The Next Enterprise App

During the first Internet bubble, one prominent IT journal promoted itself with the tagline that IT equaled the business.

Obviously that was a bunch of hype, but a chance conversation with a colleague from a financial data firm reminded us of the central role that IT still plays. His firm was dumping Documentum as its content management platform in favor of a homegrown system because managing content comprised the heart of its business. And their business was simply too unique to be addressed by anything off the shelf.

But in most cases, exceptions like these prove the rule. For most firms, technology helps them run some aspect of the business, but doesn’t define it. And that explains why packages have become facts of life across large, and in growing cases, small-midsize enterprises (SMBs).

Admittedly, enterprise apps aren’t exactly a hot growth sector. Aside from targeting SMBs (which will generate barely a fraction of the revenues of the Global 2000 heyday), most enterprise players like SAP are focusing more on expanding the footprint with their existing base.

Actually, let’s correct ourselves. While ERP is mostly a mature market, there’s at least one enterprise segment that’s begging for common solutions: the management and delivery of IT services.

Problem is, this has long been a fragmented, technical, and highly custom market. Infrastructure management players like BMC, CA, HP, and IBM have traditionally sold to varying silos within IT operations with products that were tools that required significant time and money to customize and integrate.

Yet, with regulatory compliance initiatives consuming greater chunks of IT bandwidth, something’s gotta give. When DBAs tweak databases, system admins provision servers, desktop support adds new users, or operations phases in a new Oracle or SAP upgrade, how do you document that their activities aren’t compromising the sanctity of financial data or the privacy of customer records? The only practical solution is adopting common processes that leave audit trails.

Over the past couple years, a new category of software with the incredibly awkward name of “Run Book Automation” has emerged to orchestrate some of the processes required for managing and delivering IT service. It’s drawn startups like Opalis and iConclude plus attention from the usual suspects. You model the workflows that it takes to handle a trouble ticket or provision a new user, tie in the appropriate management systems, then dashboard or report how the processes are orchestrated. Call it BPM (Business Process Management) for IT.

“Run Book Automation” is a pretty awful label because it implies that vendors are still designing this as a technical solution addressing their usual data center constituencies.

But executing and documenting that users are provisioned according to standard workflows is critical to the folks who own the business apps and conduct the audits. They’re the people who control the budgets, and they’re not going to buy “run book automation.” But they might pony up for something like “Business Service Management,” “Business Technology Orchestration” or maybe even BPM for IT.

Changing labels is the easy part. The challenges are to offer comparable functionality to prove to the folks writing the checks that this is a real market with products (not tools) that can be compared. Equally daunting to vendors is building an effective go to market strategy that reaches a higher-level business audience.

Fortunately there’s an answer here. The IT Infrastructure Library (or ITIL) is a framework that defines things like, what are the elements that comprise incident management or change management. More importantly, ITIL initiatives are being embraced by a critical mass of the Global 2000, primarily as one of the pillars of their SOX, HIPPA, or Basel II compliance initiatives.

For Run Book Automation (or whatever you want to call it) vendors, ITIL provides the blueprint for developing standard orchestrations that could become the next enterprise off the shelf application. OK, ITIL itself doesn’t prescribe implementation, so you can’t design solutions from it. But organizations like the IT Service Management Institute are beginning to develop formalized bodies of knowledge that might fill the gap.

All this is redolent of what happened the last time a cross-industry group formalized processes. Nearly 30 years ago, the American Production & Inventory Control Society (APICS) defined the processes for managing manufacturing inventories, something that eventually broadened to areas like finance and costing. The result, MRP and MRP II (and later, ERP), provided a fat target for technology vendors to develop packaged solutions. It eventually spawned a $25 billion market.

Marathons and Marketing

Conditions were practically ideal for this year’s New York Marathon. With temperatures in the mid forties (about 10C), hardly any wind to speak of, and the world’s best on the field, records should have been shattered all over the place.

In retrospect, the weather was comfortable, probably too comfortable. Runners ran at a modest pace, overconfident that when the time came, they could stage a heroic surge on First Avenue and overcome a leader that nobody had ever run cross before. As one runner put it, “It was great weather, but sometimes when you run that slow, you get in a rhythm and when you do go fast, it feels so much harder. It’s like a shock to the system. It seemed to affect everyone.”

In New York yesterday, some of the world’s leanest and meanest physiques got fat, dumb and happy.

So what’s this all got to do with software?

All too often, market dominance breeds complacence. We’ve all seen it. Probably the most glaring example is Microsoft Internet Explorer, which practically stagnated for 6 – 7 years before Mozilla Firefox stole double-digit market share with a product that was demonstrably superior. We’ve seen it in the past when IBM sat on its SQL invention, creating a huge opening for Oracle. And we saw it when legacy MRP II providers let an obscure German mainframe company define the next generation of enterprise software.

Is it inevitable, or a truism, that sleeping giants are fat targets? It depends on how potentially competitive the market is. OS platforms, rich Internet clients, mobile apps, small-midsize business enterprise systems are among the most volatile markets anywhere. Technology is changing and there is rapidly growing demand for new or cheaper alternatives. Obviously, those folks can’t afford to get too comfortable, which largely explains Microsoft’s recent modus vivendi with Novell over Linux.

By contrast, legacy mission-critical enterprise transaction systems are pretty much here to stay. So let’s say you’re SAP. Your customers have enough invested in your products that they’re not likely to rip them out. So you’ll get a nice maintenance stream. Can you afford to relax? Sure –- as long as your shareholders are content to sit back with maintenance revenues.

Actually, SAP isn’t relaxing, witness their efforts to expand their footprint by controlling the integration platform.

But a poster child for such practice was the old CA. Under the previous regime, CA bought companies for their maintenance stream. Customers were practically held hostage to data center products that they couldn’t easily replace. But eventually technology provided new alternatives, as upstarts gnawed at the edges, claiming customer dollars that were previously going to maintenance, and CA was soon booking 35-day months. You know the rest of the story.

Obviously, not every maintenance or annuity strategy concludes with ex-CEOs landing 12-year jail terms. But even if you operate by the book, that comfortable market you’re in can easily grow too comfortable