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Nick Shelness Independent Technology
Consultant 1
Enterprise SoftwarePast, Present,
Future?
Some Personal Musings
Nick Shelness Independent Technology Consultant
2
Who The Hell Am I?
1970-1980 Lecturer in CS Dept - Edinburgh– Operating Systems, Compilers, Communications
1980-1984 BNOC -> Britoil - Glasgow– Infrastructure architect (off-shore and on-shore)
1984-2001 Soft-Switch -> Lotus -> IBM– Soft-Switch (Clydebank & Philadelphia, PA)
Founded Soft-Switch UK (1984-1986) 2nd level development management (1986-1988) Chief Architect -> Chief scientist (1988-1993)
– Lotus/IBM (Cambridge, MA) Chief Messaging Architect (1993-1998) Chief Technology Officer (1998-2001) Lotus Fellow (1 of 4) / IBM Fellow (1 of 151)
Nick Shelness Independent Technology Consultant
3
The Source of my Musings
Recently (2003-2004), I was the CTO of an Enterprise Software company – Entigo.
Entigo was a dot.bomb survivor, that after $40,000,000 had been blown on catalog & order offerings, successfully re-cast itself as the vendor
of “Warranty Chain Management Software”.
Despite excellent lead customers, sales hit a wall. The company continues to limp along.
Entigo is not alone!
Nick Shelness Independent Technology
Consultant 4
What is Enterprise Software?
Nick Shelness Independent Technology Consultant
5
What is Enterprise Software?
Software employed to run an enterprise– Directly
Accounting, ERP, CRM, Supply chain, Service, HR, …
– Indirectly (support the above) OS, DB, EIA, Web app. server, IDEs, …
Nick Shelness Independent Technology Consultant
6
How Is Enterprise Software Acquired?
It isn’t!– Do nothing
Continue with current systems/processes
It is custom built. – by in-house IT or under contract
Requirements -> Specifications -> …
As a product.– A Commercial Of The Shelf (COTS) offering– Alignment will be required!
Align the software with current business processes. Align new business processes with best practice.
Nick Shelness Independent Technology Consultant
7
How is COTS Enterprise Software Sold?
By a direct sales force– Bundled with hardware– For an up-front license fee with annual renewals– For a recurring fee
Through an indirect channel– Bundled with hardware– For a recurring fee
Through telemarketing– For a recurring fee
Nick Shelness Independent Technology
Consultant 8
Enterprise Software
The Far Distant Past1950 – 1970
Nick Shelness Independent Technology Consultant
9
What Computers Replaced
Nick Shelness Independent Technology Consultant
10
Enterprise Data – Sources & Sinks
Punched Cards & Cheques– Punches, Sorters, Collators, Readers, Tabulators– Required Re-keying (paper->cards, cheques)
Magnetic Tape– Sequential Read & Write
Nick Shelness Independent Technology Consultant
11
Enterprise Software Landscape
Large mainframes – largely leased. Software bundled with hardware.
– Operating Systems, Assemblers, Compilers Batch processing the norm.
– Initially manual, and then OS (JCL) scheduled. Enterprise software?
– Primarily developed in house.– A few COTS offerings
Sort/Merge utilities. Payroll packages.
Nick Shelness Independent Technology
Consultant 12
Enterprise Software
The Distant Past1971 – 1985
Nick Shelness Independent Technology Consultant
13
Enterprise Data – Sources & Sinks
Cards, Cheques, and Tapes Green Screen Input
– Command lines, Forms, Function keys
Magnetic Discs– Random Block Level Read & Write
Nick Shelness Independent Technology Consultant
14
Enterprise Software Landscape
Larger mainframes and mini-computers Software was separately purchased/leased.
– From hardware manufacturer & independents.
Online access & processing became the norm. Enterprise software
– The majority still developed in-house.– More COTS software (beyond OS, etc.) employed
Data Management Systems– ISAM -> CODASYL -> Relational & 4GL
Application packages (financial, utilities, etc.).
