Monday, April 2, 2012

Enterprise software market is ripe for big disruption

I wanted to share a couple of articles that I ran across today that illustrates how enterprise software market is ripe for big changes.  As I wrote earlier about enterprise software, there is an big opportunity for disruption for enterprise software market.

Glory days of Oracle may be behind us
unless it reinvents itself
WSJ ran an article today talking about how Oracle customers are frustrated with high maintenance fee.  Although customers are paying annual maintenance fees, most of them are forced to do so because of "end of support" of earlier versions.  In order for customers to upgrade they must stay current with annual maintenance subscription, and they have no choice but to continue to pay Oracle to get software upgrades.

It used to be normal for big enterprise to make a top-down decision about consolidating one vendor's product to reduce the cost of fragmentation.  As a buyer, it made a perfect sense to choose one vendor rather than multiple vendors.  But often these buyers were not actual users.  Big if, which often was not true, was whether user adoption will follow once system is deployed.  Enterprises assumed once you build it, users will follow.  Anyone who worked with enterprise system will know this is not the case.

What changed?  Software as a Service.

Now everyone who has a credit card and reimbursement form can sign up for a new service without a big upfront cost to access a tailor-made solution.  Take Amazon Web Services for example.  You don't need to spend the upfront cost of setting up all clusters of virtual machines to set up a quick website.  You can set a site up next to nothing, and pay as you scale your service.

As Gigaom covered today, Gartner is warning IT teams to get ready for software on the cloud.  Because of consumerization of IT, customers will start deciding which services to use and bringing them in to work place.  IT teams should transition from top-down implementer of technology to bottom-up enabler for end-users of technology.  More and more you hear stories about enterprises allowing employees to bring in their own devices and start using them for work.

As number of connected mobile devices ramp up, more people will get access to cloud services on their finger tip.  Expect a big transition out of traditional enterprise software model.

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