Corporate software: main trends and why they are important
The applications that enterprises work with are undergoing major changes, but business is a very inertial system. We will consider some of the key areas: support for the cloud, mobility, consumerization and business analytics, which shape the situation in the enterprise software market.
Not so long ago, salesforce.com first published a list of ten major enterprise software vendors. The appearance of SaaS providers among the IT elite speaks a lot about the growing importance of cloud applications for business.
The “cloud” may become popular, but Salesforce.com revenue for 2013 was only $ 3.8 billion, far behind the $ 65.7 billion earned by Microsoft, and even more than the total 142.9 billion earned by four large Enterprise software vendors: Microsoft, Oracle, IBM, and SAP.
Although the system is highly inertial, the clouds and SaaS infrastructure, along with several other technological trends - mobile applications, analytics, and consumerization - are fundamentally changing the situation among corporate software. The diagram below shows how Forrester Research , an analytic company , represents the forces that drive changes in business applications.
The heyday of the “cloud” and patterns of transition to the use of services [as opposed to the purchase of goods] are some of the biggest shifts towards the creation, deployment and use of enterprise applications. The cost of the global “cloud” market will increase to 191 billion dollars by 2020 from 58 billion in 2013. According to Forrester, 133 billion (out of 191) will bring "cloud" applications to the market.
Cloud computing can be seen as a major threat to software that needs to be installed locally, as well as to those who supply it.
“For them, such prospects look frightening, because we can easily imagine a world in which people say:“ I will purchase order management software from one supplier, a master data management system ( MDM) - from another, the software for working with vendors - from the third, and I’ll create a single system out of it - or the semantic network will do it, ”says George Lawrie, Vice President and Forrester Research Analyst, ZDNnet.
According to Lori, in order to somehow counter the growing popularity of cloud services, major enterprise software vendors are starting to work with companies such as Accenture, Deloitte, Infosys and Wipro.
“Why not become a cloud service vendor themselves? Create a managed service — a turnkey product from Oracle, SAP, or anyone else — and we will all call it cloud, ”says Lory.
“If you talk with large companies, you will hear the following:“ Yes, we have been providing cloud services for many years. ” But they just call them cloudy. I recently finished working with a company in which they said: “Well, let our products not be cloudy. Well, what's the difference? As the saying goes: walks like a duck, quacks like a duck - that means I will call it a duck. The same with the cloud. "
Another approach is taken by SAP as part of the Business ByDesign program . “They say,“ No, no, no, this is truly a native cloud application. We wrote it from scratch. ” But they did it too slowly, ”says Laurie.
“This product does not provide for financial control at all. At first I thought: why then did they create it? The answer is obvious: in order not to “devour” your own business. They say: “This is for service companies. And you are an industrial company. Your business is much more serious. You need to install software on work computers and create your own IT service. ” And most industrial enterprises believe this. ”
Go to the cloudand the model of using services was taken by surprise not only of vendors, but also of large users of locally installed software, says Simon Wardley of Computer Sciences Corporation. “If we are talking about corporate IT and all the changes taking place in this area, that ERP and CRM are becoming more of a commodity that the services provide, then all of this is predictable changes that we have known about for quite some time,” says he.
“This is a process of transition from innovation and obscurity to a product, service, process put on stream,” adds Wardley. “This affects not only the vendors, which can be stopped by their own inertia and attachment to existing business models, but also on companies that consume various goods and services of these vendors. Moreover, the impact is associated not only with the efficiency and ability of competitors to create products faster, but also with the ability to quickly get past the barriers to enter your business. ”
A study of corporate strategy, in which Wardley studied 150 companies, showed a lack of understanding by companies of the fundamental changes in the field of corporate software. “The companies create excellent, detailed strategies that answer the questions: How? What? When ?, but almost not touching the question Why? Although it is precisely this question that determines 60-70% of what others are doing - be it cloud computing, Big Data or social media. Companies operate in this environment, but do not understand it, ”he says.
