Cloud

Enterprise Software is Not Gangnam Style

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Are you among the more than 800 million people who have seen South Korean pop superstar Psy’s hit music video, Gangnam Style? It went viral within six days and is now the most-viewed video of all time on YouTube and the number-one song in every country. It refers to an area of Seoul, South Korea, where people are noble during the day and sexy at night, which brought to my mind recent articles I’ve seen about software. Someone wrote that “cloud” is sexy while another opined that enterprise software is not sexy. Yet another pundit wrote that enterprise software “is not sexy and I know it.”

The Facebook IPO disappointed investors and hastened the flight of venture capital from consumer-oriented software back to enterprise software. Like the viral spread of the Gangnam Style video, the VC community’s switch to enterprise software happened in just a few months.

My opinion is that enterprise software has never been sexy, but in 2013 it will become hot!

Enterprise software change drivers

Enterprise software has always been based on the premise that it has value to a customer. The value can be quantified and there is a clear return on investment. Customers have a need that the software addresses. They implement it on-premises or in the cloud, train people to use it, maintain and upgrade it. It then becomes an indispensable part of an organization’s operations. Great value but not sexy.

Compare that to consumer-oriented software, where downloads/sales are based on fads, impulse, emotion, possibilities and intangibles. Consumers tend to be fickle, using a game or other apps for a while, and then move on to the next hot one.

So what will drive change in 2013 to make enterprise software sexy?

Disruptive technologies — the cloud and mobile — are rapidly changing the models of delivery and consumption. Cloud technology changes the traditional delivery model of a large lump sum amount up front and an annual maintenance fee to just paying a monthly fee. Because of mobile technologies and the consumerization of IT, practically everybody in a company now takes a smartphone or iPad or a tablet to work. Enterprise applications that employees were using on a desktop or laptop now have to be accessible from mobile devices.

These disruptive technologies are great for enterprise customers. With the traditional model, the cost of change was so prohibitive that customers limped along with whatever they had. But with the advent of the cloud, a customer can easily discontinue a service and move to one they like better. Like consumer-oriented products, the cloud changes the customer loyalty factor. Now customers can switch easily if a software company screws up, so companies are very motivated to deliver high-quality service. The cloud model helps customers be more in control. Enterprise software’s core value proposition has not changed; only its delivery and consumption.

The greatest game not yet played

A major outcome of the cloud and consumerization of IT is the fact that they enable the enterprise customer to experiment and lead software companies to build better products.

The entire face of enterprise software now has to look, feel and act differently; the user interface must become more “consumerish.” And that’s where the sex and sizzle will come in. Enterprise software will be forced to look like a game or other smartphone apps. It must be intuitive; there can’t be a boatload of documentation behind it. It must be built so that employees intuitively know how to use it.

Because of the mobile devices that enterprise applications will now use, software vendors have an opportunity to move to a new paradigm in terms of the user interface. In 2013, we can make enterprise software really sexy if we bring in the consumer-oriented features that we’re all used to now in our daily lives and make enterprise applications look like consumer apps.

Will we actually see this change in enterprise software in 2013? Will this paradigm change catch on quickly like Gangnam Style? I believe so because the reality is that the cloud model means cloud companies are faced with customer churn just like consumer-oriented products. Enterprise software vendors will need to pay a lot of attention to what customers want in order to keep them.

M. R. Rangaswami is co-founder and CEO of Sand Hill Group and the publisher of SandHill.com

Comments

By Mobility Software

Nice Blog. I totally agree with this.

By Craig LaFrance

Very good, nothing to add to this blog.

By Eric Peters

Nice post. It’s interesting to see enterprise trends follow consumer tech for once – as you’ve noted, users have changed too. At Mendix we call this generation of end-users ‘the Facebook generation” – they know within the first 10 seconds of using an app whether they’ll continue using it. (It doesn’t matter whether it’s an app they spent 99 cents on, or their IT department spent 99k – ie. UX is paramount for mobile.) One area worth mentioning though, is the adoption of social productivity tools and collaboration spaces that allow end users to be more involved in projects, effectively making every stakeholder a part of the dev team.

By Jim Geisman

Well stated — sex DOES sell even in B2B enterprise-class software. I do take issue with the ability to switch vendors — it isn’t easy just easier. It is easier to run parallel operations so what you say is true but it does take a while to port things over to the new system.

The biggest hurdle is when a cloud app is integrated into a company’s workflow or with other apps. The time required to switch may be long (and the switching costs high).

By MR Rangaswami

Thanks everyone for your comments! I think the next few years will see a radical transformation of the “traditional” enterprise apps as we know them. Let’s see how fast it all happens.

By Sean O'Leary

That’s a very important statement- ” Enterprise software vendors will need to pay a lot of attention to what customers want in order to keep them.” It’s all about the consumers. With the cloud, there are plenty of more options to take your business. The companies that aren’t keeping up with consumer demand will get shut out.

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