The Innovation Cycle

The recording of yesterday’s Sandhill.com webinar “The Death of the Software Suite?” is now availalble listen to here. It was a great discussion that generated a lot of questions and perspectives about the future of enterprise software. Boris Chen, Director of Engineering at LucidEra, was clearly inspired and he is our guest blogger today. Here are his thoughts:

The industry goes through cycles of innovation. Whenever innovation happens, things change, and change rapidly, and there are multiple approaches to the same problem. Just look at the area of social networking type applications. You have general ones like MySpace and Facebook, but then there are niche applications like Dopplr. There is no dominant vendor. Integration is still nascent, and standards outlooks are not good for the immediate future (OpenSocial’s future is a big question mark still). When speaking of suites, one cannot resist talking about Microsoft Office. And in this case, Office only happened after some years of innovation, from a laundry-list of predecessors such as: VisiCalc, Lotus, Quattro, WordPerfect, WordStar, etc.  Consolidation into a suite occurred when the technologies matured, the market for them “Crossed the Chasm” and people were looking for the greater power to be gained by the integration of various office tasks. Consolidation is usually driven by a desire to have apps work together, ease of use in having a common interface, and having a common vendor to hold responsible or to deal with. Microsoft in this case was also helped by having a decent competitive offering, owning the operating system, and also having incompetent competitors. But, regardless of this latter point, consolidation into suites is a very natural outcome.

Open source provides us another example of innovation and consolidation. It is hard to believe that only a short while back, open source was a fringe phenomenon. People were suspicious about quality, worried about support, and dubious about integration. Through innovation, open source flourished to where today, a corporate IT department is hard pressed to keep it out of the enterprise. However, here too, in the “wild-west” of engineering, consolidation has occurred. One need look no farther than RedHat and their acquisition of JBoss. Or look at open source families such as offered by Apache, Eclipse, and ObjectWeb. Or look at the commercial vendors issuing certified suites such as SpikeSource, and SourceLabs. We seem to have reverse-entropy constantly at work… Chaos demands organization.

Today, SaaS is still young as an industry. Salesforce is in the Tornado nearing Main Street (or maybe it is already there), but as whole the SaaS area has not even “Crossed the Chasm” (I apologize in advance for invoking Geoffrey Moore). So, the answer to whether the suite is dead is probably a no. It’s just that in our case, it’s irrelevant. We’re in a phase of high innovation, and the threat to SaaS is not suites, it’s not being innovative enough.

As SaaS platforms build out, there will be consolidations, but the consolidations may take various forms. Integration standards may emerge to make suites “virtualized” among several vendors (in the area of hardware there are more examples than in software). Some vendors could begin to buy up others and consolidate the industry (like Oracle) into suites, or some vendors become integration brokers, where they offer a solution that is a composite of other vendors. (like IBM). But how is that good news for people like LucidEra? Well, for now, suites are irrelevant, since as a whole, the technology is far from having a common platform or even a common set of interchange standards, rather, right now is the fast evolving phase, where nothing is clear, and the game is open, primarily favoring people like us. SaaS platform plays such as AppExchange, LongJump, and Coghead, are an exciting area to watch, but it is doubtful that we’ll see “one platform to rule them all” for a long time, if ever.  In the web world, it’s about integration. That is the key take-away from the success of suites, and which is all the more important in a distributed environment where you have no data center. Your data center is distributed among services out on the Internet.

Keys to success for SaaS revolve around partnerships and working on integration ability to foster a vibrant ecosystem. One may start out by offering a superior stand-alone SaaS offering servicing a specific niche. SaaS services the long-tail, there is no doubt. But, to grow the niche into something more, it’s about harnessing the power of integration.

So back to the original question about whether or not suites are dead, and more specifically should a company like Salesforce, Intaact, LucidEra, etc. view established players like Oracle and SAP as threats. One should never discount the competition. IBM proved that even elephants can dance, and Grove taught us that only the paranoid survive. However, that is different than saying that the big players have the upper hand and their dominance is forgone. The questions about if suites vs. best-of-breed is really the wrong question. Niches players and consolidations happen wherever you go in the innovation cycle and consolidation into suites is just one of the many types. The question is really about SaaS vs. on-premise, and when we ponder the gravity of the Innovator’s Dilemma that is posed by such a shift we are now experiencing, one can almost hear the grinding of wrenching guts echoing out of the large vendors’ corporate offices.

Thanks for sharing your thoughts Boris! Be sure to listen to the Death of the Software Suite webinar here.

posted by Darren Cunningham at 10:04 am

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