Eating away from below: what’s happening to enterprise software

Though definitely not as sexy to talk about as tagging, and mashups, and whom Yahoo acquired today, I think that the trends we’re witnessing in enterprise software will have a far greater impact than much of what’s being discussed.

And the most obvious trend is that the enterprise software market is being eaten away from below. My favorite case in point is Movable Type, the software which enables me to publish this blog. With a few modifications, it enabled Adaptive Path to publish it’s site. And then, as this post makes clear, with a fair bit of modification, it powers the site for SEED Magazine. What this demonstrates is what we’ve known all along — Movable Type isn’t a blog publishing tool — it’s a lightweight content management system. Blog publishing was essentially a trojan horse toward rethinking how to enable publishing on the Web.

In my world, content management systems (CMSes) have long been the enterprise software that has been the biggest pain in the ass to deal with. Typically modified from document management systems, these tools were big, bloated, unwieldy, expensive, and, most importantly, ill-suited to the task of publishing on the Web. What Movable Type did was start with the simple, and focus on supporting a true web-native genre, and then build up from there as need be.

Another enterprise hassle that I’ve been privy to are website analytics tools. These overblown metrics packages suffer all the same faults as CMSes. This was why I became so excited with the development of Measure Map — it’s site analytics “for the rest of us.” Which could evolve into site analytics for all of us. It, too, has humble blog beginnings, because that’s a well-bounded problem to solve. But it doesn’t take much imagination to see how it can evolve.

And while website development is what I’m most familiar with, I know that this eating from below is happening all over. Companies are realizing that the millions they’ve spent on “knowledge management” systems got them little more than confusing document repositories. So folks like Socialtext can package a compellingly light tool of blogs and wikis, and sell it cheaply enough that it doesn’t require budget approval from IT, and people can get their collaboration done without hassle.

And of course, Salesforce.com has completely rewritten the game when it comes to customer relationship management, and sales support software.

Through various projects with Adaptive Path, I’ve talked to a lot of people tasked with purchasing enterprise software. And, universally, no one likes doing it. No one likes talking to enterprise software salesfolks, no one likes the 3 to 6 months that the sales process takes, no one likes the 6 to 12 months that deployment takes, no one likes the costs, and almost no one likes the results. Enterprise software succeeded, though, because there weren’t many other viable options.

That, of course, is changing. These smaller point solutions, systems that actually address the challenges that people face (instead of simply creating more problems of their own, problems that require hiring service staff from the software developers), these solutions are going to spread throughout organizations and supplant enterprise software the same way that PCs supplanted mainframes.

I sure wouldn’t want to be working in enterprise software right now. Sure, it’s a massive industry, and it will take a long time to die, but the progression is clear, and, frankly, inevitable.

8 thoughts on “Eating away from below: what’s happening to enterprise software

  1. Peter,
    Hosted & bottom-up solutions have a two HUGE problem when competing with the behemoths of enterprise software–scale and customization. While Salesforce.com has figured out some of this, as a hosted solution they are still always going to battle the idea of who owns it and how to manage it. They have taken a bite out of Siebel, but they will never defeat them in the true enterprise market. Who they are beating are the middle tier and g-d bless ‘em.

    I have moved from Documentum to IntraLinks. In their own way both are enterprise software solutions. DCTM is well the grand-daddy of ECM software and IntraLinks is a hosted solution for niche markets dealing with secure document distribution.

    When it comes down to it. DCTM while totally viable for the IL market can’t compete on cost of ownership and ease of deployment that IL has, but IL can never compete on scalability and customizability at the user level. So there is a catch-22 in place for the customer. The solution is best served in the hands of the enterprise behemoth’s–site licenses. For true Fortune 1000 customers, DCTM doesn’t do a 1-off per division that uses it’s server/client products. It sells a site license. This gives IT management a ton of flexibility and the ability to offer DCTM solutions across units and do integrations more easily. A hosted solution is almost always too nice to be anything more than a division/unit/group sale, so while there are discount possibilities, they are limited. Besides once you get IT involved you loose one of the main selling points of the hosted solution–“no IT needed”.

    Last point — Integration & legacy — At the level of the Fortune 1000 these legacy tools have to be integrated with at some point, and the scale of doing integrations is really difficult without IT involvement. I know that SalesForce.com is offering great tools for doing customizations and integrations, but then you are requiring IT involvement again, making it expensive, and complicated and also taking the buying power out of the hands of those that need it. AND you are also starting the consulting services lifecycle all over again, probably the biggest reason that enterprise software costs so much and why it is so hated.

    Moveable Type, Social Text, Measure Map, these are blips on the enterprise product management’s radar and probably bigger blips on the M&A’s analyst radar for near term acquisitions.

    I’m not saying that SalesForce.com is not a total concern to reckon with, but we should bear in mind the reality that it is not even a billion dollar company in either revenue or market cap compared to those that it is competing against. Their technology is unremarkable and so it would be easy for an Oracle/Seibel or SAP to match them within 5 years and offer a hosted mid-tier solution. SF.com doesn’t have too many places to go except in breadth of services. The big guys already have the breadth and can just copy the hosted model pretty easily. And they can do it on top of superior (more scalable) technologies.

    — dave

  2. MT and WordPress [and their lesser-known but still solid brethren] indeed have radically lowered that barrier. I’m glad to see it.

    I hope MT can stay independent of the M&A route—I’m curious to see if they can build their company into a solid behemoth and keep focus.

    [BTW, Peter, your Measure Map link in the fourth paragraph is broken.]

  3. My problem with traditional enterprise software solutions is, since they cost so much, are so complex, every possible problem that could potentially be solved by the solution, gets thrown into the mix (partly to sell the solution to the organization, partly to amortize the costs over a wider collection of organizations within the enterprise).