“Think about it - why the general gives the order to bombard the hill. He does not do this because he has a consultant who reports that 60-70% of generals give such orders, and therefore he needs to act in the same way. ” The lack of insights causes obvious problems in the use of technologies, such as the cloud or the transition from products to services.
“We had a lot of time to prepare for these changes. Back in the mid-2000s, everything showed that these changes would happen, but the companies remained unprepared, ”Wardley notes. “By analogy with experience gained, best practices from the world of selling goods, companies continue to be inert, but best practices from the world of goods and best practices from the world of services are two different things. Companies that have been strongly influenced by the current changes are usually those who do not know how to analyze the current situation. They wonder at predictable things. ”
Habitual or convenient?
Services like SaaS will occupy their niche, but will not replace everything, says Roy Illsley, senior Ovum analyst. “Most likely, cloud services will occupy 60-70% of the market - most expect this,” he adds.
But the impact of SaaS is not limited to this - the cloud is changing our attitude towards custom-made applications. “The SaaS model has triggered a revolution - for a number of things, company representatives are now happy to say:“ You know what? We needed to create a custom application. But now what we needed to do to order has become the standard for cloud applications. ” This is the exceptional value of ServiceNow and Salesforce, ”says Illsi.
Forrester’s George Laurie emphasizes that people tend to buy standardized systems for capturing information and create customized systems for interoperability. “Systems that provide interaction are now being created on the principles of consumerization and can vary greatly depending on the audience using them,” he adds. “For example, no one uses the basic interfaces that SAP provides. Everyone always - absolutely always - creates their own interfaces, optimized for the company's experience and the needs of its employees. ”
However, Simon Wardley believes that businesses may be fooling themselves by extolling the significance of their customization. One day he asked a group of one hundred CIO the question of how many of them use ERP systems. “All one hundred hands raised. Then I said: “Well, if all of you have such systems, then this is a consumer goods.” A pair of hands rose into the air: "No, this is not a consumer product!" “They thought it wasn’t, because they made customization that made their systems unique in their eyes,” Wardley explains.
“Then I began to find out from them exactly how they customized their systems. Of course, no one wanted to go into details, but I still persuaded one CIO to give me an answer. Then I asked everyone in the audience if anyone else had done something similar - and again everyone raised their hands. This CIO group spent billions of dollars a year on complete customization of roughly the same systems initially and brought them to almost identical results, which nullified the whole value of this process, ”says Wardley.
According to Ovum analyst Roy Illsi, the effect of companies like Salesforce.com was to change the way they use business resources. For example, now many companies are happy to work with standard CRM-systems in SaaS format. “Now the systems are the same for everyone. Now the dog is wagging its tail, and not vice versa, as it was before, ”he says. “Of course, the products may be slightly different from each other - in case someone continues to need a product created“ on order ”. But, as a rule, [from the point of view of the software used], there is a feeling that everyone in the world is doing about the same thing - so how to distinguish one company from another? ” The difference is not in the applications used, but in the fact that the company does not see and cannot copy its competitors, Illsi adds.
“This is not about any program that tells us where the buyers purchased product X, or that their balance is Y units - because now almost any software can do it.”
Inertia and other obstacles to the cloud
Nevertheless, the attractiveness of cloud applications may not be enough to overcome the inertia of the business, says Simon Wardley. “Of course, existing consumers may retain some kind of resistance to such changes for a number of reasons, such as existing procedures, political capital. Very often, inertial barriers of a very different nature get in the way of such changes, ”he says. “It's hard to say:“ I just implemented a multi-billion dollar ERP system, although I could buy it a replacement hundreds of times cheaper ”and not look like a fool.”
According to Wardley, inertia is an integral part of both organization-users of corporate software and vendors of such solutions. “People will always try not to leave their homes. They always want to return to the past - even if the changes are worthless, they want to see them somewhere in the future, but not now. ” “But unfortunately, you cannot customize large-scale production and receive goods from components that are not goods in themselves. It won't work out, ”says Wardley.
