The old software model dies here

The enterprise software landscape is shifting faster than most people think, and most vendors and their customers are going to get left behind.
Written by Phil Wainewright, Contributor

There's no doubt that the enterprise software landscape is shifting. The question is, how far and how fast? I think it's happening faster than most people think, even those who are looking to the future.

In the past week, there have been three fascinating examples of how the new model of enterprise software is already racing ahead of the old model.This future vision is not vaporware; it's available now While today's incumbents dither over how to transition to new licensing models as they slowly migrate to more collaborative services architectures, tomorrow's leaders are forging ahead to set completely new parameters for simplicity, control, ease of use and flexibility in the next generation of enterprise software.

That future generation of applications gives business users the power to select and present real-time information exactly how they want it with just a few mouse clicks; allows developers to roll out new functionality instantly to next-generation mobile devices without recoding; and is deployed on infrastructure software that costs nothing to acquire. This future vision is not vaporware; it's available now. It can be up and running in your organization this year. The only catch is, it's not available from a single vendor ... yet. But that's only a matter of time and M&A.

My first example is one that's garnered the least coverage, and yet in many ways it's the most spectacular. Last week, NetSuite announced version 11 of its on-demand business suite, which it will be delivering across its customer base in a phased roll-out over the next three months. NetSuite isn't really thought of as a technology pioneer, but it's been using AJAX technologies for far longer than the term AJAX has existed — I remember being blown away by the richness of its web-based user interface several years ago, when it first introduced its real-time business dashboard concept.

The current release really pushes the envelope of what's possible using AJAX technologies, particularly in its reporting interface, which allows users to design or modify report layouts in a drag-and-drop WYSIWYG environment that's so intuitive you don't have to think about it all. You can search for field names, drag them into the report layout, drag them again to rearrange the layout, and then publish or print the report — and all this with live data. You can even make the data editable, right there in the report, if that's an appropriate thing to do.

What I find exciting about NetSuite isn't the technology, it's what the vendor has done with it — it's given business users control over their information. There are other things in the new release that follow this theme, such as the ability to add custom workflow using server-side JavaScript that can incorporate user-editable rules. Unlike traditional software customizations, these automatically migrate from one release to the next without any recoding required.

My second example is today's acquisition of Sendia by Salesforce.com to launch AppExchange Mobile. Imagine the headaches enterprise developers face when contemplating rolling out functionality to users of the new generation of mobile devices, with all their multifarious technology platforms. The traditional enterprise software solution involves buying a swathe of new technology, paying a systems integrator a seven-figure sum to implement it, recruiting a team of experts, and deploying it several months after the mobile device in question has become last year's model.

Compare that to the new model, in which ... oh, it works already. You already have an application hosted on AppExchange. You already pay the Unlimited client subscription. Which means you already deployed to that device. The only thing you may have to do is tweak your application to make sure it fits with the screen and keyboard quirks of that particular mobile device, but that's only going to take a savvy developer a day or two to sort. There's no contest here. This is on an utterly different planet from the old model.

Finally, all of this is on a services model in which the software itself has no inherent value. Now that Red Hat has bought JBoss, its stack covers all the bases from operating system up to business process management. Infrastructure software is free. There's no secret sauce any more, it's all open source.

Instead, what you pay for is the implementation and the support. You pay for the capability, rather than the promised (and all-too-often unrealized) potential. Or, in the case of an application provider like Salesforce.com or NetSuite, you pay for the operational capability, delivered and already working. Plus their ability to continue to innovate within this new environment, unrestrained by the need to support legacy software and a legacy software business model.

I think the majority of mainstream vendors — and their customers — have failed to recognize the pace and extent of change because they underestimate the weight of their own inertia. They acknowledge the need for change, but they're also conscious of the disruption and pain required to embrace it. So they act slowly and tentatively, hoping that if they wait long enough something will happen to make the change easier. What actually happens is that waiting makes the change even more painful, and they'll end up forced into it anyway by the competitive pressure from others who had the foresight or the opportunity to act when they chose not to.

All this inertia means that vendors will continue to be reassured by their customers that they can continue to delay moving faster. In reality, what will happen is that both they and their customers will be overtaken before they even notice it's happening.

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