Corporate software: main trends and why they are important

The applications with which enterprises work are undergoing major changes, but business is a very inertial system. We will look at some of the key areas: cloud support, mobility, consumerization and business intelligence, which shape the situation in the corporate software market.

Not so long ago, salesforce.com first published a list of the top ten corporate software providers. The emergence of SaaS providers among the IT elite says a lot about the growing importance of cloud applications for business.
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The “cloud” may be becoming popular, but Salesforce.com’s revenue for 2013 amounted to only 3.8 billion dollars, far behind the 65.7 billion earned by Microsoft, and even more so from the total 142.9 billion earned by four major Corporate software vendors: Microsoft, Oracle, IBM and SAP.



Although the system is highly inertial, the “clouds” and the SaaS infrastructure, along with several other technological trends - mobile applications, analytics and consumerisation, radically change the situation among corporate software. The diagram below shows how Forrester Research , an analytical company, represents the forces affecting changes in business applications.

Forecast: Cloudy

The heyday of the “cloud” and the model of transition to the use of services [in contrast to the purchase of goods] are among the biggest shifts in the way of creating, deploying and using enterprise applications. The cost of the global "cloud" market will increase to $ 191 billion by 2020 from $ 58 billion in 2013. According to Forrester, 133 billion (out of 191) will bring cloud applications to the market.

Cloud technologies can be seen as a major threat to software that requires installation in the field, as well as to those who supply it.

“For them, such prospects look frightening, because we can easily imagine a world in which people say:“ I will get order management software from one supplier, the master data management system ( MDM ) from another, software for working with vendors - from the third, and independently create a single system out of it - either the semantic network will take care of this, ”said Forrester Research vice president and senior analyst George Lawrie, ZDNnet.

According to Lori, in order to somehow counter the growing popularity of cloud services, large vendors of corporate software are beginning to work with companies such as Accenture, Deloitte, Infosys and Wipro.

“Why don't they themselves become cloud service providers?” Create a managed service — a turnkey product from Oracle, SAP, or anyone else — and we will all call it cloud-based, ”says Lori.

“If you talk to large companies, you will hear the following:“ Yes, we have been providing cloud services for many years. ” But they just call them cloudy. I recently finished working with a company that said: “Well, let our products be non-cloudy. Well, what's the difference? As the saying goes: walks like a duck, quacks, like a duck - so I will call it a duck. The same with the cloud. ”

Another approach is using SAP as part of the Business ByDesign program. “They say:“ No, no, no, this is really a native cloud application. We wrote it from scratch. ” But they did it too slowly, ”Laurie comments.

“This product does not provide for financial control at all. At first I thought: why did they create it then? The answer is obvious: not to "devour" your own business. They say: “This is for service companies. And you are an industrial company. Your business is much more serious. You need to install software on workstations and create your own IT service. ” And most industrial enterprises believe this. ”

The transition to the cloud and the model for using the services took by surprise not only vendors, but also large users of locally installed software, as Simon Wardley of Computer Sciences Corporation says. "If we are talking about corporate IT and all the changes that are taking place in this area, that ERP and CRM are more likely to be consumed by services, then all of this is predictable changes that we have known for quite some time," says he.

“This is a process of transition from innovation and uncertainty to a product, service, process, put on stream,” adds Wardley. “This affects not only vendors who can be stopped by their own inertia and attachment to existing business models, but also by companies that consume various goods and services of these vendors. And the influence is connected not only with the efficiency and the ability of competitors to create products faster, but also with the ability to bypass the barriers faster to enter your business. ”

The study of corporate strategy, in which Wardley studied 150 companies, showed a lack of understanding by companies of the fundamental changes occurring in the field of corporate software. “Companies create excellent, detailed strategies that answer the questions: How? What? When? But almost not concerning the question Why? Although it is this question that determines 60-70% of what others do - be it cloud computing, Big Data or social media. Companies work in this environment, but do not understand it, ”he says.