    Is MT scaleable across the enterprise? It depends on what you mean. There is no single reason you couldn’t use MT to generate content for a large scale, high volume corporate web site, unless you start attaching organizational process, command and control issues to the basic notion of “generating content”. Is it customizable? Sure it is. Scalable and customizable for all possible variations on enterprise solutions? No way, but then again neither are the enterprise solutions. The difference being that MT doesn’t sell itself as an all-encompassing enterprise solution.

    I’ve found MT to be most useful for sites which consist of serial channels of content (be they blog posts, news releases, how to items).

  4. Excellent write-up. I have seen far too many large enterprises go with big CMS solutions to solve relatively simple problems (workflow or controlled content creation/generation). I have had a a tough time trying to figure the Enterprise CMS fascination as most have a long laundry list of things they could do, but most are not capable of pulling them off easily. Most are not efficient nor elegant in their solutions, convoluted interfaces for managing the information and workflow, and their output (everything from the URL structure to markup) is horrid and wasteful. Nearly every consultant or contractor I have interacted with in this market segment does not understand the web, browsers, not how people interact with digital information. These people think they understand the technology they are selling/implementing, but most often times fail. Unfortunately, the people buying get caught-up in the cool complicated solutions all the while forgetting the simple problems they were trying to solve.

    Excellent post.

  5. “Scale” is a slippery word. I’m imagining that software like MoveableType is (accidentally?) built to scale above the level of a single server – it’s cheap, anyone can install it on anything, and the Atom API is an equally-devious Trojan horse for synchronizing material between sites. Who cares about scale when each new group in need of content-publishing just throws up another box as necessary?

  6. Peter, I know exactly what you mean.

    This is not about hosted vs. non-hosted solutions. The issue we’re discussing here deals more with the problems that are being solved and the approach to solving them.

    Scalability issues don’t have one solution: enterprise desktop software. That’s just been the approach in the past. As Michal says, we’re talking modularity. No longer will you expect to take a year to buy and integrate a software package.

    What Salesforce.com and Moveable Type are demonstrating is that flexible, well-designed software that works for the end-user will also better serve the enterprise.

    My 3500-person company has more enterprise software than you could shake a stick at, but still the hardest things to do are get reimbursement on expenses and figure out the particulars of the travel policy.

    Over time, the high-maintenance, difficult-to-enhance enterprise platforms turn the IT resources into support robots and troubleshooters, rather than keeping them available to add features (or new software) and scale as needed.

    I, for one, am looking forward to the day when the enterprise is supported by flexible, task-appropriate software that allows me to keep my mind on my job rather than on the administration of being an employee.

  7. Dave, no disrespect, cause I know you’ve been in the enterprise game a long time, but your comment above just proves Peter’s point. I get what you’re saying about enterprise being a solution to licensing and integration needs, but it’s almost pure gibberish in terms of describing actual products that solve actual human needs.

  8. Andrew, no disrespect taken.

    I think we might be reacting to two different parts of peter’s post.

    Are the behemoth’s going through changes? DEFINITELY!!!!! No doubt that the bottom-up world is shaking them up. “hosted-solutions” is what all of them are doing for example. But this reminds me of the HUGE mistake they all made when b/c of the hype of the internet all the enterprise companies decided that they needed to have a browser version of their client software b/c it was the hot thing to do. Again, don’t get me wrong browsers are great b/c they offer wonderful deployment ease, but no customer I have ever spoken with and I have spoken with many throughout the world are satisfied with the browser experience for CMS clients. All their comments and all the lab work I reported pointed at the time (Yes, I know we now have AJAX) that we need to have the same experience as the desktop version. Now that they can do it, thank g-d some finally are. But my concern here is that the RSS/Web 2.0/AJAX hype of today that I think is portrayed in Peter’s post is what they are doing. We have to be hosted they are saying now. Next they’ll say something else.

    The other point I’m making is not to dismiss the real problems of enterprise software. No one knows better than me that Enterprise software sucks!!! Really Sucks! Sucks to high heaven. (did I make that clear?) But the best UCD processes in the world are not going to fix enterprise software and bottom-up software that Peter is suggesting isn’t going to do it either. There are HUGE cultural changes that need to happen (and well, I guess the best Design solutions do account for that). We are talking huge changes, that will get people fired (a lot more fired than hired) and in the fortune 500, the political landscape and power struggles are steep. THEN there are the consultancies. These are a huge problem as someone already noted. I have offered at one point my services to DCTM consulting as a UX expert to work out in the field (off the production line) and was told by the VP of Consulitng, “But no one asks for it.” Now maybe my sales skills were I a bit off, but the sheer blindness of the situation from customers cannot be denied.

    What does this mean? This means that the behemoths have a long time before they need to worry themselves about MoveableType.

    My last point in all this. MoveabType is great if there is no, or very limited workflow and custom data types (effecting that workflow), but once you move beyond basics which almost every enterprise I have ever had the chance to visit uses its a whole new ball game. You enter the world of customization, you enter the world of service instead of licensing and no matter what the product offering is, you raise the stakes. yea!!!!

    I’m not saying that MT is bad, and not useful for small to med, but not really for the Fortune 500,and BTW 3500 people is small compared to the Fortune 500. that is downright, Peoria. Multiply that by a factor of 10 for Ford, Microsoft, Intel, Bank of America, Pfizer, etc.

    Can MT do replication? Can MT deal w/ Sarbanse-Oxley? SEC Compliance restrictions? Can MT deal with intergration with SAP, with Siebel? with blah blah blah. These are real questions that Fortunate 500 companies need answers to.