Where are the big tech companies going?

competitionWhat I would call the “old tech companies” – SAP, Oracle, and to some extent Microsoft – seem to be getting further away from the core where they started, and are beginning to look more like IBM and HP.

This notion was kicked off by Vinnie Mirchandani’s question ‘What happened to the SAP I knew?

It used to be in tune with business process leadership … Its (reduced) attention to apps has been diffused even more by years of seemingly wasted BYD investment and digesting acquisitions like SuccessFactors.

Oracle has strayed from the software path into hardware, and competes against ‘former’ partners IBM and HP. It seems like the company wants to own not only the vertical stack – from base hardware up to the software applications – but also wants to have a piece of the entire software value chain, for example, buying market automation maker Eloqua and content vendor Compendium. Apparently, the reason for this is to build a portfolio of applications to compete against Salesforce.

When it comes to Microsoft, they now wants to focus on “high value” activities that consumers and business users prioritize. Is that code of owning more of the customer’s wallet? The new Microsoft strategy is discussed further here and here. In some cases, Microsoft’s strategy seems quite different, but it also seems to be doing much the same as the others.

The situation that SAP and Oracle are putting themselves into was nicely described as being ‘too big to succeed.’

… anyone visiting Oracle OpenWorld this year would have seen a company teetering under the sheer bulk of the steroid-drip of acquisitions it has made over the years …
… SAP has also bulked up its product and customer base, and there’s a genuine risk that, at least when it comes to the SAP field sales team, it has become increasingly difficult for anyone outside to top echelons of the company to articulate the full value of SAP’s vast portfolio to customers and prospects …
… I think it’s time to admit that economies of scale work well in industrial companies with industrial processes, but sheer size is no advantage in a service economy. In a service economy, or any economy that depends on getting people to come together in order to provide innovative services to customers, doing more with less – the mantra of the economies of scale mavens – simply doesn’t work.

What really gets me about the strategies these companies are pursuing is that it seems to show they are more worried and more focused on growing revenues for shareholders, than what their customers want.

Any comments?

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