“Consider - why the general gives the order to bombard the hill. He does this not because he has a consultant who reports that 60-70% of generals give such orders, and therefore he must act the same way. ” The lack of insights causes obvious problems in the use of technologies such as the cloud or the transition from products to services.

“We had plenty of time to prepare for these changes. Even in the middle of the 2000s, everything indicated that these changes would occur, but the companies remained unprepared, ”Wardley notes. “By analogy with the accumulated experience, the best practices from the world of selling goods, companies continue to be inert, but the best practices from the world of goods and the best practices from the world of services are two different things. Companies that have been strongly influenced by current changes are usually those who cannot analyze the current situation. They are surprised at predictable things. ”

Usual or convenient?

Services like SaaS will occupy their niche, but will not replace everything, said Ovum senior analyst Roy Illsley. "Most likely, cloud services will occupy 60-70% of the market - the majority expects exactly this," he adds.

But the impact of SaaS is not limited to this - the cloud changes our attitude to custom-made applications. “The SaaS model caused a revolution - with respect to a number of things, company representatives are now happy to say:“ You know what? We needed to create an application to order. But now what we needed to do under the order has become the standard for applications in the cloud. ” This is the exceptional value of ServiceNow and Salesforce, ”says Illsey.

George Laurie of Forrester emphasizes that people tend to buy standardized systems for capturing information and create customized systems to ensure interoperability. “The systems providing interaction now are created on the principles of consumerisation and can vary greatly depending on the audience using them,” he adds. “For example, no one uses the basic interfaces that SAP provides. Everybody always - absolutely always - creates their own interfaces optimized for the company's experience and the needs of its employees. ”

However, Simon Wardley believes that businesses may be deceiving themselves, exalting the importance of their customization. Once he asked a group of a hundred CIO a question about how many of them use ERP systems. “All hundred raised their hands. Then I said: “Well, if you all have such systems, then this is a commodity of mass consumption.” A pair of hands rose into the air: “No, this is not a mass consumer goods!” - they thought it was not so, because they carried out customization, which in their eyes made their systems unique, ”explains Wardley.

“Then I began to find out from them exactly how they customized their systems. Of course, no one wanted to go into details, but I still persuaded one CIO to give me an answer. Then I asked everyone in the audience if someone else had done something similar — and again everyone raised their hands. This CIO group spent billions of dollars a year on full customization of initially approximately identical systems and brought them to almost identical results, which negated the whole value of this process, ”Wardley says.

According to Ovum analyst Roy Illsey, the effect of companies like Salesforce.com was to change the direction of business resources. For example, now many companies are happy to work with standard CRM-systems in SaaS format. “Now all systems are the same. Now the dog is wagging its tail, and not vice versa, as it was before, ”he says. “Of course, the products may differ somewhat from each other - in case someone continues to need a product made to order.” But, as a rule, [from the point of view of the software used], there is a feeling that everyone in the world is about the same thing - so how can you distinguish one company from another? ”The difference is not in the applications used, but in the company its competitors do not see and cannot copy, adds Illsey.

"This is not about any program that tells us where buyers purchased item X, or that their balance is Y units - because now almost any software can do it."

Inertia and other barriers to the cloud

Nevertheless, the attractiveness of cloud applications may not be sufficient to overcome the inertia of the business, said Simon Wardley. “Of course, existing consumers may retain some kind of resistance to such changes for a number of reasons, such as existing procedures, political capital. Very often, inertia barriers of a very different nature stand in the way of such changes, ”he says. "It is difficult to say:" I just introduced a multi-billion ERP system, although I could buy a replacement for it a hundred times cheaper "and not look like a fool."

According to Wardley, inertia is an integral accompanying of both corporate software and vendors of such solutions. “People will always try not to leave their homes. They always want to return to the past - even if the changes are worth nothing, they want to see them somewhere in the future, but not now. ” “But unfortunately, you cannot customize large-scale production and receive goods from components that are not themselves goods. It won't work, ”says Wardley.

