The enterprise software industry as we know it is changing significantly. Recently, it’s seen a rise in ‘best of breed’ apps, which in turn, has contributed to the fall of the enterprise monopoly. More specifically, there are three factors fueling this change, including the reality of the problem, the collective app economy, and new technology enabling the next generation of business applications.
The reality of the enterprise problem
Over $600 billion is spent on enterprise software each year. And to date, modern enterprises have had two options: buy big, unfocused packages that excel in nothing; or buy small, focused ’best of breed’ apps and risk an integration nightmare.
First off, the major software platforms purchased by IT departments provide tools to make thousands of different features for thousands of different types of users. These products are cumbersome when they are overloaded, often perceived as hostile by the user, and difficult to learn. What’s more, this obstacle isn’t bypassed when they move to the cloud in an attempt to keep up with changing trends. But since these products seem to solve everything, they’ve been successful for quite some time and become the status quo in the software market.
In the meantime, the ’best of breed’ apps have been the preferred choice by business executives, and they have increasingly received support among all employees. With the consumerization of enterprise technology, products now enter a company from the bottom up, rather than the top down.
In the private space, you can easily compose your own suite of software tools to accomplish a task. To throw a birthday party, for example, go to the app store and get a calendar app, a social app, an invitation app and you’re set.
Those who have grown up today with the ease of an app store are entering into the positions at enterprises. They want their daily business tools such as accounting and smart marketing tools to be as accessible as messaging apps and car navigators. Enterprises must endorse this through the fast and easy delivery of efficient tools to employees who need a certain software to accomplish a special task.
Although these have been the two prevalent options among enterprises, the reality is that 68 percent of IT projects fail. These failures are forcing CIOs and CEOs at enterprises to seek change from the status quo.
The collective app economy
When multiple small apps band together, they can upend the status quo – this is the new collective app economy. Today, new technology is allowing this to happen:
- Allowing enterprises to mix and match best of breed apps without the need for complex and expensive integration projects.
- Allowing each vendor to be on top of its own food chain.
- Allowing new business models to outperform the existing ones in the enterprise software business.
- Allowing app stores, for example, to deliver interoperating apps and to be truly polylithic.
The ’best of breed’ app vendors often have an innovative edge because of their focus and domain knowledge. Though they still cannot check off as many boxes as the big vendors with their ecosystem of piggy-backers, and buyers shun complex, expensive, lengthy and risky integration projects.
The incumbent software platforms will not be replaced by a single app, no matter how elegant, intuitive, and powerful the app is. That’s because a single app can never replace the full functionality of the large players’ platforms. The best of breed apps must be able to be mixed-and-matched without the need for complex integration projects.
A single mobile payment app, for example, cannot replace a full retail solution. However, combining best of breed apps for accounting, product stock and point of sales results in a virtual retail suite that can outperform the larger players.
These new apps are promising and must meet two critical conditions to gain any significant market share:
- It must be possible to run multiple independent business apps by different vendors side by side in a modern web user interface. Together they create your virtual business solution.
- The apps must operate on the same set of data without knowing about each other. All apps being aware of all other apps simply does not scale. APIs have been the peer-to-peer glue between apps for 50 years, and independent business apps still do not operate on a single set of data.
As new technology is now solving the vital, if not all, components of the ”shared data and shared screen” problems, this will have a major impact for enterprise software vendors and enterprises.
The next generation of business applications
Technology comes before revolution. Always. Though not typically obvious when first introduced, the importance of truly novel technology is not something reserved for tech geeks; in fact, it is and has always been vital for the evolution of the human race. Modems and computers were not invented to power the web. Rather, the web was discovered because we had computers and modems.
The new generation of in-memory application platforms will not only transform the database industry; it will forever change the enterprise software industry. How? By combining an in-memory database engine, data processing and application server into a single business operating system. This technology can deliver the capabilities of a huge data center in that single server. It can allow many small independent applications in combination to replace a monolithic application. It can remove the need for a single application to be the master of all others. Plus, the speed, radical efficiently, low costs and openness will help drive fast and wide adoption.
Time to band together
The enterprise software landscape will change dramatically in the near future. The new software landscape will be simultaneously fragmented and connected, with new business models created by collaboration among many small vendors.
It is time for vendors and talents to band together in order to provide businesses with the freedom to use the best tools needed to meet their goals, instead of being locked into a single vendor that is a jack of all trades, but master of none.
Post originally published on Gigaom Research Blog.