The traditional enterprise software business is crumbling. Once-dominant vendors like HP, SAP and Oracle aren’t going away anytime soon, but their iron grip on the minds and wallets of Fortune 100 C-suite residents is weakening daily.
When the New York Times — not exactly the center of the tech reporting universe — runs a piece like this one, you can be pretty sure the writing is on the wall.
What’s driving this change?
Salesforce gets a ton of credit for setting the pace — Force.com is the biggest and most vibrant platform and marketplace for cloud-based enterprise apps, and they’ve made bold acquisitions (e.g,. Heroku) and invested heavily in internal innovation projects (e.g., Chatter) to accelerate their leadership.
But really, monolithic, top-down enterprise software is dying the death of a thousand cuts — with literally hundreds of agile SaaS vendors targeting thin slices of enterprise functionality, winning over end-users one at a time without ever paying a call on central procurement officers or IT gatekeepers.
This trend has only accelerated with the rise of “smart” mobile devices and the app store model of software distribution. Employees love their iPhones and iPads, and they expect to be able to use them at work as well as at home. BYOD (bring your own device) policies are slowly making their way from consumer-centric enterprises to the most security-conscious strongholds like financial services, cracking open another path into the enterprise for agile software entrepreneurs to wiggle through.
Individual enterprise users love all this beautiful, functional software — and most SaaS vendors are smart enough to price their services so low that “official” approval channels can’t block the purchase. You can expect this trend not just to continue, but to accelerate, in coming years.
But even the most open-minded and forward-thinking enterprise technology managers have a few very legitimate beefs with the atomized, self-serve future of enterprise IT, including…
- Data Fragmentation
More than ever, data is the lifeblood of any organization — real-time intelligence about business and financial performance, supply chains and competitive environments is essential to managing cost and risk in a connected age.
What happens to that unified view of enterprise effort and productivity in a thin-sliced world of SaaS-based point solutions? You get lots of little data silos, big gaps in cross-firm visibility and a steady erosion of management insight and agility.
- Security / Authorization / Permissions
Clunky as they are, monolithic legacy enterprise solutions also help companies manage employee access to sensitive business data — sometimes just for control reasons, but often for legal/regulatory compliance and customer-facing security commitments that need to be honored.
Not only can disaggregated enterprise SaaS tools deny the organization a unified / normalized data store, they often also clutter the security and permissions landscape with isolated, opaque access control regimes that create headaches across IT user support, compliance and HR functions.
- Human Performance + Innovation
The “softest” cost of fragmentation in enterprise SaaS is arguably the most important: adding friction to information flows among team members, particularly across organizational boundaries like location, department or line of control.
Maximizing performance in knowledge-work organization requires the greatest possible transparency into how people’s time is being spent, who’s working with whom on what, and how potential information gaps might be short-circuited by connecting individuals and teams in disparate parts of the company. Disaggregating enterprise data and workflow tools into departmental silos is virtually guaranteed to reduce total organizational effectiveness.