But there are more weighty business reasons to stick to traditional approaches and use software installed on local PCs, according to Roy Illsey. “There are still traditional companies that use applications created exclusively for their needs. So if you manage a bank, your main banking applications will most likely work from the mainframe, ”he says. "These programs are radically different from the set of corporate applications that firms like PayPal use - they can be counted among banking organizations, but they do not carry the entire baggage of tasks that a traditional bank has." “Such companies do things a little differently, also because they entered the market relatively recently and are not burdened with a mass of already operating programs,” Illsey notes.

“If the bank has basic applications that are already working, you will not throw them away and spend millions of dollars to replace them with something that you are still not completely sure.”

However, now the elements of ERP are divided into component parts and are used by companies as separate programs. “Because [the components] should be combined, but since they can work together, receive and share information, you do not need a monolithic mega application that will manage everything without exception,” Illsey explains. “These may be separate fragmented applications. They can run locally, but the data and control must remain centralized. ”

As an example, he cites airlines using the iPad to accommodate passengers without printing a lot of documents, and restaurants using tablets for booking, taking orders and recording information about visitors. “The mobility issue continues to gain momentum - and to ensure it, you need applications that will work differently [compared to traditional corporate software], because you usually don’t need a whole ERP on a tablet. You will have to act a little differently, ”says Illsey.



“These“ somewhat different actions ”may concern the use of a front-end application, the task of which is to transfer information, and a back-end application, all of whose activity is to process this information - this is now standard.” "The way you make important decisions about your indicators, group information, present it in the stock market or, for example, work with stocks - all these standard tasks can be solved with the help of super-powerful calculations, but now, as a rule, all this is done in real time and nothing but using batch processing. "

Mobility, real-time applications and consumerization

The growth of methods for delivering applications to mobile devices has led to the fact that today, along with cloud technologies, mobility and the need for receiving information in real time have become the largest trends in the development of corporate software. "Cloud, SaaS contributed to the reduction of the functionality of corporate applications - part of the tasks that solved the corporate software," leaked "into the cloud," - says Illsey.

"But trends in mobility and real-time information require the use of solutions that can more quickly deliver to the most diverse geographic points the full amount of data and capabilities necessary for the work of employees using mobile devices."

“You don’t have to expect them to come to the office, sit at the computer and stare at green letters on a black background to fill out a form or accept an order. This time is irrevocable. ”

Consumerization has changed not only the nature of mobile applications, but also the attitude towards corporate software as a whole, says George Laurie. “If the application is unsympathetic, if it cannot be used with fashionable devices like the iPad, they will not use it.

Consumerization has also created an obstacle for vendors on the path to distributing applications, ”he says. "This process is much more complicated than distributing applications within the client-server architecture, because these new applications can be used in any context, and you can deliver them not only to your own employees, but also to your clients' employees or even to your customers." “As soon as you begin to work in this way, you will begin to form a different type of infrastructure, because in a new environment you will not know for sure what kind of strikes your system may be subjected to,” explains Lori.

“First of all, you need to split your applications into separate components. Therefore, all your efforts to create a monolithic system (“This should all go into one database, otherwise we will not be able to work”) can be considered vain - this approach no longer works. Everything has become much more complicated. ”

Just like custom applications, business software should be intuitive so that you can start working right away. “You can’t just tell people that they first need to go through a week-long training - and you can’t keep telling them that they’re wrong. But in the past, working with corporate systems was conducted in this way: if something does not work, the user is to blame, ”Lori continues. “This approach is unacceptable for those who are used to booking vacations online or ordering purchases from Amazon.”

