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Back to the Future: Software Moves as Catalysts for Driving Change

By November 26, 2012Article

Several events in the software world during 2012 will have a notable impact on the industry for years to come, according to SandHill’s industry observers. Some are striking enough that our panelists think they deserve an award.

What software event that happened in 2012 will have the most impact over the next two to three years?

Lincoln MurphyLincoln Murphy, founder and managing director, Sixteen VenturesFrom a purely commercial standpoint — software innovation aside — there was one event that should have the attention of everyone from freemium startups to the biggest, entrenched enterprise software vendors: Microsoft’s acquisition of Yammer. Microsoft bought Yammer, a four-year-old company, for $1.2 billion not just to expand their market or for their “Cloud DNA,” but because Yammer was, quite simply, beating them in the market. This should make legacy enterprise software and ISV incumbents open their eyes to the reality of cloud startups in their market.

As an industry, enterprise software companies should have learned from sneaking up on CRM vendors — including Microsoft — and taking market share. But it was brushed off as an anomaly. In 2012, 2013, and beyond, cloud-native companies disrupting and displacing entrenched, on-premises software vendors is no longer an anomaly; it’s rapidly becoming the norm.

Yammer, a cloud-native company, was winning deals against Microsoft SharePoint; and Microsoft didn’t see it as (or perhaps admit it was) a threat until it was so late that the option of buying Yammer was only available at a premium. If you’re the incumbent on-premises software company being threatened by cloud-native vendors and FUD doesn’t work anymore, what’s your move?

Kevin CoxKevin Cox, vice president corporate marketing, Actian Corporation: The thin client or mobile device or smartphone established itself as the most consumer-desired platform for software consumption and a dramatic extension of cloud as the new most desired platform of software. This will play out over the next three years as a disruptive reshuffling of middleware, applications and service provider markets.

Guy Smith, chief consultant, Silicon Strategies Marketing: The utter domination of Android for smartphones is a shift that cannot be discounted. Android came from nowhere to market dominance in less than two years, which changed everything. There appears to be no slowing its growth save for market saturation. If Apple releases anything like Apple Maps again, their halo sales will drop and Android will own it all.

Peter AuditorePeter Auditore, principal researcher, Asterias Research: DreamForce 2012 will impact the industry for years to come.


Steve SchmidtSteve Schmidt, vice president corporate development, Flexera Software: Software license optimization went mainstream, driven in part by the high number of software audits and cost containment initiatives. Compliance is emerging as a key requirement for most organizations.  Software license optimization was recognized as a category by both Gartner (July 2012) and Forrester (Sep 2011). Software license optimization is taking center stage because companies are moving up the maturity model (beyond just inventorying their applications) and, accordingly, they need to move beyond simple software asset management.  This will also take on growing importance as enterprise app stores go mainstream. Companies will require strong back-end systems to facilitate these app stores and the consumerization of IT movement. Software license optimization and application readiness strategies will allow companies to implement enterprise app stores in a way that allows IT to retain accountability and control.

Paul Ressler, principal, The Cirrostratus Group: The acquisition of Taleo by Oracle and the acquisition of SuccessFactors by SAP will continue to have a large impact on the software industry over the next two to three years as both SAP and Oracle figure out how to integrate these SaaS companies with the rest of their businesses. They will use these acquisitions as the catalysts to make the companies more cloud focused.

Andrew HayAndrew Hay, chief evangelist, CloudPassage: Perhaps the biggest change was the launch of Microsoft’s Azure IaaS offering. Given the clout of Microsoft’s reach, it’s likely that the company will inevitably disrupt the cloud market and may even bring previously apprehensive adopters of cloud into the fold. Since customers often “dance with the one that brought them,” Microsoft hopes to take its existing datacenter users by the hand and lead them into the cloud world.


Howard DresnerHoward Dresner, president, founder and chief research officer, Dresner Advisory Services, LLC: The business side as opposed to IT, is gaining dominance in business intelligence spending decisions. As the business continues to exert its control we’ll see a greater emphasis upon things that the business wants including social media access/analysis, cloud BI, collaboration, visualization, mobile support, etc.

