October 20, 2011Doug Hadden
Doug Hadden, VP Products
One of my mentors described the corporate euphoria when software companies killed innovation: “the wicked witch is dead”. And all was well in Oz.
As described in our attempt at humour yesterday, Enterprise Software Lingo – what does it really mean?, “innovation” in the software industry is what you get when you acquire another company. The two largest players in this market have recently introduced innovations in “real-time analytics.” All from acquired technology rather than something developed in-house.
I’ve written a bit about this subject in Never too big to fail? What are the implications for Government IT and E in ERP – does it stand for “economies of scale”.
I want to explain why many incumbent enterprise software vendors fail to innovate and why companies like FreeBalance have taken different approaches.
The Wicked Witch
I still like to think of it as the “Wicked Witch”. Innovation in many companies is seen as a witch because:
- Technically challenging with new platform require engineers to learn new skills
- New markets are less predictable than old markets
- Employees are compensated based on the old business model
- It gets outside the company comfort zone
- Conventional thinking usually trumps critical thinking
- Organizational structures restrict agility
- It bakes customization out of the product and threatens the channel’s revenue stream
Monkeys can fly?
Many people who learn about FreeBalance technology are stunned. “You created the next version of the software from scratch using modern architecture? Nobody has done that.”
Here’s the calculation that many software companies make:
- The market projection is uncertain
- No one else is doing this, so it must be a bad idea
- Analysts aren’t covering the market, so there mustn’t be a market
- Customers haven’t specifically asked for this
The reality, when you come down to it is:
- Not enough evidence that the innovation will generate results [Strawman]
- Uncertainty that this is will help the company [Cowardly Lion]
- Lack of passion for the market or the customer problem [Tinman]
- Lack of leadership to harness company resources [no Dorothy]
Pay no attention to the man behind the curtain
While many large enterprise software companies dither on the yellow brick road, innovation does not stand still. There are some “strategic inflection points” missed by these companies:
- Cloud computing (Software as a Service, Shared Services etc.) where large vendors struggle to deliver solutions while new companies grow rapidly
- Middleware commoditization where large vendors continue to promote proprietary middleware when standards-based and open-source middleware are almost always less expensive, more open, and more secure
- Web as platform where large vendors continue to use legacy client/server software as core, creating performance, scalability and maintainability problems
The last point is very much about the “man behind the curtain”. Sure, the latest versions of enterprise software is web-enabled. It’s just using technology that is as much as 40 years old.
We’re not in Kansas anymore
Social media enables companies to listen. Yet, if you examine the majority of corporate tweets and blogs, you’ll find a lot of talking. So, it’s no wonder that executives in these companies don’t think that customers want innovation. They’re not listening.
And, they’re not getting to the fundamental problems facing customers.
And, some are too big to care about your business.
What has FreeBalance done differently?
- Use social media to engage, listen and learn
- Create customer steering committees to tell us what our product roadmap should look like
- Change processes company-wide to solve customer issues (and we’re ISO certified for it)
- Leapfrog large vendors by using modern technology – something ideal for government and government shared services
Maybe the witch wasn’t so much wicked as misunderstood.