But there are more significant business reasons to adhere to traditional approaches and use software installed on local PCs, says Roy Illsi. “There are still traditional companies that use applications created exclusively for their needs. So if you manage a bank, your main banking applications will most likely work from the mainframe, ”he says. "These programs are radically different from the set of corporate applications that companies like PayPal use - they can be ranked among banking organizations, but they don’t carry all the baggage of tasks that a traditional bank has." “Such companies conduct business in a slightly different way, also because they entered the market relatively recently and are not burdened by the mass of existing programs,” Illsi notes.
"If the bank has basic applications that are already working, you will not throw them away and spend millions of dollars to replace them with something that you are not completely sure about."
However, now ERP elements are divided into their constituent parts and are used by companies as separate programs. “Because [components] need to be combined, but since they can work together, receive and make information, you don’t need a monolithic mega-application for this, which will manage everything without exception,” Illsi explains. “These may be separate fragmented applications. They can be run locally, but data and management should remain centralized. ”
As an example, he cites airlines that use the iPad to accommodate passengers without printing a ton of documents, and restaurants that use tablets to book, accept orders and record visitor information. “The issue of mobility continues to gain momentum - and to ensure it requires applications that will work differently [compared to traditional enterprise software], because, as a rule, you don’t need a whole ERP on a tablet. You will have to act a little differently, ”says Illsey.
"These" slightly different actions "may relate to the use of a front-end application, the task of which is the transfer of information, and a back-end application, all of which is to process this information - now this is already the standard." “The way you make important decisions regarding your indicators, group information, present it on the stock market or, for example, work with stocks - all these standard tasks can be solved with the help of heavy-duty computing, but now, as a rule, all this is done in real time and not otherwise than using batch processing. ”
Mobility, real-time applications, and consumerization
The growth of methods for delivering applications to mobile devices has led to the fact that today mobility and the need for real-time information have become, along with cloud technologies, the largest trends in the development of enterprise software. “The cloud, SaaS helped reduce the functionality of enterprise applications - part of the tasks that corporate software solved were leaked to the cloud,” says Illsi.
“But the trends in mobility and real-time information acquisition require the use of solutions that can more quickly deliver to the most diverse geographic locations the full amount of data and capabilities needed for employees using mobile devices.”
“You don’t have to expect them to come to the office, sit at the computer and stare at the green letters on a black background to fill out the form or accept the order. This time has gone forever. ”
Consumerization has changed not only the nature of mobile applications, but also the attitude to corporate software in general, says George Lory. “If the application is unsympathetic, if it cannot be used from fashionable devices such as the iPad, they will not use it.
Consumerization also created an obstacle for vendors to distribute applications, ”he says. “This process is much more confusing than distributing applications within a client-server architecture, because these new applications can be used in any context, and you can deliver them not only to your own employees, but also to your customers or even your customers.” “As soon as you start working in this way, you will begin to form a different type of infrastructure, because in the new environment you will not know for sure what impact your system may be subject to,” explains Lori.
“First of all, you need to break down your applications into separate components. Therefore, all your efforts to create a monolithic system (“This should all be in one database, otherwise we will not be able to work”) can be considered futile - this approach no longer works. Everything has become much more complicated. ”
Just like user applications, business software must be intuitive so that you can get started right away. “You cannot just tell people that they first need to undergo a weekly training - and you cannot continue to tell them that they are wrong. But before, work with corporate systems was carried out exactly like this: if something does not work, the user is to blame, ”continues Lori. “This approach is unacceptable for those who are used to booking holidays online or ordering purchases from Amazon.”
