There Is No Enterprise Software Market


It occurs to me, and is further reinforced this excellent post on Tech Crunch, that selling software to the enterprise is becoming a losing proposition. It may take a while to dry up, but the big splashes are getting fewer and farther between. This type of sea change always reminds me of that scene in The Matrix where Neo is schooled by a young boy who tells him, simply, “Do not try and bend the spoon. That’s impossible. Instead… only try to realize the truth…. There is no spoon.” The IT industry, like Neo, may need some time to internalize this new reality. The biggest winners, though, will be the companies who most quickly realize the truth: There is no enterprise software market.


Photo Credit: I_am_Allan via Compfight cc

Traditional enterprise software is dying as a market, but that doesn’t keep startups from trying to liberate coins from enterprise coffers. That’s a great idea, because that’s where the money is. But, here’s the thing: There are few forces at play that are kind of a big deal. Enterprises still need vendors, just not necessarily for (only) software.

  • Software keeps eating the world. Every company has to either get great at engaging their customers with software (apps) or lose. The same holds true for enterprise vendors.
  • Open source software is flat out better. Enterprises are so over proprietary vendor software. They know, with confidence growing at an exponential rate, that they can solve their technical problems with leftovers from Google, Netflix, Amazon, etc.
  • DevOps is the next “best practice” that will legitimately draw a line between winners and losers. As its simpler cousin, agility, proved, they can either adapt or die. Coding faster doesn’t help if you can’t deliver on (or, more accurately, respond to) customer expectations on their timeframe.
  • Customer expectations for adoption, integration, and business have been forever changed by mature SaaS offerings. As enterprises continue to rely less on building the supporting infrastructure they need, their desire for turnkey solutions has grown insatiable. Savvy companies are forcing themselves to rethink how to differentiate from competitors and focus all their attention in that area.
  • Speed of innovation at every layer of the technology stack is approaching Moore’s Law proportions. Enterprises, and their vendors too, can’t keep up. It’s easier, cheaper, faster, and more efficient to let someone else try to keep up with it while they reap the rewards to execute on their business goals.

What does it all mean?

The successful enterprise vendor of the future will need to serve the market with much more than software.

Serving the market, in this case the enterprise market, means building a powerhouse open source company that builds, runs and understands open source software. It means being able (and flexible enough) to provide a SaaS experience, simple in terms of business and integration. It morphs “SaaS” into “Service-as-a-Service”, counting as a simple detail whether people, process, and technology are on premise, co-located, hosted, whatever.

The value enterprises want/need/expect is expertise to bring them to the leading (but not bleeding) edge and keep them there, so they can run their business. It’s the natural extension from agility to DevOps and the right products/tools to make it happen. It’s just as critical to have thought-leadership-as-a-service, with an accompanying “warranty”, as having the right products to solve their current technical challenges. That’s the new product/market fit.

How do we fix it?

The past (current?) model of selling multi-year software licenses, leaves the buyer unable to keep up with the pace of innovation in their stack. They have learned that they are behind the curve before their purchase is even installed. If their vendor can’t continuously deliver updates to their stack, they’re just buying a new bottleneck.

Simply selling software doesn’t offer the capabilities that a modern enterprise needs to remain competitive. The new enterprise vendor is going to be have to monetize a brand new business model: one that blurs the lines between software, managed services, outsourcing, and consulting and can be continuously delivered anywhere (or everywhere, even).

If vendors want to win in the enterprise software market, it’s time to embrace a future where that market doesn’t even exist. It’s time to take continuous delivery to a new level. It’s time to realize that the recipe for success in a post-proprietary world is “People first. The rest is code. Win together.”