it is accessible.
Daniel Newman: And we’ve seen a lot of innovation. That’s the foundation of The Main Scoop.
Greg Lotko: Absolutely.
Daniel Newman: If I’m sort of trying to recite what Pat shared today, I mean, effectively, CIOs are really moving between these sort of not just keeping the lights on, but really moving the needle forward in their business, and then of course, dealing with these fast-paced disruptive innovations and how they implement, but at the same time, secure, private, capable, connected, hybrid. All those things, a big part of the CIO’s agenda and a big part of what the mainframe’s purpose is in the market. I mean, whether it’s 70 or 74% of the transactional data, the world still runs on mainframe, and that’s pretty darn cool.
Greg Lotko: Well, it’s about making the most of the technology and the investments you have and then picking the right investments that’ll be coordinated with your overall IT strategy to give you a competitive differentiator in the marketplace.
Daniel Newman: Absolutely.
Greg Lotko: It’s been fabulous having you on Patrick. Love having you here.
Patrick Moorhead: Wow. No more FOMO. I’ve been on The Main Scoop.
Greg Lotko: And it flew, right?
Daniel Newman: Totally. That was fun.
Greg Lotko: That was a lot of fun.
Patrick Moorhead: This is fun. I guess I do 50/50 interviewing, and be the interviewee. This is fun.
Daniel Newman: I see you on CNBC and Yahoo Finance and every other platform on the planet.
Patrick Moorhead: Got to keep up with you, buddy.
Daniel Newman: You’re good in the hot seat. But you’re also a good-
Greg Lotko: I’ve just been on the interweb, so-
Daniel Newman: You my friend are building and running a heck of a great business. I love being side by side with you.
Greg Lotko: Well, thank you.
Daniel Newman: And everyone out there, we love having you as part of our community here on The Main Scoop. This has been a great episode. It was great to bring my co-host, partner in crime from my other show to meet my other show co-host here. Greg, don’t be jealous. It was fun. Hit that subscribe button. Be part of The Main Scoop community. We appreciate you very much. We’ll see you again soon. Bye-bye.
Greg Lotko: See you next time.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
