Why Enterprise Software Will Be Forever Changed

Why Enterprise Software Will Be Forever Changed
Why Enterprise Software Will Be Forever Changed

On the earnings call this week for ServiceNow, CEO Bill McDermott said: “Around the world, we see that customers who are farthest along in their digital transformation are better equipped to manage this crisis. Companies lagging behind are realizing that they now have a burning platform. Accelerating digital transformation has become a business imperative.”

He pointed out that—during the next three years—about $7 trillion will be spent on digital transformation. And yes, this process is likely to accelerate.

McDermott’s use of the phrase “burning platform” harkens back to a memo in 2011 from Nokia CEO Stephen Elop. He recounted a story about a worker on an oil rig, which exploded. His choice was stark: either burn in an agonizing death or jump 30 feet into icy waters. 

Well, for Elop, he believed his company was facing a similar dilemma! His burning platform was caused by the onslaught of Apple and Google, which were rapidly eroding Nokia’s market share. And even though he did take swift action, this had little effect. Nokia would ultimately abandon the phone market that it once dominated.

Today’s Burning Platform

“With the COVID-19 pandemic,” said Tom Siebel, who is the CEO of C3.ai and the author of Digital Transformation: Survive and Thrive in an Era of Mass Extinction, “companies have little choice but to change. It’s existential. And technology will be the way to survive.”

While this will lead to much more spending on IT, this does not imply that the enterprise software industry can rest on its laurels either. There will also be wrenching changes. Siebel believes that there will be many software companies that will simply disappear.

OK then, so what will things look like? What will we see for the enterprise software industry?

Let’s take a look:

Soma Somasundaram, the CTO of Infor:

Enterprise software will inevitably evolve with the surge in digital transformation. Today’s software is built for human interaction, meaning the architecture is UI-driven. As the demand for automation continues to grow, software architecture must adapt to support the vast amounts of data needed to power automated workstreams. In particular, there will be a large focus on leveraging cloud technology to enable AI and automated processes.

Vivek Ravisankar, the co-founder and CEO of HackerRank:

Well-established brands usually succeed (or at least hold firm) in times of crisis, in part based on the simple scale of their business and their ability to tap into multiple revenue streams to help prop up ones that may be impacted. Microsoft is a great example of a company that has learned to adapt. Take Microsoft Teams—more than a month ago, Microsoft accelerated Teams innovation, adding new capabilities each week. In less than a quarter, the product has evolved to support meetings of all sizes, scaling from 250 active participants to 100,000-person live events, all the way up to streaming live broadcasts.

Ayman Sayed, the CEO of BMC:

Both the technology buying centers and gravity in companies will shift to allow for technology buying across the company, so pricing models will need to adjust to accommodate the spending trends and models of the business units that make software purchases to operate more responsively, intelligently, and efficiently. Big or small, the tech vendors that succeed—be it software, hardware, SaaS vendors etc.—will be those that adopt a next-gen business model that operates within an ecosystem focused on technology, capabilities, and process integrations that support business requirements at scale.

Muddu Sudhakar, the co-founder and CEO of Aisera:

The remote work lifestyle will eat the enterprise. Companies have already made huge investments for this and will not abandon these efforts when the virus fades. Besides, in a tough economic environment, there will be more focus on cost cutting. And the rent line item is a major one. Going forward, enterprise technology will need to focus much more on the consumerization of work as there will emerge a virtual office as a community. 

Eric Clark, the Chief Digital Officer for NTT DATA Services:

Clients need to reduce dependency on human interaction, so they’re looking at solutions that offer contactless operations, self-help/self-heal tools, and automated workflow. They also need solutions with clear value and defined outcomes. They will no longer buy on vision.

Yvonne Wassenaar, the CEO of Puppet:

As we head into what will likely be a recessionary environment globally, there will be an increased focus on investments that deliver efficiency and optimize the business. I’ve heard from fellow business leaders repeatedly how they are reassessing their priorities for the year ahead, introducing new steps into the procurement process, and—many of them are instituting blanket cuts. As an ex-CIO who has lived through several economic downturns, the bar for software purchases has just been significantly raised. The winning software companies enable cost containment, drive efficiency and ensure business continuity today without turning their back on innovation. The others most likely will go out of business or be bought.

Adam Mansfield, the Practice Leader at UpperEdge:

I envision a world where there is significant consolidation coming out of COVID-19, leaving a much smaller pool of truly viable enterprise software vendors. Through the consolidation, enterprises will be further locked-in to the particular vendors and functionality.  For example, I could see an end state where Microsoft, AWS and Google Cloud are essentially left as the last survivors because Google Cloud bought ServiceNow and Workday, Microsoft acquired SAP and Salesforce, and AWS acquired Oracle.

When it comes to the goal of achieving the most optimal digital workforce, Microsoft is going to benefit the most. They have long standing relationships in place, often at the top of these enterprises (CEO, CFO), and their portfolio of solutions can be geared towards enabling a truly optimized digital workforce. Microsoft is the most expansive, providing the productivity solutions (Office 365), the collaboration functionality (Teams) and a cloud platform solution (Azure).  

Everett Harper, CEO and co-founder of engineering firm Truss:

Enterprise software now needs to work well in consumer environments (relatively low bandwidth home WiFi, mobile, high latency links). JIRA needs to be as fast as Instagram.

Robin Murdoch, the global Software & Platform lead at Accenture:

Now more than ever, businesses will need to put their customers and their experience at the center of attention, make business frictionless by deploying digital technologies, and equip them with insights. AI is one of the technologies, which, when deployed correctly, can help reduce friction, build efficiencies and help ensure a seamless customer experience. While many businesses are already moving to intelligent, data-driven services, more organizations will likely seek to transition to new solutions to enable these experiences.

Paulo Rosado, founder and CEO at OutSystems:

Accept that uncertainty is a fundamental attribute of innovation. The COVID-19 crisis has created a tremendous amount of uncertainty, causing companies to question everything about their business model. Going back to Andy Grove, the biggest innovators have thrived on constantly questioning first principles, even when there wasn’t an existential threat.