May 8, 2015Doug Hadden
It may be past the strategic inflection point
We’re in danger of being fooled by the mad rush to cloud, big data, engineered systems, user experience, mobile, social and the Internet of everything by major enterprise software vendors. Yes, fooled into complacency. Into thinking that incumbents are loudly and incrementally innovating. And, acquiring new technology firms. That these firms “get” digital disruption.
My sense was that we’re at the strategic inflection point for transformation in this market. Where economies of scale were about to change to favour nimble over bloated enterprise software companies.
My view has changed. I think that we’ve gone past the strategic inflection point. Why?
- Major vendors and consultants are pleading with IT to get relevant in digital transformation. Meanwhile, Constellation Research President Ray Wang describes how digital focuses customers on outcomes, not products in his recent book. Takeaway: the good-old-days of selling shiny objects to IT is gone.
- Enterprise software vendors and legacy technology analyst firms no longer have a significant asymmetric information advantage, as I described on a guest ZDNet blog edited by Michael Krigsman. Takeaway: enterprise software companies can no longer rely on customer ignorance of poor implementations, bad service, forced upgrades, license audits, high TCO and legacy technology.
- The enterprise software cost burden has become more visible with so much of IT budgets focused on “keeping the lights on”. Vinnie Mirchandani recently described how the use of engineered systems with a proprietary database does not solve the fundamental customer problem of high TCO. Takeaway: Enterprise software companies that remain disconnected from customer realities will continue to solve problems that customers do not have.
- In fact, Deloitte is on record saying many organizations are modernizing systems to pay down technical debt, replatforming solutions to remove barriers to scale and performance, and extending their legacy infrastructures to fuel innovative new services and offerings. Takeaway: it’s often the underlying technology platform that introduces unreasonable long-term costs.
- Dion Hinchcliffe from Adjuvi suggests that we should be done with the one-size-fits-all mentality to most IT, making all parts of the business accept limited solutions and the impact of the growing cohort of nimble digital competitors. Takeaway: there’s no time than now to rethink your enterprise software portfolio.
The New Enterprise Software Portfolio
This has always struck me as odd: increased commitment to 1990s enterprise software leaders. Consider the pace of change in the automobile industry since the late 90s where innovation in physical engineering were required. Software is entirely virtual. Since the late 90s, the enterprise software industry has adapted to moving from client/server to web interfaces to web-based. From ASPs to SaaS to cloud. From CORBA/IIOP and DCOM to REST and .Net. From BI to Big Data.
What should “replatforming” look like? (And, this goes for all industries, not just the public sector.)
- Where is the cost burden in your portfolio today? Think: consultants, upgrades, training. Solutions: simplicity, mobility, user experience.
- What is the platform implication? Is it legacy ERP technology that is heavily customized? Is it high costs for metadata management and information governance even though it’s on the same platform?
- What needs to be good enough? Think cloud or open source.
- What is truly mission critical? Create a heat map and use business component mapping (as used by IBM) to determine what you may want to highly configure or customize.
- Integrate and assemble among platforms. Enterprise software selected should support industry standard integration. Forget the best-of-breed vs. all-in-one argument of the past. It’s best-of-breed.
- Replace then rip (as suggested by Wainewright). Don’t be afraid to rip out what you’ve decided on later. Remember: the longer you use an enterprise software application, the more that the vendor can take you for granted.