That normally staid bastion of conventional computing is perking up taking on subscriptions and cloud computing like candy. It used to be that when you thought about back office and cloud in the same thought you also thought about NetSuite. Truthfully you still do, they’ve been at it a long time and have produced a solid and well articulated suite of back office ERP, finance, and accounting software (and more) that runs a lot of companies, especially the international variety that keep books in multiple languages and currencies.
But over the last ten days other companies have announced partnerships and solutions that both challenge NetSuite’s position and point to an important new era in computing.
The new era has been percolating through all of this century. Ever since Salesforce starting selling “no software,” cloud computing and subscriptions have been stealing a march on conventional, expensive, and bloated on premise software. Each year these solutions became more powerful and ubiquitous. First they supported other subscription companies, then all sorts of companies, and now, with the advent of the platform, cloud computing has come to the development suite and the back office.
The back office! Ten years ago the mantra was “Not with my data!” but something happened. Certifications sprouted and cloud became normal and safe and with Salesforce’s leadership, kind of cool. On the back office side, NetSuite carried a similar message to the point that today cloud and accounting are no longer words that, when spoken together, sufficient to punch your ticket to a long rest in a rubber room.
The last week has seen a breakout of sorts for subscriptions, cloud, accounting, ERP, and platform computing. Zuora and Intacct announced a widening partnership that will deliver Zuora’s subscription billing, payments, accounting, and financial management solutions to Intacct’s 7300+ cloud accounting customers. Be aware that cloud and subscription are not the same. Intacct has been successfully delivering cloud based accounting services and giving NetSuite its fair share of competition for many years.
The addition of subscription power from Zuora raises the bar to enable Intacct’s conventional customers with subscription aspirations to support what can best be called hybrid business models. At the same time, the announcement also shines a light on Salesforce’s platform strategy. Zuora is a native application on Force.com and Intacct has developed powerful integration with the platform in general and the joint announcement says they’ll double down on that integration. For Zuora it means 7300 new prospects, for Intacct it means a major capability upgrade without breaking a sweat. But we’re not done.
Also today, FinancialForce, a native accounting system on the Force.com platform just announced their entry into the ERP market with FinancialForce ERP. As a native application on the Force.com platform, FinancialForce has completed the circle of front to back office solutions that began with Salesforce. With all of the available solutions, a company of any size or complexity can now support all of its enterprise IT in the cloud and via subscriptions.
I think the biggest news in all this is what will happen to conventional IT in the years ahead. Pessimists say that IT will wither as significant chunks of functionality decamp for the cloud but I disagree. IT has always been a major component of a company’s secret sauce. If garden-variety accounting systems, even those that support subscriptions, can be off-loaded to the cloud that’s fine.
As more enterprise solutions head for the clouds and budget ratios turn from capital expenses to operational, we should see a renaissance of in-house application development which will, importantly, drive new business processes, especially in mobile apps that will help users do more and better business and do it faster. That’s where the secret sauce is and will remain for the foreseeable future. Time to embrace it.
These foundational changes come at an opportune time as prognosticators think about what it will mean to have 50 billion devices hanging off the Internet in 2020. Devices will increasingly be non-human consumers of goods and services (especially for restocking) and producers of data and information. Their transactions will take fractions of a second, be automatic, and require the attention of the infrastructure we are building now with cloud and subscriptions.
So the significance of these announcements together with things that have been coming out in the last year all point to an important milestone. Conventional applications managed data but the new stuff with platforms, front and back office integration, workflow, and social media all point to building and managing better business processes. I think we’re close to the end of a long wave of technology invention and at the beginning of an era of its consolidation and application.
We’re beginning to see an important differentiation, even a schism, in the enterprise software industry. It’s been building up for the last seven years and it will burst onto the scene tied in a bow this year. It’s the separation between conventional software suites and platforms and it is most vividly explained by front to back office integration but also alive and well just in the back office.
Let me digress.
In the conventional software era now heading into twilight, vendors provided more or less soup to nuts solution sets all integrated around proprietary standards, data models, middleware, and the like. It took a long time for suite vendors to get to that point, developing one application after another, delivering additional functionality to the market year after year. The process was not without its flaws and immature products occasionally got to market causing much heartburn for early adopters.
Cloud computing and subscriptions are changing all that and the most obvious change agent is Salesforce.com with its Force.com and Salesforce1 platform — Salesforce1 being the superset.
Rather than offering defined solution sets as conventional vendors have done, the Salesforce strategy has been to provide foundation technologies that include the development and maintenance tools you might expect from a solutions provider but with a twist. The tools sit on a platform that also includes some spiffy data management, workflow, collaboration, social media, and analytics tools. In short, just what you need to build robust apps these days — cloud or conventional. Moreover, any developer can make an app that harmonizes with the platform and delivers a robust solution even if it’s version one.
This foundation also gives developers two things they’ve never had. First, the ability to build apps that automatically integrate with others built to the same platform standards and, second, a way to define apps once and target-generate runtime images for a variety of operating systems.
One of the best examples of this approach is the Salesforce ecosystem and here we rejoin our previous column.
It is more or less expected that Salesforce can easily integrate with the apps in its ecosystem. So the real proof of the platform is in the ability of non-Salesforce apps built on the platform to integrate with each other.
Earlier this week in Las Vegas, Zuora, a native application on the Force.com platform, announced a deepening relationship with Intacct a financial applications provider in the Salesforce ecosystem. IntAcct is not a native Salesforce application set meaning it has its own cloud but no matter. Another attribute of the platform is its API set designed precisely to enable the kind of integration just announced.
We’re not done yet.
Zuora is one of the leading providers of specialized services that help subscription companies and subscription groups within conventional companies, to account for the sometimes squirrely (that’s a technical term) business processes needed to correctly manage customer orders, configurations, billing, payment, and finance. I can’t find an accurate number of Zuora customers but I can say they have offices in the U.S. and Europe as well as $132.5 million in venture capital. The press release says Intacct has more than 7300 customers including startups and public companies.
My point is that the platform is not some gimmick for small companies or cloud only companies or front office only companies. The cloud is for every company, everywhere. This is made abundantly clear by this announcement by two back office companies this week.
This announcement is another proof point for the platform but also a major validation for Zuora that, by this integration, is enabling Intacct customers to build and deploy hybrid business models for its customers that include conventional and subscription businesses.
This is a big deal because it adds significant subscription functionality that will enable Intacct’s users to make better decision because they’ll have more information available. And that information will not come at the cost of storing customer data in two locations and hoping to be able to synchronize everything. The two systems will operate as a single entity for those companies sponsoring hybrid business models that are in need of hybrid accounting.
Obviously, the deal gives Zuora a universe of 7300 new customers but it also gives Intacct an easy way to deliver major new functionality with no drama. That’s why I think this is a milestone event.