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Hurwitz & Associates - Insight is Action

Judith's Balancing Act

A frank dialog about the impact of emerging technologies such as big data, cloud, and security on customer success

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Is there value in enterprise software? Part I

Over the past couple of months I have been on the road quite a bit, primarily attending a variety of analyst meetings – in addition to project work and book writing. This has given me little time to keep up with my blog writing. I decided to begin by providing an overview of my composite observations about the direction of the software market as part 1. I will then provide observations from a variety of meetings I have attended this spring.

Enterprise software vendors at the crossroads. This is a time of transition for enterprise software. In the good old days it was possible to sell each type of software as though it were an independent market, selling solutions to specialized business units or the IT organization. While that still happens, the world has grown much more complex. The silos between software products and even between software and hardware are breaking down.   For example, software development is becoming a cloud service, and analytics software is tightly integrated with big data and cloud services. Large enterprise software companies are increasingly being forced to acquire more emerging technology companies in order to remain relevant in an increasingly complex market. Smaller software companies with leading edge IP are hoping that their offerings are innovative enough to survive and grow into the next Google. Companies of all shapes and sizes are finding the software market to be fragmented and complicated.

Customer confusion abounds. Customers purchasing technology offerings are facing much of the same level of confusion. As cloud becomes the preferred deployment model for many different situations, IT will often have a different perspective than the business user. Likewise, customers who typically purchased independent best of breed tools are finding that connecting tools or data together is a daunting endeavor. The business user often gets exasperated by the slow pace of the IT department; the IT organization is concerned that the business user is jumping head first into the abyss – without understanding the consequences.

What’s the value, what is the pain, and who wins?

How do you judge value and success? It is ironic that we are in an era where software and infrastructure has never been more important. Increasingly, software vendors are having a difficult time differentiating themselves from their competitors. What does it mean to be innovative? What does it mean to provide a dynamic cloud environment that is also agile? What does it mean to a business to create a great customer experience? How well can all of these elements be managed so that they act as though they are a single unified system? How does the combination of cloud, mobile, big data, software development and deployment combine to create a well orchestrated computing machine? The bottom line is that it is difficult to execute and even more difficult to explain.

And the answer is?

The reality is that there are more questions than answers in the technology market today. As we as an industry begin to realize that silos of technology, data, cloud, mobility, software design, testing, integration and more are rampant, it is difficult to find a smooth path forward. Things are even more complicated because business usersrightfully want technology be streamlined so that the business can focus on results for customers. On the other hand, there is no free ride. The simplest technology may not scale or may subject the company to security and compliance risks. Managing complex technology is the most important issue that leads to technology failures. Despite increasingly well-understood risk, company leadership seems to be mired as ever in politics and internal power struggles.

Who are the winners?

Right now it appears that there are no obvious winners. There are simply popularity contests. Companies like Google and Amazon have made their technology accessible and free or inexpensive on one level but complex and hard to manage on another level. Enterprise software companies like IBM, HP, Dell, SAP, Microsoft – to name a few are left with having to deal with all the complexities inherent in managing legacy systems, complex data, governance, security and integration. Emerging companies that focus on solving a single problem often have the luxury of being able to “walk customers into the tunnel”. When I use the term tunnel I mean the ease of being able to get started with a technology that seems easy and effortless. Once a customer begins to use that technology to expand into more complex situations, the tunnel that was so engaging now becomes dark and foreboding. However, politically and economically, it is very difficult to start over with a different solution that is best able to deal with complexity once a commitment has been made to another technology.  

It is no wonder that the technology market is consistently creating new market sectors that are hot and engaging. These new technology areas are mandatory but they are not a substitute for creating modular, elastic, agile, and linkable components that can create true customer value and a great customer experience.

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