Tag Archives: Enterprise 2.0

Evolution At Work: Why Traditional Enterprise Tech Will Get Killed By Consumer-oriented Products

Article first published as Evolution At Work: Why Traditional Enterprise Tech Will Get Killed By Consumer-oriented Products on Technorati.

Today’s Post-PC, Web 2.0 Era is causing the consumer and enterprise tech worlds to collide. In this battle, the DNA of consumer tech positions it to displace “dinosaur” Enterprise mindsets.

Three of the most thought-provoking articles I have read this year on enterprise technology have shined a light on a new, emerging phenomenon: how the rapid advancement of Web 2.0, cloud computing, tablet and smart phone technologies has opened the door to allow consumer-oriented products to displace traditional enterprise technology:

  • R “Ray” Wang, CEO of Constellation Research, explored this from the perspectives of speed, innovation and freedom of choice, writing about the emergence of consumer technologies that meet robust enterprise needs – fast, cheaper and more flexibility.
  • Matt Rossof, in an interview with Andreessen-Horowitz partner Peter Levin, discussed this from the end user experience, asking why people should not get the same ease of use from enterprise tech that they do from the products they use outside of work.
  • Thomas Wailgum, writer on enterprise for CIO.com, highlighted the poor customer experiences that can arise after “vendor lock-in”, questioning the business rationale to accept this in light of influx consumer-style, on-demand options now available.

It does not take much research to see the increased use of consumer tech for business. Many of us now can use personal smartphones and tablets to read our corporate email or Skype to conduct free, easy videoconferences. App Stores have thousands of business productivity apps we can install instantly. Media giants like CNN use WordPress. Even the US government now uses Drupal, a GSA-managed App Store and Google Office via the cloud.

Why This Is Happening Now

Technology innovation is not new; it happens all the time. What has changed is the emergence of a whole new set of innovations that focus on making it much, much easier to deploy and integrate robust, advanced technology. Three particular developments stand out:

1. Cloud Computing. The Cloud has turned computing into a utility. Fortune 500 firms, SMEs, startups and even individuals can setup business-class environments with equal ease – without the need for large investment in capital or specialized teams.

2. Web 2.0. The Web 2.0 (and Mobile 2.0) movement has made integration open and market-driven. You can go to an App Store and find thousands of applications that work together rather than managing—and maintaining—integration projects yourself.

3. The Post-PC Era. Consumer “off the shelf” smartphones have changed how many people view computing—at work or at home. As a result, they are now creating demand for a new class of business application, one that deliverable over the cloud and Web 2.0.

The Result: Consumer and Enterprise Worlds in Collision

dinosaur-extinct-250pxsq1In the past, the enterprise and consumer technology worlds rarely touched. Consumer tech was in the household (or consumer-facing websites). Enterprise tech was on-premise. The resource-intensive requirements to deploy and integrate business technology served as a barrier between the consumer and enterprise technology words.

Now that barrier is gone. Clouds, Web 2.0, smartphones, tablets and other dual-use innovations have created a “land bridge” between these two worlds. Non-technologists can now implement many projects without specialized technology teams and large budgets. They are regularly doing this based on their personal (i.e., consumer-based) experiences with technology. In more and more businesses, enterprise and consumer technologies are competing head-to-head.

Why Consumer-oriented Tech Will Win Out

Companies who build consumer-style products evolved in a fundamentally different environment than those companies that have evolved in the world of the “locked-in” enterprise agreement. As a result, they have three critical “genetic” differences:

1. Another Choice Is Always Available. Consumer-facing product companies cannot rely on multi-year enterprise agreements to retain their customers. If customers are not happy, they will leave now – not in four years. Companies fighting in this intense environment are used to working daily to keep customers happy enough not to not only keep using their products, but also to recommend them to their friends.

2. Support Is a Cost Center Not a Revenue Center. In the consumer world, it is very hard to charge for support. It is equally hard to sell products that require lots of setup and training time to use. As a result, consumer-oriented companies design products to minimize the need for customer service. This is vastly different than many enterprise companies, who view extended service and support agreements as a key revenue stream.

