Opportunities in the impending tech fallout

Richard Koman writes an interesting piece on what he sees as the impact of the current financial crisis. The extract from Jay Bhatti, cofounder of people search engine Spock caught my attention:

The big players like Oracle, Sun, Microsoft and SAP … will feel an immediate impact. Financial Service firms are some of the biggest spenders of IT budgets around. I can imagine memo’s coming from the top to CIOs at banks telling them to cut costs ASAP. Naturally, they will start to push back on upgrades to new software (sorry Vista), ask for greater concessions on license pricing, and in some cases, abandon plans for new technology deployments such as new hardware or new ERP applications.

Not so fast Jay. For every crisis there is opportunity and this is one such occasion. Sure, Sun will have problems but what of the others? SAP and Oracle don't have the kind of exposure to the financial services industry that Jay attributes but that doesn't mean they will not come under pressure. Microsoft is a special case as it is bought by the truckload by the millions of SMBs around the world. While we tend to concentrate on the big enterprises, the SMB sector is often the first to feel the pinch. Even so, Microsoft has so much cash at its disposal it should be able to ride out the storm without too much difficulty.

SAP and Oracle are a different proposition. Next week sees the start of Oracle OpenWorld. I don't believe there will be anything more than a muted discussion around the new Fusion apps. Beyond that, a general rallying of the troops is definitely required. We will be able to judge how it goes from the enthusiasm generated by Oracle's bloggers and Twitterers. I am particularly looking forward to hearing what Eddie Awad has to say. For those that don't know, Eddie is an Oracle rock star customer but he's also intensely pragmatic. A great combination that provides the stamp of authenticity that is often lacking among enterprise bloggers.

SAP on the other hand has an opportunity. Its ongoing problems with getting customers to line up behind a 30% price hike in maintenance revenues is not going away. Earlier today I saw a Twitterstream from Jim Spath of Black and Decker that described explanations of the 'new regime' as 'total baloney.' Jim's an influential SAP Mentor. His voice counts. Here's the comment in context:

Cordrey [SAP] answered my comment that solving problems takes longer now than 10 years ago by saying Solution Manager instead of OSS. Total baloney.

A few Tweets later and Jim declared:

That's all the teflon I can take. Outta here.

Does that sound like the voice of a happy camper? So what might SAP do? Simple - defer the price hike for another time and work on getting their ecosystem into shape, delivering compelling TCO so that the support services take on a value of their own. That's not just about implementation and support but about controlling the whole environment.

SAP will argue that it's not in a position to make such radical change but then how can it boast more than 50% of the world's IT touches an SAP system without taking responsibility for the whole ecosystem? A few of us see this as a golden opportunity across multiple dimensions. Whether SAP takes that opportunity in time to make a difference is another question altogether. Companies like SAP warn that they move slowly and use it as an excuse to defer hard decisions. They don't have to if the right executive sponsorship is in place.

Richard didn't mention IBM but I will. They're in the services game, currently making huge plays in the Enterprise 2.0 space. How they fare remains to be seen but my guess is they will muff it in the short term. I'm not convinced they know how to implement without going for the upsell jugular. That's hard to pull off in a cost constrained world. Similarly, they are more likely to be affected by a down turn as they provide wads of integration services to the financial community.

One company no-one mentions is TIBCO. They are so tied to Wall Street banks that their business can only take a huge hit. TIBCO has been remarkably quiet the last few years and rumor has it they're desperate to find a suitor. Right now, it is unlikely they will spring a surprise but watch for a downbeat forecast going forward. The same goes for Progress Software though they are more diverse and so better insulated. The recent Iona acquisition will help.

What about the startups? The good news is that the last few years has seen very little public money going into the startup world. IPOs are rare and arguably impossible right now. That leaves investors with more latitude counterbalanced by the dash to cash - or rather gold. I also see a shakeout among the burgeoning collaborative plays. There are too may of them that don't have differentiated offerings but which are riding the tired social media story. There are exceptions but I suspect we'll see many of these vendors in the dead pool before the end of 2009. It won't be a bad thing.

That just leaves SaaS and the open source community. My sense is they could be real winners as enterprise turns more seriously to their offerings as a way of getting what they want through supported lower cost models. For me, the current poster child isn't MySQL (now owned by Sun) or Salesforce.com but MindTouch.

MindTouch is on a roll at the moment. They are hitting high download levels for their OSS product. The free wik.is site is getting a lot of attention in government and education while their supported model is generating decent revenue at departmental pricing. But what really sets MindTouch apart for me is the way they are positioning Deki as a way of providing the lightweight integration fabric many large enterprises can implement and from which they can derive genuine value. My colleague Oliver Marks has more to say about this.

I'm often accused of being curmudgeonly and with goo0d reason. But on this day, as the markets squirm, I am surprisingly upbeat. The opportunities are there and it will be customers who benefit. The losers will be those who go into their shells and don't exploit the tsunami of innovation. That counts for both buyers and sellers.