State of Affairs in Enterprise IT – Part 1

I was thinking this weekend about the convergence of trends that we are experiencing in enterprise technology. In the Irregulars discussions these things get vigorously debated but there is invariably a thread that remains to be pulled on, not because we neglect it but because of the circular nature of things and how one trend fuels another which then becomes self-fulfilling because the first uses as it’s evidence the second.

Bear with me while I run through some of these now, but I already know that this is something that will take the span of several posts to fully think through.

Consumerization of the enterprise is a hot topic and one that I fundamentally believe in if for no other reason because enterprise users are consumers themselves and are increasingly expecting the ease of use and low barrier to entry that consumer services have become known for. Most enterprise software is not built to sell to users but rather to IT and CIOs who are likely never to use the applications that they are selecting for their employees. As a result of this dynamic, enterprise software companies have become fat on rich maintenance streams and low expectations from the people who are actually buying them, as opposed to the people that are using them.

Enterprises talk about “shared services” environments all the time, as if the notion exists that their is a services marketplace behind the firewall. How many global 2000 companies allow their employees to select what HR system best serves their needs? How about email or mobile devices? If IT were a shared service environment then I would be able to select from Outlook, Gmail, and Zimbra for my email application, and if one let me down then I would be able to switch. In just such an environment my employer would only be required to pay for the software that was being used, as opposed to what was sold to them.

Okay, so maybe HR is a legitimate shared service… but what about CRM? If the cost of implementing the “standard” CRM package that my company licenses to is onerous to me, why can’t I select the one that better fits my requirements and budget?

People in large companies are looking at Google’s Premier Apps and saying “jeez, $50 a year for 10gb of storage, that alone is worth it” because they well understand that they can buy a 100gb drive at any Best Buy for $100, so why pay EMC $10,000 for a 4×500 storage array? Enterprise technology vendors are hoping against all odds that we’re not aware that there is this thing called the internet where we can see what things really cost. You want to tell me that you need management software and failover capability Mr. IT guy? Well that’s your problem not mine so don’t try to shove $1,000 of “shared service cost” on me just so I can have a bigger email inbox.

Niel makes a good argument about how IT can no longer use the hostage strategy to force me to pay for their expensive infrastructure, as in “your box is in our datacenter and if you don’t pay we’ll send you the SATA cable cut up into a thousand pieces” so they are now using the fear strategy as a fallback. Hosted services aren’t safe and you don’t know who is looking on Google’s servers so you can’t trust them. What about compliance?This argument has evolved from “you mean your going to trust your mission critical data to some third party who might have a datacenter powered by hamsters running on wheels?”, because who is really going to question Google’s chops when it comes to running a world class datacenter?

From where I sit the best thing that could happen to enterprise IT, at least for users, is that IT becomes an infrastructure services provider inside the enterprise. In other words, they keep the power on and a dial tone on the line, while business units take greater responsibility for selecting and managing their hosted applications. IT should also be responsible for legacy systems, after all they are responsible for building them in the first place. If business units are responsible for the cost of providing the applications they use, the actual cost and not the “shared service” cost that is used to pay for all the software that is bought and not used, then they will make better decisions and be more accountable for bad decisions because, after all, it’s coming out of their budget and they have direct control over the decision making process.

In just such an environment in this place we’ll call “Fantasyland” business users would get applications they need because they selected them and the scenario where the better app didn’t get selected because it doesn’t support the Tagalog language wouldn’t materialize because our fictitious business group is located in the UK and they really don’t need Tagalog support. Business users would get the features they require because the provider of the selected application would be directly connected to the people using the software and if something didn’t work or could work better they would be incented to deliver because their users could actually pull the plug on them if it didn’t work right. Lastly, because the business unit would be concerned about their budget and conscious of what things actually cost, they could constantly evaluate options and select the best value not on a 8-10 year TCO analysis but what things are actually costing them in today dollars, and because the software would actually work there would not be the investment in the customizations required to get it to work in the first place.

Basically, in Fantasyland the market dynamics of the best priced, best built solution would prevail just like in the real world consumer market that we business users are currently living in. We may be talking about Fantasyland but here in the real world we are seeing examples of business units taking more control of their IT environments and telling corporate IT to go away… more on that in a future post.

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10 thoughts on State of Affairs in Enterprise IT – Part 1

  1. Hi Jeff. This is excellent. Can’t wait for part II. The early data coming in suggests we are far off from realizing your Fantasyland scenario. How long will it take before business units can dictate their own technology terms and choices?

  2. Jeff, we will keep on arguing about this. 80% of most CIO budgets are spoken for with SAP, Oracle, Verizon, IBM, etc etc – the top 25 vendors. You can blame the CIO for having picked them in the first place, but while it is fashionable for start ups to blame the CIO, the reality is there is not much new budget for start ups till the top 25 vendors reduce their entitlement spend. Show the CIO how to squeeze out the bigger guys, not just snipe at him.

  3. I am quite sure we will keep arguing about it… but we’re pretty much used to that as the normal state by now. 🙂

    I do have another post I am mentally organizing about how big upgrades from MISO are putting the stranglehold on anything innovative because of the risk IT takes on with these upgrades and the large $$ that get committed in the process.

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  9. Hi Jeff

    Good points. But I would say that all your points would address only one sector of enterprise IT applications.

    I would broadly categorize enterprise applications as follows –
    A) Applications used by business users but non-critical. If they go down doesn’t mean you can’t do business (HR, ERP, CRM)
    B) Applications used by business users but critical (Trading apps in an investment bank)
    C) Applications used by external customers (internet banking application in a retail/corporate bank)

    You have addressed (A) in this post. I would say that (B) and (C) would still be developed and controlled internally as they provide the competitive advantage which is lost once you start using services offered by somebody else.

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