Nick Shelness Independent Technology
Consultant 15
Enterprise Software
The Intermediate Past1986 – 1997
Nick Shelness Independent Technology Consultant
16
Enterprise Data – Sources & Sinks
Cheques, Green Screens, PC based clients Magnetic Discs
– 70% per year compound growth in storage density
Tapes (for backup only) Inter-enterprise (B2B) data (EDI) PC documents (files)
Nick Shelness Independent Technology Consultant
17
Enterprise Software Landscape
PC use explodes Hardware & software start to be decoupled
– The rise of Microsoft Personal productivity software is developed
– Word processors, Spreadsheets, Presentation Graphics, …
LANs become widely deployed Client/Server architectures are promulgated
– Utilize Rich UIs and cycles close to the user– Version control become a nightmare
Nick Shelness Independent Technology
Consultant 18
Enterprise Software
The Recent Past1998 – 2001
Nick Shelness Independent Technology Consultant
19
Enterprise Data – Sources & Sinks
Cheques PC (thick) clients & Browser (thin) clients Shared Magnetic Discs
– SAN – Storage Attached Network (Block Mode)– NAS – Network Attached Storage (File System)– Mirroring, SNAPing, and Tapes (for backup)– 120% per year compound growth in storage density
B2B data & commerce B2C communication & commerce
Nick Shelness Independent Technology Consultant
20
The Internet Explodes
PCs and modems provide consumer access– Relatively cheap PCs– Flat rate access tariffs (originally in US, then spread)– World Wide Web & Browsers
B2C becomes possible– Communication & commerce
B2B – Becomes much more frictionless– Expands to encompass smaller businesses
Nick Shelness Independent Technology Consultant
21
Year 2000
A once in a millennium (lifetime) event Constituted a massive forcing function
Nick Shelness Independent Technology Consultant
22
The Enterprise Software World Changes
Do nothing–Continue with current systems/processes
Custom Build–Requirements -> Specifications -> …
COTS product.–Alignment will be required!
Align the software with current business processes.Align new business processes with best practice.
Not an option
Limited option
–From who?
Nick Shelness Independent Technology Consultant
23
Purchase From Who?
No over-arching offering Some area only addressed by quite new vendors.
– Financials plus (ERP) SAP, …
– Supply Chain (SCM) E2, Ariba, Manugistics, …
– Customer Relationship & Sales Force Automation (CRM) Seibel, …
– Human resources (HR) PeopleSoft, …
Required huge amounts of customization & integration.
Nick Shelness Independent Technology Consultant
24
Integration – Where, When, & How?
Between systems/applications– ETL & EAI tools– Data archeology & anthropology
Via common data The growth of 2nd & 3rd party system integrators
– Professional Services, IBM Global Service, Accenture, …
The growth of IT Outsourcing– Transfer IT staff & equipment to a 3rd party– Transform “fixed” into “variable” costs
Nick Shelness Independent Technology
Consultant 25
Enterprise Software
The Present2002 – 200x
Nick Shelness Independent Technology Consultant
26
Enterprise Data – Sources & Sinks
Cheques become electronic images Otherwise stasis except for data volumes
– 120% per year compound growth in density
Nick Shelness Independent Technology Consultant
27
Enterprise Software Landscape
The industry hits a wall– Hardware & software massively over-sold
over the preceding period. New software license revenue drops to near zero.
– Enterprise software purchasers object to the prevailing business model.
High initial license fee. Significant annual renewal (previously maintenance) fee. High customization and integration costs.
– IT departments & vendors start to move off-shore 70% reduction in loaded costs & high quality.
Nick Shelness Independent Technology
Consultant 28
Enterprise Software
The Future200x – ????
Nick Shelness Independent Technology Consultant
29
New License Revenue is Way Down.
The Tech Recovery appears to be losing steam, with
the growth in corporate spending slowing. Companies are
squeezing more out of what they have on hand, buying
cheaper technology and refusing to pay big upfront fees.
The shift is holding back a major driver of growth in the
broader economy.
Tuesday, November 9, 2004
Nick Shelness Independent Technology Consultant
30
Enterprise Data – Sources & Sinks
Stasis except for data volumes
Nick Shelness Independent Technology Consultant
31
Enterprise Software Landscape
What will the future require?– The huge up-front license fee is largely dead.
Yields revenue smoothing. Poses much larger capital demands. Requires acceptance of “out of the box” functionality.
– Pay for what you eat as you eat it.– Off-shore software development
India today China tomorrow
Nick Shelness Independent Technology
Consultant 32
Questions?