Jeff Kaplan, managing director of THINKstrategies and founder of the Cloud Computing Showplace:’s marketing cloud initiative will help to educate CMOs and other business decision makers about how to measure and maximize the effectiveness of their social marketing efforts.


Chris Lochhead, Al Ramadan, Dave PetersonDave Peterson, Chris Lochhead, Al Ramadan; co-founders and partners at Play Bigger Advisors: The IPO of Facebook showed that private valuations got too far ahead of the public markets. The crash of Zynga also illustrates the risk of companies pricing their value to perfection before they go public, pushing new employees and shareholders deep underwater in their stock. Good, old-fashioned enterprise companies will swing back into to the lead for making long-lasting categories that deliver 20+ year returns to shareholders.

Which software companies deserve an award for something outstanding they did in 2012?

Kevin Cox, vice president corporate marketing, Actian Corporation: Apple’s iPhone iOS integration with Facebook is really superb.  It’s an exquisite link between the digital world and the digits world (palm of your hand). They both deserve an award for looking beyond the interests of their own realms to see the new opportunities.

Paul Ressler, principal, The Cirrostratus Group:  Microsoft should receive the “Bet the Company” award for their release of Windows 8. The “Bet” is not for the financial survival of the company but whether they will continue to be an industry leader. Windows 8 has the opportunity to change them into a visionary company focused on a mobile world where customers do not have to change operating systems and applications to operate in a hybrid smartphone/tablet/laptop/desktop/cloud world. If they fail to get ordinary users to see the future through Windows 8, they will likely end up being a company of the past without the impact they have had over the last 20 years.

Guy Smith, chief consultant, Silicon Strategies Marketing: Even though it may prove to be fruitless in the end, Microsoft moving to a uni-architecture in Windows 8 — one that bridges phones, slabs and desktops — is an achievement. Had they done this two or three years ago, they might have dominated all three major personal computing hardware types. But in this business, two years is too late.

Jeff Kaplan, managing director of THINKstrategies and founder of the Cloud Computing Showplace: Alteryx created an Analytics Gallery that enables business users to create and share analytic apps.

Lincoln Murphy, founder and managing director, Sixteen Ventures: Three companies come to mind for what they did in 2012:

  • Square brought the ability to accept credit cards in real life to the masses, displacing low-end Point-of-Sale/CRM vendors and severely disrupting payment-processing companies including PayPal in the process. In mid-2012, Square landed a deal to bring its payment processing service into 7,000 Starbucks locations in the United States, significantly expanding its brand awareness and daily transaction numbers. Legacy payment processing and Point-of-Sale providers should be very nervous.
  • Workday’s successful IPO made everyone fully aware that SaaS is a viable model for vendors in even the most entrenched enterprise software categories, even those that have a high-touch, complex sales model. Legacy vendors should be very nervous if they don’t have a cloud strategy yet.
  • Yammer beat Sharepoint in so many deals and finally got the attention of Microsoft who — at that point — decided to buy them for $1.2 billion rather than compete. Unless you’re in a position to buy your competition — at a premium — don’t let the upstarts in your market sneak up on you and take market share. If you see SaaS and cloud-native startups entering your market, don’t rest on your laurels. You should be nervous and you should take action!

Peter Auditore, principal researcher, Asterias Research: deserves the award for continuing to innovate by acquisition and leveraging the new social media interfaces and platforms that facilitate collaboration in enterprises.

Dave Peterson, Chris Lochhead, Al Ramadan; co-founders and partners at Play Bigger Advisors:

  • The “This is Not Your Father’s iPhone Award” goes to Samsung. Watch their brilliant attack ads that are painting Apple iPhone users as nichie, esoteric and aging fan boys.
  • The “Save The World From Mangy Taxis Award” goes to UBER.  It has disrupted a long-lasting monopoly of crappy service and terrorizing customers. With a click of a button, we are safe, sound and riding in style. We hope to soon be flying Ashton Kutcher-style with the rollout of the UBER for private jets.
  • The “Get This Rock out of My Pack” award goes to Kno, which is making digital social textbooks a reality. (Full disclosure: Play Bigger are advisors to Kno.) 
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