In addition, companies have reduced time and resources for employee training, adds Roy Illsey. “Now organizations need their employees to stop fencing off from others by their narrow specialization, so that they can act in different roles. They need people who are ready to act not only within those areas of business with which they are well acquainted, who are able to use various technological tools. And this means that the process of using software should not be shrouded in a veil of narrow professional argo and specific manipulations that are difficult for the uninitiated to deal with. ”

Thus, the basis of creating corporate applications should be based on the following principle: an application should not just perform its tasks and be user-friendly, it should provide the ability to work together, exchange information, it should be easy to deploy and support - the user should be able to work independently solve all your questions related to the product. “Now developers are investing significant amounts in how the application looks, and in the positive user experience, and in simplifying its management in terms of backend, which reduces the cost of using the product,” comments Roy Illsey.

Automation, self-service and analytics

Forrester's analyst, George Laurie, believes that the driving force for reducing software costs and increasing the convenience and ease of use (both for business customers and technical staff) is an active move toward more and more automation.

“There is a certain limit to which you can automate certain tasks. We have come across this with the example of server, network and storage virtualization. You can add a new server to your data center without doing anything manually, ”he says. “All the tasks that business personnel have previously done are now automated, even standardized and outsourced. You do not have to deal with them. When the need arises in them, someone else must solve them. ”

The next aspect of this trend is the increase of tasks that users decide on their own.

“The days when people said:“ Will you give me a report? ”Are long gone. Make a report yourself: you have the data, you have all the necessary tools - use it, ”explains Laurie.

Consumerization not only leads to the fact that large applications are divided into smaller subtasks, but also causes changes in the management of business processes and the formation of rules - where previously the rules and processes combined the code [program], now there is no such relationship. “New business rules - on determining the size of discounts, for example - are not currently defined by software. These rules can now be reflected in a sign that users [business users] will maintain on their own: “Do you want to change policies? Here is a table for you. Change. Want to change the process? We will check the credit card at the time of sending the goods, and not at the time of accepting the order - it is easy. " This is no longer IT. ”



This philosophy is also felt in the use of analytics in applications: both mobile and desktop applications. According to Lori, such analytical calculations can include serious calculations with large amounts of data, as well as a study of the correlations between the data. “Increasingly, we are meeting with the idea of ​​finding the right analytical tools for the original data set, not vice versa. When I say “analyst,” I mean a situation in which employees can say: “Let's fix our observations and see what they can correlate with” - this is the problem of the equation with all unknowns, ”he says.

“Given the flexibility of the cloud and new software, this means the possibility of obtaining completely unexpected insights for end users and their [users] potential to orchestrate the rules of their transactional systems in accordance with the services provided by these insights. Now, users can conduct tests and learn as effectively as never before. ”

For many years, retailers have been conducting similar analytical studies offline, but now these techniques are becoming generally accepted thanks to technologies such as, for example, in-memory calculations. “Soon you will see how ordinary workers will start using such opportunities. For example, in the telecom sector, the lowest paid employee — one who drives up customer calls and sets up their equipment — might use an application that counts your value as a customer for a company, ”says Lori.

Roy Illy emphasizes that retail is an area in which there is an increasing sense of the ability to dynamically update prices [in stores]. “As a rule, prices are updated at night when the store is closed. You prepare a large file and send it to the store for opening, ”he says. “But now, when we have more advanced technologies and tools that use them, you can dynamically update the price tags in all stores without leaving the central office. Is it hot? Increase the price of ice cream and beer! "

Since the new type of applications takes into account external events, it becomes easier to make decisions - and the infrastructure can now support work with such information. The application and infrastructure together provide the user with the necessary real-time data. “Look at what changes have occurred in the field of IT infrastructure - we have left monolithic applications running from physical servers in a data center with the“ one server - one program ”architecture,” Illsey said.

“Cloud and virtualization have taken a strong place in our lives, and now you have applications that adapt to the infrastructure and can scale independently. Applications of a new type also enable the infrastructure to become a flexible resource. This is a huge shift in software development. ”