CXO

Is this the new era of big software?

After several years of high quality, point solutions to IT problems, consolidation is gaining steam as enterprise stalwarts gobble up smaller software companies.

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I started my technology career in the late 1990s, as massive enterprise software platforms from the likes of SAP and Oracle were in their prime. Everything about implementing these software packages was big, from two-hundred-person teams, to dozens of countries in scope, to multi-year timelines and budgets that stretched into nine digits. As the economy cooled and companies started to take stock of their massive investments, these types of projects gradually disappeared. In their place smaller software vendors began to fill gaps around massive ERP and CRM systems with customized point solutions, and the rise of cloud computing made compelling functionality available at commodity prices, all on timelines measured in weeks rather than years.

Is Big the new Big?

Two trends are combining to recreate a return to the days of big software. First of all, while cloud-based "point solutions" that fill a single niche are cheap and easily implemented, integration with existing systems becomes the main challenge. A cloud-based e-commerce platform might be priced right and provisioned in hours, but it's of limited utility if it doesn't integrate with your existing inventory management and sales applications.

Secondly, evolutions in areas like marketing and commerce are demanding increasingly complex integrated systems, and the large enterprise vendors are acquiring niche players and attempting to cobble together integrated marketing and commerce packages that integrate with other vendor systems, or have deep roots in existing cloud platforms like AWS, Azure, and Force.com. Essentially these players are promising all the benefits of integrated applications and pre-defined business processes that sold ERP in the 1990s, with the benefits of speed and cloud infrastructure that ultimately drove many IT shops away from commitments to massive applications.

This shift back to big is most visible in the marketing and customer experience space, where companies like IBM have hammered a variety of acquisitions into the "IBM Marketing Cloud," while CRM darling Salesforce has made similar moves in the guise of "Marketing Cloud." Oracle, Adobe, and even Microsoft have made similar moves in the hopes that existing customers see adoption of additional tools from an existing vendor as an easy solution to delivering a challenging capability.

Can they pull it off?

The promise of a new era of big software appeals to many IT leaders. Rather than dealing with a startup that might disappear in a month, big companies promise stability, long-term support, and perhaps most importantly, easy integration with existing enterprise applications. Perhaps the biggest challenge faced by these vendors is that they're now forced to cobble together a portfolio of acquisitions, not only on the organizational end, but also on the technology side, while customers clamor for products.

In addition to the usual organizational and logistical challenges of integrating an acquired company, a typical acquisition by a larger software company requires new marketing and sales capabilities, integration of the acquisition's technology with the existing application portfolio, potentially a shift to a new cloud platform and technology stack, and integration of the existing code base. Unfortunately for end users, priority is usually given to the marketing and sales aspects, and the newest version of "Big Company Marketing Cloud" is often little more than updated branding and a few revised screens. Many buyers believe the marketing hype that they're purchasing an integrated package, only to discover that not only must they undertake a costly integration, but that the application will likely dramatically change in the near future.

Take care when buying big

It's easy to take comfort in vendor promises, and forget some of the nastier aspects of the era of big software, like half-baked components released as production ready, or "the next big thing" that's dropped in a future release after you've invested millions in its implementation. These risks are obvious when dealing with smaller vendors, but recollections of these challenges with the major vendors might have become a hazy memory.

As we enter a new era of big software, it's as important as ever to analyze how much benefit you'll actually receive from promised integration, and how well the components interact beyond a consistent set of branding and screens. Seek out peers at other companies who are using the packages you're considering, and pay particular attention to any integration challenges they faced, or the level of care and feeding that's required to keep various components "talking." Similarly, look for overlapping products in your vendor's portfolio as a result of acquisitions, and carefully assess whether the product you're considering is on the chopping block in the near future.

While a new era of big will hopefully bring the benefits of integrated, consistent business applications with the speed and low costs of niche cloud players, there will be near-term growing pains requiring additional attention and savvy for IT leaders.

About Patrick Gray

Patrick Gray works for a global Fortune 500 consulting and IT services company and is the author of Breakthrough IT: Supercharging Organizational Value through Technology as well as the companion e-book The Breakthrough CIO's Companion. He has spent ...

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