On Enterprise Software Strategy

Tom Foremski has an excellent recap of the discussions with Jeff Nolan of SAP : While the complete article looks interesting, the summation of the approach of the three principals of enterprise software and how fare on the intersections look interesting.

- As Jeff sees it, Oracle is probably assembling a middleware stack and wants to use open-source components so that it can offer a subscription based pricing structure. This is exactly the direction that Sun,CA & other IT vendors are moving towards.

- SAP's strategy is different from that of Oracle, IBM, and Microsoft because it believes that the value is in the processing of the data. Its software is reconfigurable which gives it a lot of flexibility(not all may agree on this in toto) because it doesn't have to create new code–and it owns its own vertical applications.

- IBM focus on the business process - its recent announcement of a new facility in India that would produce business process modules based on its IT consulting work.Such modules would integrate applications with its middleware, third-party applications–and could also be sold with an IBM hardware component. Now how does each of their strength play out in intersections :SAP believes that the value is in the processing of data, while Oracle may seem to believe that its database dominance may give it a huge advantage as databases almost hold all applications. The Oracle strategy could hurt IBM because IBM does not have any enterprise applications. Tom points to Ray Lane’s view that IBM ought to buy SAP to protect itself,the threat to SAP may could come from the direction that it could become squeezed at the top by IBM's business process push–and Oracle pushing from its database customer base into enterprise applications besides custom crafted IT applications.

My Take : Excellent perspective no doubt – but the entire focus seem to be in protecting the turf and expanding the market reach by using scale as the weapon – impressive as it looks. From a customer perspective, the expectation of consolidation lay in better returns, lower cost of operation and ability to future proof enterprises by embedding newer and newer technologies elegantly – a weak link for the enterprise majors. As I wrote earlier,the software companies have a huge untapped source of credit that they could use to fund future growth & the software companies will steadily increase their use of debt to fund growth as the industry continues to mature – This could keep fanning the wave of innovation in enterprise software. I would like to know from an integrated perspective how these giants are trying to move towards being the applistructure players. As Erik Keller points out the applistructure players needs to provide an integrated structure for applications and infrastructure. With applistructures, some of the key expectations are to continuously decrease the operational cost and permit upgrades and product enhancements on the fly. Ask somebody today with installations from major technology players what it’s the trend towards cost of operations and what an initiative like migration means to enterprises – phenomenally expensive and too often enterprises migrate due to push and not pull fearing that vendors would not extend support anymore. Many CIO's have lost their jobs owing to migration mess.In my view the big players – well entrenched today need to be assessed in terms of innovative approaches towards offering new solutions, showing genuine desire and align actions towards bringing the cost of operations down - its time the leaders in the enterprise software space begin to be assesses along these lines.