The CIO, Enterprise & Business Applications

Dave Girouard of Google highlights that technology is leading companies to spend 75% to 80% of IT budgets simply maintaining the systems they have already. Besides a shortage of money, Girouard notes CIOs face strict regulations and an impending brain drain with many CIOs in particular are really in a difficult situation, and innovation isn’t something they can spend the majority of their waking hours talking about. The information technology business as it pertains to large businesses has become a lot of maintenance IT officials approaching retirement. The key point to note here is that a lot of things that people think of as core IT functions need to disappear into the ether so that the IT organization can properly focus on the value-added [activities]. I like the part where Girouard says that the “consumerization of information technology,” describing budding efforts to bring the user-friendly features of consumer products to the workplace is getting center place and this pales the efforts of enterprise technologies makers who tend to add lots of features as a way to improve a product, but instead the extra bells and whistles often make products so complex they detract from the user experience.

As I see it, he has got the issues correct – most of his solutions like security managed by third party or SaaS looks too far fetched for CIOs’ to even consider them as a serious option. In general inside large enterprises, application strategy has traditionally been centered around packaged applications; it is becoming broader and open to modification and adaptation. The challenge here is that business change is inevitable, but the application often does not keep up and is certainly not the catalyst for the change. The enlightened business users realize that the interplay of business strategy and application support demands a more-robust application strategy that can help drive tangible business results. From a CIO’s perspectives the ability to stretch applications with no disruption to business is the most likely place for the IT department to show significant value to the business. This is where tech vendors stake their claims that their technologies are the best suited to make this happen. Vendors are generally motivated to tie the user organization to them, making their solutions indispensable and giving them a long-term revenue stream. Add to this that not may people at the top understand technology. The people at the bottom that do are not mature enough to sell it to the top. This results in a discoherent vision of technology. The Fortune 500 companies are very likely to be atleast a decade behind on technology. It is easier for CIO’s to stick with what was done before and works, even if there are better choices out there. Most big companies are very risk averse. The new dynamics of enterprise applications require a dramatic rethinking of business and technology models for sellers. With too many software products and companies looking for a problem to solve, this is the key thing that they should focus on. All these have to be accommodated when we see the boundaries between applications, operating systems and middleware disappearing.

While covering the tumult that is happening in the enterprise software space, I recently wrote, atleast in respect of the enterprise software, which is closer to the heart of CIO’s its clear – as I had always been telling - while vendors are addressing market realities to keep their industry vibrant and with consolidation fever ahead - one could clearly hear the voice :whether customers would benefit a lot because of this, add the need to make more innovation happen and absorb faster. Observers tend to overestimate the creativity and innovation that entrenched technology companies can bring to a particular problem and underestimate the effect of business-model conflicts that lurk behind the scenes ( as applicable to all majors). Innovation need not be always of the disruptive type but every type of Innovation counts. In today’s hypercompetitive world ,simply put innovation is non-negotiable and innovation streak is of very high value to enterprises. As I wrote recently , the enterprise software market players will have to reflect and embark on an important restructuring and transformation to become more vibrant, broad based, innovative and bounce back as a serious contributor to the growth of the industry ecosystem and the business at large.