The Next Ten Years
A door closed this quarter and another opened. We’re now oriented on a new computing paradigm that will serve us for the rest of the decade. There is now broad agreement on the big IT issues of our time and they can be summarized in the Four Big Buzzwords mobile, social, big data (and analytics) and real time.
We’ve been bantering these words around individually and in groups but in Q2 2012 most vendors came to a tacit agreement that these would be the issues around which marketing campaigns would orbit for the intermediate future. Since Oracle’s CEO Larry Ellison is the original proponent of decadal cadence I will use his company as the measure of the short timeline that brought us to this moment.
April 2009. Oracle buys Sun Microsystems. The purchase of a failing Sun was seen as a retrograde effort. The conventional software company buys a conventional hardware company and many of us expected them to fade into the sunset together. It didn’t go that way.
September 2009. In an interview at the Churchill Club Ellison said that cloud computing was a bunch of hot air. Less sincere words have rarely left his mouth as subsequent events would prove. No matter that by then, Ellison disciple Marc Benioff had already built a billion dollar business offering nothing but cloud computing as a delivery mechanism. The prior decade bred an entire industry devoted to cloud computing and multi-tenancy but no matter. Ellison had the database that drove these cloud companies and not much else. He also had a huge installed base dedicated to conventional on-premise computing, so he was a late arriver intent on making up ground. The first step might have been this bit of indirection.
OpenWorld 2009. Oracle announced a new strategy and line of hardware starting with Exadata a huge database server with monster truck-like capabilities for serving data and crunching it into submission ten times faster than conventional technologies. Exadata was followed by Exalogic, a compute server and Exalytics an analytics appliance. There were other things too. Before long little boys playing in sandboxes had traded their toy trucks, backhoes and other construction paraphernalia for Exatoys and Oracle had announced its engineered systems strategy. Ok, I made that up just to see if you are still with me.
2011 Anthony Lye plus Oracle’s checkbook proved to be a potent combination as Lye developed a vision of Fusion driven applications and business processes of tomorrow. Lye bought five companies proving that while you might not be able to buy love you can certainly buy R&D. By the end of 2011 Lye had purchased ATG (ecommerce), RightNow (customer experience, service and support) Endeca (ecommerce and business intelligence), FatWire (web content and web experience management) and Inquira (service knowledge management software). The combination, when knitted together positions Oracle as a contender in the Four Big Buzzword Categories.
But it wasn’t just Oracle that was making moves. As early as late 2010 Microsoft and then others began preaching a gospel of multi-tier ERP, a strategy that would keep existing ERP systems and their pricy maintenance contracts in place while providing much of the new functionality required by the Four Big Buzzwords through a second tier of ERP from up and coming players like NetSuite and Zuora.
The approach ended a potentially disruptive moment for ERP vendors and their customers who were beginning to contemplate rip and replace on a scale not seen since four digit date formats were all the rage. But beware ERP vendors, you are being surrounded and at some point you will be made irrelevant by the increasing functionality of the second tier and at some point there will be a bloodless coup d’état.
So what happened this quarter is that one ERP vendor after another admitted defeat of a sort. No one any longer pooh-poohs cloud computing (even Ellison) or questions the validity of social technologies in business. It’s all SOP today in what some are calling the post-digital era. Post-digital doesn’t mean we’re beyond it, simply that it’s established fact and beyond debate just like evolution, global warming and a round earth are in most precincts today. Yes, there are laggards who haven’t bought into the message yet but increasingly they are to be pitied, not argued with.
So, as they say in the reality shows, Who’s safe? And Who’s going home right now?
Well, as it happens very few need to go home provided they’re cloud oriented all ready and that they’re at least making noises about the other three Big Buzzwords. Companies entering the market with anything that enhances the two-tier strategy will be welcome and some, like NetSuite, which has announced a defacto three-tier strategy should do fine.
In the years ahead look for the following ideas to gain primacy in business and enterprise computing as the post-digital era gains momentum.
Increasing use of the Four Big Buzzwords. This will show up most obviously in mobility technologies but they will be supported by increasing use of centralized analytics crunching big data derived from social media.
Social will continue to be a big draw, not so much for what we know of social right now but for advances such as gamification that will become key drivers.
Multiple-tier solutions will continue to blur the distinction between on-premise, cloud and single vs. multi-tenant.
We will need to turn our attention to the internet of things later in the decade as machines increasingly talk to machines a la buy more milk, eggs and bread.
The key battleground will become platform and development tools. Increasingly, the goal in business is to project agility through the capacity to change with customer demand. Tools will be important but platform will be key. Platform increasingly is the place where security, social, mobile and all the other Big Buzzwords have to be built in. You can’t add any of them on after the fact.
Platform therefore is key and positions companies like Oracle (Fusion) and Salesforce (Force.com, Heroku, Sites.com, Database.com), NetSuite and others in the catbird seat. Vendors with older platforms rejiggered for the cloud may not fare as well.
So there it is. They’ve figured out what to do about cloud, as inelegant as it might seem, they’ve embraced the big Four Buzzwords and for the next several years, provided the economy holds up, we’ll see renewed competition as different vendors compete on slightly different permutations of a similar story. We can already see Salesforce focusing on the social enterprise, Oracle the customer experience, NetSuite commerce, Microsoft catering to its large installed base with cloud versions of the things it used to sell in boxes.
SAP will do something but it’s still hard for me to figure out what. They’re working with NetSuite according to Zach Nelson, CEO of NetSuite and Business by Design appears to be catching fire. Never a strong marketing presence they need to get an elevator pitch for a small building.
Later in this cycle we’ll begin talking about video and voice embedded in the front office suite. They’re about where social technologies were in 2006 and moving toward the center.