Salesforce.com CEO Marc Benioff was reported as saying that enterprise technology is lagging consumer technology in terms of innovation. The quote is:
Mainstream social-networking tools such as Facebook and Twitter are having an impact on the way people work that is not being matched by older technology companies … IBM is still selling mainframes, Microsoft is still selling Windows software, but they’re not leading innovation and they’re not creating new markets. Companies are either leading or protecting cash-cow monopolies.
I think he is wrong on several counts.
How do motor manufacturers innovate? The Japanese car companies are innovating, in manufacturing and supply chain, which is important to customer service and satisfaction. The outward innovations – ‘green’ cars – are too expensive for the large majority of their customers and their impact seems to be marginal.
IBM and Microsoft are innovating. Look at how IBM is moving into new markets by building (through acquisition) new types of services. For Microsoft, Dynamics CRM was an innovation from them, especially if you were a customer considering Siebel’s CRM. Although Microsoft haven’t been very successful in some areas (e.g., Live, tablet PCs), but they keep trying (e.g., Windows Phone 7).
It’s important to appreciate the cash-cows that provide the funding for innovation. In time, I reckon Salesforce.com will have a few cash-cows, and then someone else will be accusing them of lacking innovation.
What type of innovation have Twitter and Facebook brought for the enterprise? The basic processes of an organisation – order-to-cash, procure-to-pay, record-to-report – as well as other types as processes like supply chain and design chain operations (SCOR and DCOR) have hardly been scratched by the social media applications. These processes and operations are absolute core to businesses and will continue to be needed.
Commentators like Dennis Howlett and Vinnie Mirchandi have attacked enterprise software vendors in the past for lack of innovation, but the vendors are still providing products and solutions demanded by their customers. Ten years ago, the concept of a Tier 2 level of ERP vendors was hardly discussed, now it’s one of Gartner’s Magic Quadrants. That doesn’t mean that the Tier 1 vendors have lost business – Tier 2 ERP addressed another market niche. The innovations that Dennis and Vinnie applaud could well be opening other market niches.
There are several synonyms for innovation – novelty, invention, revolution, modernization, improvement, advance. The last three have all been done by ERP systems, however ERP customers are very wary about their vendors applying the first three. So from where, and why, is there a demand for innovation?
I wonder whether innovation has become such a mantra, that some people are forgetting that a large number of customers are getting the solutions they want. Perhaps innovation is a generational thing – the change of business control to Generation X and Ys might produce innovations in managing business that us Boomers cannot envisage.
In what areas do you see a need for, or believe there should be, innovation in enterprise software? Is it in the area of business processes, or in the user interface and experience, or another area?