Software 2006 – Ray Lane
Posted on April 4, 2006
Filed Under Enterprise Software |
Interesting that Ray’s keynote starts out with the CA advertisement of the cardboard cutout software salesmen. Interesting because Ray as much as anyone else is responsible for that image. Ray starts out with a provocative statement that most of us already know, this industry is never going back to the “good old days”.
Ray is running through a bunch of slides that basically says that the U.S. software industry dominates the world and we will continue to retain that position providing that we take advantage of the unique opportunities that the current environment affords us. This would be a good time to point out that SAP dominates enterprise application software and isn’t a U.S. company, so maybe this is less about U.S. domination and more along the lines of east vs. west?
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The economics are interesting, with the great bulk of profits in enterprise software coming from 15 companies and half of those coming from Microsoft. Margins are shrinking, valuations are tightening.
There is a supply and demand problem that bodes well for the business. IT spending is rising, different surveys bear this out. Basically this is referring to what we have always known, eventually business has to pull the technology lever in order to realize productivity advances in their business, and there is still a good cross section of companies that have underinvested.
I love the next slide title: How do you succeed in today’s enterprise software business?
Changing business models. Very popular theme, SaaS and on demand being the 2 most popular. Ray suggests business model change alone is not enough to save a company, I agree with that as much as the closely related statement that established software companies have an extraordinarily difficult time changing their business model. Actually, the next 2 slides do a very good job at articulating the complexity of changing your business model, everything from product architecture to release management to sales model and licensing change, as well as management.
Innovation is still crucial… innovate or dominate. The larger you are and the more investment you make, the more difficult it is for companies to disrupt your business. This flies in the face of what most entrepreneurs and startups believe, that they can innovate and disrupt the SAP’s and Oracle’s of the world. Ray nails this point while still leaving the door open for companies like MySQL to take on Oracle. Startups are protected by private equity, and the gulf between the leaders and the startups is greater than it’s ever been.
The “no man’s land” is where open source, SaaS, and offshoring is having it’s greatest impact on enterprise software. Few companies are getting acquired in the middle and innovation is getting funded at the corners (wish I had the slide to show you). I’m not sure how his slide is making the points he is making with the narrative… this just doesn’t strike me as a good way to cover this material.
Driving success in enterprise software means finding opportunities in white space. Ok, that’s a fair point but the white space is more often “grey space”. Deliver innovation with low effort, and this is a big point because it gets to the fast ROI promise of implementing a piece of software in a fraction of the time that you used to have to. Offer it for free is a provocative statement, but it’s really not free just “free now” and pay for it later. The last point is about individual value, and this is an interesting statement because it goes to the nature of people to behave differently in a business than in their personal lives.
3 characteristics of companies going forward: 1) low resistance (he actually told a funny story about how he was competing against SAP for the Exxon deal and tried to sell them on how they could implement software quicker, Exxon went with SAP – btw, yesterday Exxon became the most valuable company in the world surpassing Walmart), 2) price for value which is another way of saying license according to TCO/ROI, and 3) use customer sat to drive word of mouth.
Web 1.0 versus web 2.0 epitomizes the points made above. Not so sure I subscribe to the notion that what drives web 2.0 in the enterprise is an overlay to consumer side but I would disagree explicitly either.
Themes and technology slide runs through many of the things you are already well familiar with, collaboration, virtualization, convergence, on-demand, contextual search, anytime/anywhere, anonymous connection, visualized search. Ray is running through Bill Joy’s “6 webs” concept: near, far, here, weird, b2b, d2d.
There is a couple of slides about the “inter-personal” enterprise which basically says that people in companies have more control over their technology tools and fewer points of intermediation. This is a good umbrella for a bunch of technology that makes this happen.
Ray’s Seven Laws:
1) serves individual need
2) viral/organic adoption
3) contextual and personalized information
4) no training or data entry
5) delivers instantaneous value
6) utilizes community and social relationships
7) minimal IT footprint
All things considered, a good keynote that combined good perspectives and experience with strong forward looking statements and guides.
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My name is Jeff Nolan and I write Venture Chronicles. I am the VP of Product Marketing for Get Satisfaction and I write about a range of topics that interest me, including public policy, technology, entrepreneurship, finance, and global issues.
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