Accenture’s Philippe B.Vincent presents a compelling, research based scenario for enterprise software vendors as the current wave of technology change moves into the mainstream. There are way too many nuggets for a posting here. It should be required reading for any professional looking across the software landscape and considering how they respond to client requests for software recommendations. It should also be on the CEO/CIO/CTO desks as the next AOB board discussion. This should be enough to tempt:
As the enterprise software sector grapples with an era of slower growth, the “perfect storm” appears to be brewing for an increasing number of vendors -especially those in the business application arena.
In summary, Philippe believes there is the potential for a simultaneous coming together of competitive forces that have the potential to create a destructive ‘perfect storm’ scenario. It consists of ‘mega vendors’ at one end and ‘dispruptors’ at the other, squeezing the so-called mid-range ‘best of breed’ vendors.
I believe the scenario he paints hits everyone. Including those in apparent monopoly positions or who act as consolidators. I think this is especially true in the SMB/mid-range where the emergence of SaaS players is leaving traditional vendors scratching their heads.
It seems Philippe’s view is based in part on an assumption that monopoly or consolidator players can always tempt disruptors with enough cash or can use their position to crush competition. That may be true but to date, I don’t see any of the privately held yet successful application players being in any mood to sell out. That may be anathema to the VCs mantra but holding out may be a better strategy when there is so much to play for. I estimate for instance that the UKs untapped VSB market could be worth a minimum of $200 million pa.
Philippe suggests a basket of alternative strategies. I’ll think these through for another day. But here’s an example of how market change is influencing the behaviour of the new boys on the block.
AccountingWEB was looking to get ad sales for a round up on SaaS. No-one wanted to play. This is unusual. Normally, a well read title can count on bringing some ad trade through its portal but this time? No takers. The disruptive and as yet tiny players spend their ad money sparingly. They’re finding that the viral effect of blog marketing, attracting comment across a broad swathe of pro-am sites while tele-marketing is far more effective than banner ad placement on sites that have to charge relatively high costs to support operations. In the meantime, these nimble vendors are gobbling up market share in previously untapped markets. They are, in effect, responding to the market in a manner attuned to the grass roots requirements of a tech savvy audience.
This change in behaviour ripples across multiple markets producing interesting responses from the incumbent vendors. Recently, I conducted research for one of the professional vendors. For this company, the UK market is at best flat. They wanted to know if moving to other geographies would be a useful strategy. They have an offer that, while very good, doesn’t match the direction the market is taking. They’re not in a position to re-engineer without running the risk of cannibalizing the existing market. They’re following one of Philippe’s recommendations – innovation. I can’t say more as their plans have not yet been made public. Let’s just say they’re ‘interesting.’
Professional firms are going to find they’re being offered a mixed bag of alternative services. Some will be better than others and it will be important to think through the implications for clients. It’s already happening. One practitioner emailed me today, asking about the impact of innovation. We’ll be talking further in the near future. They’re not considering incumbent solutions.
The future’s here, it’s just not very well distributed.
I’ve calendarised a revisit on this topic in 6 months.
Technorati Tags: innovation, practice development, SaaS
