Bimodal IT doesn’t mean complexity

bimodal_itFor over a year the Gartner analyst group has been talking about the need for ‘bimodal IT’. An article in InformationWeek described it as the need for an IT organization to

split its focus between the core services that make other things possible and the more exciting possibilities of digital innovation.

When I first heard of bimodal IT I was still working in the ERP software space. Coming from that traditional background I used to think that any bimodal IT effort had to be somewhat big and complex. But now I’m at a cloud software company I’m beginning to see things differently.

According to a recent study, 44% of enterprises expect cloud computing to help launch new business models, and this will increase to 55% by 2018. Moving some of your enterprise apps to the cloud may therefore give you one bimodal IT project.

There will be cases however where an IT department needs to develop apps. The growth of platforms-as-a-service (PaaS) offer higher productivity gains than traditional on-premise developments environments, and these don’t just enable faster starts but also quicker results.

Then there was something I learnt recently about the power of the much used, and also much maligned, product – Excel. If people are going to organize, format, tabulate or calculate data, they will most probably use an Excel spreadsheet. Excel formulas are a standard business application logic than everyone understands. But Excel is also architected for integration because it is stored in a standards-based XML-based format. This means that using an PaaS for integration, business users can create sophisticated reporting and analysis solutions using a tool they already know and understand using data from other sources. This is something we wrote about on the company blog recently – making Excel awesome.

So bimodal IT doesn’t have to be big and expensive, nor does it only need to depend on IT. I would be interested to learn of other options that make bimodal IT easier and quicker.

Why monolithic systems of record will disappear

cloud-computingI thought that having left the ERP industry I would not have any reason or inspiration to write about it, but I was wrong. My experiences since I started working in the cloud application market have led me to believe that the era of the monolithic systems of record, as typified by ERP, might be coming to an end.

When I started in the ERP field as it was taking off in the late 1990s, only large organizations could afford, or saw the rationale for, ERP. It took another ten years for ERP systems to penetrate most sizes of business. Now, because moving off ERP is a mindset change, and organizations have invested hugely in enterprise software, I don’t believe that change will happen overnight. But as the economics and business benefit of cloud become more apparent, and a younger generation assume decision-making roles, it could occur over the coming decade. Several writers have commented that the growth of cloud computing bears many similarities to the expansion of electrification in the early 1900s.

Here some of my reasons for believing that monolithic systems will disappear.

1. You don’t need an ERP as single source for company truth
Many organizations use specialized applications for key customer-facing operations, and increasingly these are SaaS (software-as-a-service) systems. With modern iPaaS (integration platform-as-a-service) apps, software integrations can allow different systems to be a system of record for a set of business functions. The only system that needs to be centralized is accounting, and with companies are already using iPaaS to synch operational data into the accounts system.

2. Legacy systems diminish the ability to innovate
According to a recent survey, 90% of IT decision-makers say legacy systems prevent them from adopting new digital technologies that they need.

3. The push to digital disruption requires new approaches
An article by Constellation Research explains that ERP arose out of the business process re-engineering movement and the disruptive innovation caused by the PC. In its day the emergence of ERP software disrupted the existing business model, but there is now the new disruptive influence arising as a result of cloud and mobile computing. It would be unlikely that a new company these days would opt for an on-premise ERP; more likely it would look for a SaaS solution. “New business model = new ERP model!”

4. The cloud is now acceptable for many business-critical solutions
Analyst companies are reporting a change in the way the cloud is perceived. Gartner notes that fears about the suitability of the cloud for critical applications is now a thing of the past. Forrester Research found that agility is the most important driver of cloud adoption. The fact that many cloud providers are now certified for compliance and security regulations has also made them more acceptable.

5. Ease of SaaS upgrades
SaaS software has the advantage of “bite sized, frequent, managed- by-the-vendor upgrades“, compared to the headaches of managing on-premise upgrades. I am noticing a proliferation of SaaS applications with a fairly narrow industry focus. What enables that is that is a relatively easier to develop and maintain cloud-based applications (compared to on-premise), and SaaS subscription model enables profitability at an earlier stage than the traditional license fee model.

6. ERP consultant recommends alternatives
When ERP consulting firm Panorama recommends alternatives to typical ERP solutions you start to ask whether ERP may be close to its sell-by date.

Companies are increasingly being made aware of the possibility of digital disruption to their business. It’s difficult to cope with a disruptive business model that requires agility by staying with a monolithic legacy system like an ERP.