In addition, companies have reduced time and resources for employee training, adds Roy Illsi. “Now organizations need their employees to stop fencing themselves off from others with their narrow specialization so that they can play different roles. They need people who are ready to act not only within the framework of those areas of business with which they are well acquainted, able to use various technological tools. And this means that the process of using software should not be shrouded in a veil of narrow professional argo and specific manipulations, which are difficult for the uninitiated to understand. ”
Thus, the creation of enterprise applications should be based on the following principle: the application should not only fulfill its tasks and be convenient to use, it should provide the ability to work together, exchange information, should be easy to deploy and support - if possible, the user should be able to independently solve all your issues related to the product. “Now developers are investing significant amounts in both the way the application looks, and in a positive user experience, and in simplifying the management of it from the backend point of view, which reduces the cost of using the product,” comments Roy Ellsey.
Automation, self-service and analytics
Forrester analyst George Lory believes that the driving force behind reducing software costs and increasing the usability (both for business and technical staff) is an active move towards more and more automation.
“There is a certain limit to which one or another task can be automated. We came across this on the example of server virtualization, networks and data storage. You can add a new server to your data center without doing anything manually, ”he says. “All the tasks that personnel on economic activities used to do were now automated, even standardized and outsourced. You should not deal with them. When a need arises in them, someone else must decide for you. ”
The next aspect of this trend is the increase in tasks that users solve on their own.
"The days when people said:" Will you report to me? " long gone. Do the report yourself: you have the data, you have all the necessary tools - use it, ”explains Lori.
Consumerization leads not only to the fact that large applications are divided into smaller sub-tasks, but also cause changes in the management of business processes and the formation of rules - where code [programs] used to combine rules and processes, now there is no such relationship. “New business rules - for setting discount rates, for example - are not currently set by software. These rules can now be reflected in a label that users [business users] will independently support: “Do you want to change policies? Here is a table for you. Change. Want to change the process? We will check the credit card at the time of sending the goods, and not at the time of acceptance of the order - easily. " IT is no longer doing this. ”
This philosophy is also felt in the use of analytics in applications: both mobile and in applications for desktop PCs. According to Lory, such analytic calculations can include serious calculations with large amounts of data, as well as the study of correlations between data. “Increasingly, we are faced with the idea of selecting the right analytical tools for the original data set, not vice versa. When I say “analytics” I mean a situation in which employees can say: “Let's fix our observations and see what they can correlate with” - this is the problem of the equation with all unknowns, ”he says.
“Given the flexibility of the cloud and new software, this means the possibility of absolutely unexpected insights for end users and their [users] the potential ability to orchestrate the rules of their transaction systems in accordance with the services that provide these insights. Now users can conduct tests and learn more effectively than ever before. ”
For many years, retailers conducted similar analytical studies offline, but now these techniques are becoming generally accepted thanks to technologies such as, for example, in-memory computing. “Soon you will see how ordinary workers will begin to take advantage of such opportunities. For example, in the telecom sector, the lowest paid employee - the one who drives customer calls and sets up their equipment - will probably use an application that calculates your value as a client for the company, ”says Lori.
Roy Illi emphasizes that retail is an area where the benefits of being able to dynamically update prices [in stores] are increasingly felt. “Typically, prices are updated at night when the store is closed. You prepare a large file and send it to the store for opening, ”he says. “But now that we have more advanced technologies and tools that use them, you can dynamically update price tags in all stores without leaving your central office. Is it getting hot? Increase the price of ice cream and beer! ”
As the new type of application takes into account external events, it becomes easier to make decisions - and the infrastructure can now support working with such information. The application and infrastructure together provide the user with the necessary data in real time. “Look at the changes that have taken place in the IT infrastructure industry - we’ve moved away from monolithic applications that run from physical servers in a data center with a one-server-one-architecture architecture,” Illsi says.
“The cloud and virtualization have taken a strong place in our lives, and now you have applications that adapt to the infrastructure and can scale independently. New types of applications also leverage the ability of infrastructure to become a flexible resource. This is a huge shift in software development. ”