enterprise software

Nick Shelness Independent Technology

Consultant 1

Enterprise SoftwarePast, Present,

Future?

Some Personal Musings

Nick Shelness Independent Technology Consultant

2

Who The Hell Am I?

1970-1980 Lecturer in CS Dept - Edinburgh– Operating Systems, Compilers, Communications

1980-1984 BNOC -> Britoil - Glasgow– Infrastructure architect (off-shore and on-shore)

1984-2001 Soft-Switch -> Lotus -> IBM– Soft-Switch (Clydebank & Philadelphia, PA)

Founded Soft-Switch UK (1984-1986) 2nd level development management (1986-1988) Chief Architect -> Chief scientist (1988-1993)

– Lotus/IBM (Cambridge, MA) Chief Messaging Architect (1993-1998) Chief Technology Officer (1998-2001) Lotus Fellow (1 of 4) / IBM Fellow (1 of 151)


3

The Source of my Musings

Recently (2003-2004), I was the CTO of an Enterprise Software company – Entigo.

Entigo was a dot.bomb survivor, that after $40,000,000 had been blown on catalog & order offerings, successfully re-cast itself as the vendor

of “Warranty Chain Management Software”.

Despite excellent lead customers, sales hit a wall. The company continues to limp along.

Entigo is not alone!


Consultant 4

What is Enterprise Software?


5

What is Enterprise Software?

Software employed to run an enterprise– Directly

Accounting, ERP, CRM, Supply chain, Service, HR, …

– Indirectly (support the above) OS, DB, EIA, Web app. server, IDEs, …


6

How Is Enterprise Software Acquired?

It isn’t!– Do nothing

Continue with current systems/processes

It is custom built. – by in-house IT or under contract

Requirements -> Specifications -> …

As a product.– A Commercial Of The Shelf (COTS) offering– Alignment will be required!

Align the software with current business processes. Align new business processes with best practice.


7

How is COTS Enterprise Software Sold?

By a direct sales force– Bundled with hardware– For an up-front license fee with annual renewals– For a recurring fee

Through an indirect channel– Bundled with hardware– For a recurring fee

Through telemarketing– For a recurring fee


Consultant 8

Enterprise Software

The Far Distant Past1950 – 1970


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What Computers Replaced


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Enterprise Data – Sources & Sinks

Punched Cards & Cheques– Punches, Sorters, Collators, Readers, Tabulators– Required Re-keying (paper->cards, cheques)

Magnetic Tape– Sequential Read & Write


11

Enterprise Software Landscape

Large mainframes – largely leased. Software bundled with hardware.

– Operating Systems, Assemblers, Compilers Batch processing the norm.

– Initially manual, and then OS (JCL) scheduled. Enterprise software?

– Primarily developed in house.– A few COTS offerings

Sort/Merge utilities. Payroll packages.


Consultant 12

Enterprise Software

The Distant Past1971 – 1985


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Cards, Cheques, and Tapes Green Screen Input

– Command lines, Forms, Function keys

Magnetic Discs– Random Block Level Read & Write


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Larger mainframes and mini-computers Software was separately purchased/leased.

– From hardware manufacturer & independents.

Online access & processing became the norm. Enterprise software

– The majority still developed in-house.– More COTS software (beyond OS, etc.) employed

Data Management Systems– ISAM -> CODASYL -> Relational & 4GL

Application packages (financial, utilities, etc.).


Consultant 15

Enterprise Software

The Intermediate Past1986 – 1997


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Cheques, Green Screens, PC based clients Magnetic Discs

– 70% per year compound growth in storage density

Tapes (for backup only) Inter-enterprise (B2B) data (EDI) PC documents (files)


17


PC use explodes Hardware & software start to be decoupled

– The rise of Microsoft Personal productivity software is developed

– Word processors, Spreadsheets, Presentation Graphics, …

LANs become widely deployed Client/Server architectures are promulgated

– Utilize Rich UIs and cycles close to the user– Version control become a nightmare


Consultant 18

Enterprise Software

The Recent Past1998 – 2001


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Cheques PC (thick) clients & Browser (thin) clients Shared Magnetic Discs

– SAN – Storage Attached Network (Block Mode)– NAS – Network Attached Storage (File System)– Mirroring, SNAPing, and Tapes (for backup)– 120% per year compound growth in storage density

B2B data & commerce B2C communication & commerce


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The Internet Explodes

PCs and modems provide consumer access– Relatively cheap PCs– Flat rate access tariffs (originally in US, then spread)– World Wide Web & Browsers

B2C becomes possible– Communication & commerce

B2B – Becomes much more frictionless– Expands to encompass smaller businesses


21

Year 2000

A once in a millennium (lifetime) event Constituted a massive forcing function


22

The Enterprise Software World Changes

Do nothing–Continue with current systems/processes

Custom Build–Requirements -> Specifications -> …

COTS product.–Alignment will be required!

Align the software with current business processes.Align new business processes with best practice.

Not an option

Limited option

–From who?


23

Purchase From Who?

No over-arching offering Some area only addressed by quite new vendors.

– Financials plus (ERP) SAP, …

– Supply Chain (SCM) E2, Ariba, Manugistics, …

– Customer Relationship & Sales Force Automation (CRM) Seibel, …

– Human resources (HR) PeopleSoft, …

Required huge amounts of customization & integration.


24

Integration – Where, When, & How?

Between systems/applications– ETL & EAI tools– Data archeology & anthropology

Via common data The growth of 2nd & 3rd party system integrators

– Professional Services, IBM Global Service, Accenture, …

The growth of IT Outsourcing– Transfer IT staff & equipment to a 3rd party– Transform “fixed” into “variable” costs


Consultant 25

Enterprise Software

The Present2002 – 200x


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Cheques become electronic images Otherwise stasis except for data volumes

– 120% per year compound growth in density


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The industry hits a wall– Hardware & software massively over-sold

over the preceding period. New software license revenue drops to near zero.

– Enterprise software purchasers object to the prevailing business model.

High initial license fee. Significant annual renewal (previously maintenance) fee. High customization and integration costs.

– IT departments & vendors start to move off-shore 70% reduction in loaded costs & high quality.


Consultant 28

Enterprise Software

The Future200x – ????


29

New License Revenue is Way Down.

The Tech Recovery appears to be losing steam, with

the growth in corporate spending slowing. Companies are

squeezing more out of what they have on hand, buying

cheaper technology and refusing to pay big upfront fees.

The shift is holding back a major driver of growth in the

broader economy.

Tuesday, November 9, 2004


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Stasis except for data volumes


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What will the future require?– The huge up-front license fee is largely dead.

Yields revenue smoothing. Poses much larger capital demands. Requires acceptance of “out of the box” functionality.

– Pay for what you eat as you eat it.– Off-shore software development

India today China tomorrow


Consultant 32

Questions?

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