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Large companies can afford “innovation” (smaller firms can’t)

 

April 24, 2013

Enterprise Software Success Myth #3

Doug Hadden, VP Products

FreeBalance is a medium-sized Independent Software Vendor (ISV) with considerable success competing against very large Enterprise Resource Planning (ERP) vendors. We are sharing 16 lessons learned by bucking conventional wisdom to encourage industry innovation and creativity.

Conventional View

Large enterprise software companies frequently introduce new products and upgrade existing products. These introductions are presented, by these companies, as innovations. There seems to be increasing “innovation” hyperbole coming from the larger ERP companies. This innovation is rarely incremental innovation and never disruptive innovation. In fact, minor feature enhancements are presented as innovation.

Symptom

The enterprise software market business model is being disrupted through cloud computing, open source, social media – factors that Gartner calls the Nexus of Forces , what Altimeter calls Four Disruption Themes for Business and Constellation calls Engagement Systems.

Emerging Trends

  • Enterprise software and ERP companies are witnessing a slow-down of “organic” growth.
  • Enterprise software and ERP companies continue to acquire additional companies to overcome innovation limitations
  • Innovation such as open source, open systems , cloud computing and new architectures challenges existing business models and supply chains. This often leads to the “The Witch is Dead” phenomenon of killing internal innovation in larger companies

FreeBalance Approach

Small and medium sized software companies that do not innovate do not last long. Our approach to innovation differs from what I’ve witnessed in larger companies:

  • Innovation is not just about product because there are innovation opportunities in process including services, methodologies, go-to-market and business models. More modest-sized companies can focus on unbeatable products and services.
  • Larger companies build proprietary technology in order to increase “intellectual property”. This technology is sometimes arguably incrementally better than commercial or open source alternatives but provides little additional value to customers. This is especially true of middleware that has rapidly become commoditized. FreeBalance focuses on the value provided in the applications seen by users.
  • We make no claim that feature enhancements are “innovations”.
  • Our focus for incremental innovations is to determine how to reduce the Total Cost of Ownership experienced by customers. That means looking for better ways to configure and adapt software easily to meet unique government and language needs. It also means finding ways to reduce the maintenance footprint and upgrade costs.
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Doug Hadden

Doug Hadden

Executive Vice President, Innovation at FreeBalance
Doug is responsible for identifying new global markets, new technologies and trends, and new and enhanced internal processes. Doug leads a cross-functional international team that is responsible for developing product prototypes and innovative go-to-market strategies.

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