3. Integration Is Free, Open and Instant. Products that easily share contacts, photos, updates and other useful information are used more and more often; products that don’t fall by the wayside. Integration is inherently open, instant, free and simple. It does not require complex partner agreements, extensive training and long integration timelines typical of legacy enterprise systems.

These differences are not superficial; they are embedded in the very “DNA” of the missions, products and teams of successful consumer-oriented companies. They provide enormous competitive advantages in comparison to those with “enterprise lock-in ‘dinosaur’ mindsets.” Freedom of choice will beat lack of choice. Pleasing user experiences will trump frustrating ones. Companies like Salesforce, 37 Signals, DropBox, Box.Net, Atlassian, Google and Apple are displacing “traditional” enterprise vendors in many corporations – even at Fortune 50 ones like Proctor & Gamble. However, this is just the beginning: in ten years the lines between consumer and enterprise tech will be blurred beyond recognition.

The Cloud is Dead! Long Live the Cloud!

The last few months have presented several large “black eyes” for cloud computing. In March, access to Google Apps (including Gmail) was interrupted for over 136,000 users. Last month, 13% of Amazon EC2 and RDS customers in the US Eastern Region had a complete service outage, affecting a range of well-known companies.

As a result, the cloud computing pundits have brought out the knives, attracting a lot of questions regarding the readiness of enterprise cloud computing. The gist of all of these arguments is that cloud computing is not something for mission-critical enterprise applications.

Many cloud computing advocates have countered these attacks by citing reliability statistics. For example, Google’s outage affected 0.02% of users for five days. This equates to 99.9997% up-time on an annualized basis—a statistic far better than that achieved by nearly all enterprises.

The Cloud: Dead or Alive?

Sunrise or sunset?
Sunrise or sunset?

So who is right? Is cloud computing “dead” for important use? Or is cloud computing better than anything enterprise management teams can provide?

They are both right… and both wrong.

How can this be true? A simple reason: enterprise (or business) computing is not simply provision of processing cycles or storage; it is a provision of a full range of computing services: systems engineering, processing, storage, customer service, technical support, backup and recovery, etc. It not simply a commodity transaction, but instead an ongoing business relationship managed by a human being and bound by service level agreements.

Those that view cloud computing solely as remote provision of computing resources are missing “The Big Picture.” Cloud computing is a service model for delivery of computing infrastructure, platforms and/or software. Those who wish to be successful providers of cloud computing for business need provide everything an internal enterprise computing provider would provide: computing resources and managed computing services—at higher quality and lower price.

The Cloud is Dead

This is why “The Cloud is Dead!” Companies who only provide remote processing cycles and storage are not providing enough for mission critical business use. They are simply providing the asset side of the equation—minus the controls critical for enterprise survival. Many of these providers—especially after the last two months—will soon be “dead” to enterprise buyers.

The Cloud is Alive

However, this is the very reason I say, “Long Live the Cloud!” The recent cloud computing problems highlight the huge market demand to add systems engineering, customer service, technical support, backup, recovery, and other human-oriented services to the cloud. (Imagine the benefits that businesses can gain by being able to “rent” the entire range of services and infrastructure their Internal Computing departments currently provides—but working from a more efficient, higher reliability infrastructure.) Cloud providers who meet the combined demand for lower-cost/higher-reliability computing AND managed services will make cloud computing a reality for big, mainstream enterprises—and do so very successfully.

The New, Complete Cloud

The nice thing—for business enterprises and cloud providers—is that there are so many ways to do this. Cloud computing providers can augment themselves with professional services teams, becoming “all in one” providers. Or they can remain focused on what they do best and partner with IT service providers who already have staff on hand and established procurement relationships with enterprises. Just imagine the ecosystems of cloud provision we will see arise over the next few years, competing with each other to provider better technology and service at a better price.

The Old Cloud is Dead! Long Live the New Cloud!