Analyzing Enterprise Technology Performance

Primary External Data

The primary source for my analyses and recommendations regarding Enterprise Technology and how it should change in today’s era of AI are outward facing or external data that is either validated, legally required, or presented by company executives directly to shareholders. The information captured in the stock price is also the markets’ current evaluation of the effectiveness of their business strategies. Descriptions of known external facing events (cyber, operational failures, successes) are also highly useful. These sources include:

1. ?Stock Market Valuations - in the end, the value of innovation and technology is an important part of the enterprise’s stock market value. The value of insights can be seen directly in how it causes the stock price to rise, has no impact on the stock price, or even causes it to fall. The stock market takes into account current events, past history, and the value of future plans. This also includes Return on Invested Capital (ROIC), an important measure of enterprise effectiveness and how company actions will or have impacted this metric

2. ?Regulatory and Legal Actions - Enterprises can be sanctioned by regulators or face legal action and during the course of these investigations public information will be released and companies may admit fault or blame or settle cases. For global enterprises, often many of the strictest rules are in jurisdictions outside the USA

3. “Investor Education” or “Shareholder Communications” - these are the official actions taken by a company during Investor Days, Earnings Calls, or Press Releases where they publicly state their strategies and how they intend to drive value in the enterprise going forward. These presentations have vastly increased in frequency and detail in recent years and are now often formal powerpoint presentations and PDF’s and not just a transcript of discussions. I find far more useful information about technology, innovation and metrics in these documents than in the official SEC filings (below)

4. SEC Filings and Proxy - I am putting SEC filings such as quarterly earnings and the proxy in a different but useful category. These documents are primarily backwards looking (with the exception of parts of the proxy for executive compensation in the upcoming year) and of some use but for a variety of reasons often don’t focus on technology and have a very high ratio of boilerplate to useful information

5. ESG and Other Communications - many enterprises provide additional documents or presentations about non-financial measures such as ESG initiatives. These documents may contain metrics and other information related to technology and innovation activities

6. Documented External Events - this would include items such as when enterprises are shut down or severely impacted due to cyber events or large scale operational failures. This also includes the company’s statements on these events and journalism related to it from reputable news sources, or books that are written on these major events from credible authors.

7. Broad Market Impacting Events - specific events can have far reaching impact across the ecosystem and need to be understood using similar criteria. These include the end of low interest rates, the rise of AI, growing cyber risk, inflation, war, and changes in tax policy to name a few. The scale is so wide that I won’t refer to any specific reports or analytics

8. Specific Analytic Reports & Standards Created By Enterprises or Associations - for instance Cloudflare Radar ([https://radar.cloudflare.com/reports](https://radar.cloudflare.com/reports)) is a great source of information prepared by a specific company that has broad visibility into cyber and the internet. Other companies including Verizon, Palo Alto and Microsoft also produce specific reports that contain very interesting and useful data that I assume is highly reliable but maybe not comprehensive. The National Institute of Standards and Technology (NIST) is also an excellent source for useful information and often official standards

9. Equity Analysts and Public Investors- equity analysts cover virtually every company of any importance or scale and give predictions of future stock prices and a view of shareholder governance and key strategies. Major public enterprises such as Blackrock and KKR and Berkshire Hathaway are large scale investors also also make disclosures and describe their strategies to some degree. Equity analysts can be notoriously inaccurate but there is can be value in their opinions on how they come to their conclusions and their opinion of management. At least theoretically, both of these groups have an incentive to be correct

10. Specific Newsletters or online trackers - Web 3 Is Going Great [https://www.web3isgoinggreat.com/](https://www.web3isgoinggreat.com/) is an example of a useful web resource. The Pragmatic Engineer ([https://www.pragmaticengineer.com/](https://www.pragmaticengineer.com/)) also provides data that they’ve gathered from their readers which is very interesting and seems useful and looks reliable.

Other Useful Data Sources

Much of the internet and AI has been trained on the publicly available information from consulting firms such as KPMG, Accenture, PWC, Bain, and McKinsey, as well as articles in journalism sources such as the Wall Street Journal and press releases from firms talking about investments in their technology and the innovation space. Industry focused consultants like Gartner and Forrester also provide copious articles and analytics. Software and hardware firms also have “case studies” on their web sites where they talk about how their tools and services have been employed by enterprises to great effect.

Firms also produce their own press releases and talk to the press for interviews when they are launching new initiatives or otherwise want to draw attention to their internal operations. Some internal functions provide even more specific information, such as a JP Morgan technology where they have a specific externally-facing web page ([https://www.jpmorgan.com/technology](https://www.jpmorgan.com/technology)) which cites their $15 billion dollar annual investment in Technology along with data and insights about their technology outlook and specific programs.

It is important to realize that almost all of the “other useful data sources” listed above are heavily slanted towards positive outcomes; enterprises don’t elaborate on their failures, hardware and software companies don’t talk about companies who use their products and fail to meet expectations, and generally the consulting industry keeps a positive tone overall (although with a tone of anxious urgency to drive a continuous need for their services).

Successful Outcomes Drive Insights

There is no particular balance between the number of articles or references in Chat GPT and the success of a technology or innovation solution. Many companies that have had poor outcomes, as measured in stock market performance or other objective measurements, have glowing articles out in the Internet or on company web sites.

It is also impossible to verify claims and see how they actually positively impact financial outcomes and stock prices in most cases. In virtually all cases there is not enough officially verified information to make a judgment.

However, even a cursory view of stock market trends shows that the large scale technology firms have had excellent performance, and many once-robust sectors of the economy like automobiles are relative laggards (with the exception of Tesla). The data on the “winners” has to count more than lessons on the “losers”. This critical context is rarely seen in articles in the popular press or in common industry sources.

Shareholder Communications Should Be A Primary Source

SEC filings have not kept up with modern times. Major companies are not even required to say how much they are investing in Technology, and there are few specific technology disclosures.

For many years, companies provided financial statements with some commentary in quarterly earnings calls, and had an annual meeting where they ratified the board members and reviewed executive pay and the proxy.

In recent years, however, there has been an “explosion” of fantastic and useful information coming directly from executives towards shareholders that should be a primary source of research information, since executives that make commitments to the market and fail to deliver are often ousted. I rarely dig through 10Q filings but I will always read the presentations that accompany the quarterly earnings release, which is simpler than slogging through the transcripts to find the salient points that the companies should be making rather than hoping the analysts ask the right questions to bring their strategy into focus.

Conclusion

Rather than doing research by asking questions to companies and consulting firms that serve their needs, I am going to try to rely on “primary sources” where ever possible or executive communications with shareholders which they are heavily incentivized to make correct and deliver upon.