There is a fundamental and profound shift that is occurring before our eyes in Enterprise Software. It isn't a fad, it won't go away and buyers will win in the end. The shift we are talking about is the realization by many of the largest Tech Titans that closed systems and ones that don't interoperate are dead. The new model that is evolving is one of Cooperation (Partnering), Cloud and App level Integration. Google, IBM and Microsoft, three of the major Tech Titans, and Box, a leader in Mobile Content Management, are doing more here than many others. This is about the shift in both Strategy and Go-to-Market that we are seeing.
The Old Closed Model of Software Suites is Dead
In enterprise software, the approach for the last 20 years has been that the winner takes all. The prevailing approach has been to compete at a product and feature level to win the deal from the customer. That has worked well for vendors, but it has not often been the perfect outcome for buyers. The reason is that most products, particularly Software Suites, have weaknesses and buyers are forced to either deal with them or to customize them with either work from a Systems Integrator or more recently from the rise of Cloud Ecosystems, where partner plugins can be deployed.
We have long advised clients of the strengths of Software Suites (one throat to choke) versus the challenges (some modules are weaker than a best of breed offering). The rise of SaaS applications has proven to many that business leaders are not going to be led around by IT or by HR with a solution or Suite that does not meet their needs. The move this week by IBM and SAP to integrate their Talent Management Suites via Connectors (see Aragon First Cut) is just one example of how the world has changed. Two years ago, this would not have even been on the table. Some who don't understand these shifts will shout out that these are tactics, but the evidence we see clearly points to a broader strategic shift that cannot be ignored.
Box Opens Up - Enables Mobile Apps
Box, known for its Mobile Content Management Platform has mainly focused on replacing older content repositories such as Microsoft SharePoint or Oracle. It made a major move on April 22nd by completely opening up its APIs and allowing third parties to build Mobile Apps and Services that leverage Box Developer Edition. That means buyers may buy a service from a third party that uses Box, but they may not know that. Content as a Backend service is relatively new and we think in the era of Mobile and Wearables, it will be very popular. We expect other MCM providers to follow suit.
Google - Allows Compute Engine Apps to run on other Clouds
Google helped to pioneer the Open Source Android Operating System and now has the dominant Worldwide Marketshare. Some will argue that Apple's more closely managed ecosystem is tighter, but Google today has more devices that run Android, party due to the Openness.
The move that Google made this week is even bigger. Google announced that it is going to allow its 6 million apps that run on Google Compute Engine to run elsewhere, including on-premise, via its partnership with AppScale. We will note that Google Compute Engine is not new - it has been around since 2008. This move would not have been entertained by Google two years ago - it shows that Google is reacting to the feedback it is getting from buyers for more choice.
IBM - Going Cloud and Partnering as a new Business Strategy
IBM, who has been under pressure due to eroding hardware revenues, has made major moves to open it up. From the major partnership with Apple last summer, to the partnership with Twitter and just this week the announcement of both the SAP Talent Management Integration, as well as the partnership with Facebook for retail advertising.
IBM is all about the Cloud - its purchase of Soft Layer is one of their bigger moves and their willingness to make it easy to use via Blue Mix and IBM Watson Cognitive and Analytics services are all major new initiatives that investors want to see pay off.
The good news for IBM is that it is being more vocal about things that it never used to talk about. It is also far more open - the fact that IBM works closely with Apple is a major coup. Its new Talent Management Integrations with longtime partner SAP, which clearly will target single vendor solutions. Its alliances with Twitter and Facebook are unprecedented. The new IBM is about being open.
Microsoft - Azure and Apps as the new way forward
Microsoft has had Azure as a PaaS Platform offering for years. For years, I advised them about leveraging it internally. Now Microsoft has really opened that up - the fact that Oracle Database can run on Azure reflects a level of cooperation unheard of several years ago.
It isn't just that. New CEO Satya Nadella is saying all the right things - that Microsoft wants to be open. He said that this week at the Ignite Conference. The biggest evidence we have seen so far is the flexibility of Azure and their willingness to even talk about Open Source platforms such as Linux at their own conference.
As far as the app integrations, Microsoft always shows how other apps can integrate with things such as Office 365, but it hasn't shown a full willingness to allow Microsoft apps to share their data bi-directionally. We think this will also change under Nadella's leadership.
Ecosystems and Customer - Salesforce Started the Movemen
One of the largest Ecosystems from Salesforce (via Force.com) is really one of the reasons we are seeing the shift from single vendor offerings to multi-vendor ones. People want choice and Salesforce today has tons of third party plug-ins that integrate with their Sales Cloud. Their success has not gone unnoticed in the market. We would note that some think they have to run their apps on Force.com - but that is not the case. Many apps that integrate with Salesforce run on other Cloud Platforms, such as Amazon. Users do not know or care about this. They just want to get work done.
The New Model is Open and Integrated
The new Model has been unveiling itself gradually over the last two years. It is here now and the future is about Open, Integrated offerings. Combined this makes for major changes in markets that many have never seen. Many will not survive. We will be talking about this and much more at our newest event - Executive Insights, part of the 15th annual IT Dev Connections Conference this September in Las Vegas.
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