Why I have really joined the smartphone crowd

iphone4A few years ago I wrote about my experience of changing to a Nokia (now Microsoft) Windows Phone. I was a fan of the Nokia hardware design, and was working at an ERP software company that had a partnership with Microsoft, and I didn’t want to be like the crowd (i.e. iPhone or Android), so it seemed a reasonable decision to go the Windows Phone route. I also referred to reports about smartphone market share that I thought were biased – see here.

The truth is that now I have joined the crowd, the iPhone crowd. At my new cloud software work I had started to become frustrated that I couldn’t use my Windows phone the way my work colleagues used their iPhones. Then I dropped my Windows phone and was told in the ship that it would take weeks to repair; and I couldn’t use my older phone as it was now way out of date. In the same shopping centre was an iStore which was having a sale, so I went there and in less than 15 minutes walked out with an iPhone 4 (the newer phones were far too expensive to buy outright).

Now I marvel at the user experience of the iPhone, both for iOS and for the apps on the phone. It really surprises me that the UX is so good, and I regret not having got an iPhone sooner. In my opinion, the problem with the Windows phone UX is that it has been influenced by the history of Windows and the emphasis on business rather than consumer experience.

One aspect struck me immediately, and that is the way iOS 8.4 pushes notifications on the screen – when there’s more than one you get a list of notifications. In Windows Phone 8, notifications are like a pop-up, the most recent one supersede earlier ones. I prefer the iOS approach way more. The new Action Center tries to resolve that issue, but it didn’t impress me.

As for individual apps, there seems to be more thought put into the user experience by the app developers. The only apps that are the same on iOS as on Windows Phone are the Microsoft Office apps.

There have been a number of articles recently about Microsoft’s new strategy for mobile phones. I tend to agree with the view that Microsoft is trying too hard to make the Windows Phone experience good, for example there’s a suggestion in Time:

Windows Phone needs a better hook than a great app launcher and some clever design flourishes. It could be in the form of killer hardware that no other platform has, but more likely, it’d have to be through tighter integration with the rest of Microsoft’s ecosystem.

The truth is that having tasted the iPhone experience, I can’t see myself going back to the Windows Phone.

Why cloud computing will grow

cloud computingAn article in the Economist in 2014 noted that the expenditure on cloud applications was small compared to the huge amount business spent on IT as a whole. However, it pointed out that corporate reluctance to cloud computing was starting to be overcome.

Since April when I started my new role at Flowgear, I have become increasingly aware how strong, convincing and valuable it can be for business to embrace the cloud rather than resist it. I also attended the Gartner Application Architecture, Development and Integration Summit in London to help promote Flowgear, and heard senior Gartner analyst Andy Kyte speak on how old applications, i.e., on-premise systems, are being relegated, and even decommissioned, in favour of newer applications, which are increasingly cloud-based. His comment to me about the rate at which cloud computing was replacing some major on-premise systems was startling.

A major reason in my case for my previous ignorance and dismissal of cloud computing came from my work and background. As a baby boomer working in the ERP industry, my whole work experience was around on-premise applications, and I now realise that it was very difficult to see outside that envelope. I think it is also the perspective of many IT people of similar age and experience, and it may mean therefore that until the next generation become the decision makers, cloud computing won’t really take off. This may apply more in large businesses – in smaller ones and start-ups the Generation Xers and Millennials are already in charge.

Two recent articles on the ZDNet site have covered the topic of innovation and why cloud computing will grow. One article discussed how the enterprise technology incumbents were not seen as enabling innovation, and published survey results that showed cloud computing was the main platform for innovation.

innovation-tech-vendors-3
The other article reviewed the drivers that would make businesses move to the cloud. It will boil down to competing in a new world of business. This will mean that companies will be running:

mostly off-the-shelf enterprise software with a handful of custom-developed applications, probably containing core IP.

It’s going to take some time, but:

Enterprises will make increasing use of platform as a service, enabling developers to create web and mobile apps for any platform that integrates easily with software as a service and on-premises applications. Cloud technologies will be pervasive, with all corporate data managed using a cloud-based business model, underpinned by a hybrid cloud infrastructure.

I am now starting to wonder – I got my first experience of the enterprise software industry in the late 1990s, when ERP was beginning to come of age; within five years it was booming. I am now doing a similar thing with enterprise cloud computing; where that will be in 2020?

Is Microsoft like the renewed IBM?

In 2007 I wrote a blog that posed the question whether Microsoft was becoming like the old IBM. I used a number of cases that made Microsoft look like the IBM of the late 1980s and early 1990s – before IBM’s near demise and subsequent revival.

Now I see a blog post by James Governor who reckons Microsoft’s new CEO Satya Nadella is like IBM’s saviour Lou Gertner.

CEO Satya Nadella is increasingly looking like Microsoft’s Louis Gerstner – that is, an executive who can look at things from the customer perspective, with a truly outside-in view, and drive the cultural change needed to revitalise a company from the ground up. Nadella has a relaxed, confident demeanor that makes you want to lean in and engage, and now by extension, so does Microsoft. In terms of its corporate evolution Microsoft currently looks like IBM in the late 1990s, supporting whatever environments customers choose, but with Azure playing the role of Global Services, and the key customer being the modern software developer rather than the CIO. In other news Microsoft’s timing is pretty much perfect.

In the end time will tell, but I do believe Governor might be right.

 

Should ERP vendors enter adjacencies?

strategyThere is a tendency these days to advise that people and companies ‘focus’, and not try to do too much. Should companies stay with one set of products, or broaden out into other related areas or ‘adjacencies’?

Recently an analyst I follow on Twitter commented that SAP has spend $50billion over the years to acquire innovative products the company could not build. I can’t remember whether it was Vinnie Mirchandani or Ray Wang, but there is a Wikipedia link that shows the SAP acquisition list. The money for those acquisitions came from the annual license fees that SAP customers pay, an issue that Vinnie has said before is a concern to customers, for example here.

SAP is not alone, Oracle has also spent billions on acquisitions over the last 10 years to broaden its footprint from a database and finance applications player, to one that has its own complete technology stack.

In an era when ‘focus’ is often evoked, the question is how do executives of a company identify opportunities and prioritise goals when they move from specialising in one area of technology to a huge range of technology products? An article in 2014 raised the issue of the dangers of adjacencies. When growth begins to decline, the reaction is for companies to enter other related areas of business, and this seems to have become almost an addiction. When it comes to SAP and Oracle, their acquisitions appear to be driven by a need to continue an aggressive growth strategy.

The basis of the article is that adjacency moves distract the company leaders from finding new ways to grow the business they are already in, and so the core business grows slower. This reduces the focus on the core area, what makes this area unique and valuable, and the business loses the advantages it used to have. Again, SAP’s core ERP area has not recorded strong growth in recent years.

Interestingly, the writer of the 2014 article published another one in 2015 that discussed how diversification into adjacencies could work. What needs to be done to succeed is to:

think about focus in terms of how much your businesses materially benefit from the distinctive capabilities that make your company better than any other at its way of creating value.

According to the new hypothesis, you don’t diversify just to enter more attractive growth markets, you do it for these two reasons.

To use your company’s way of creating value and its distinctive capabilities to generate new avenues for profitable growth.

To strengthen your company’s current business, by enhancing either its capabilities or its value proposition.

The adjacency strategy for a business therefore is not to diversify away from your base, but to diversify for your base.

Looking at SAP, Oracle, and also IBM, the question seems to be, what did they diversify for?

Leaving the ERP world

changingAfter over 15 years, I will soon be leaving the world of ERP and enterprise software.

It’s been a great time to work in the ERP software field, especially as small- and mid-size (SME) companies started seeing the value and justification for ERP in their businesses. For ERP vendors like my nearly former employer SYSPRO, the growth in the SME market has been wonderful.

For me it’s been a great experience working for a South African software company that is truly global. Having been in the SYSPRO corporate office I have had exposure to how an international software company does strategy and development planning, and been able to interact directly with some of the best developers around. I also got to engage with colleagues in other countries, and learnt a lot about how those countries can be both the same and very different. I could not have done any of that at any other enterprise software company in South Africa.

Now I am moving on, up into the cloud, so to speak. I will be joining a Johannesburg-based software company called Flowgear as head of marketing. This company was founded in 2010 and has been one of  Microsoft’s local stars in the startup space. It has also got onto the Gartner magic quadrant in the sector where it plays – Enterprise Integration Platform as a Service.

I am impressed by what I’ve seen and heard of the company – especially at a recent seminar held at Microsoft. I am also really looking forward to my new role: helping to promote the company and grow the business, not just in this country, but also internationally.

I will keep on blogging here, but I’ve realised I may have to change the top tag line, I will have to drop the “enterprise” part off.