Recently I was reading one of those CXO surveys in ZDnet (http://www.zdnet.com/enterprise-tech-vendors-sizing-up-the-next-gen-field-7000035317/), using it to challenge my view of the IT marketplace.
These articles are often the same. You can take them with a pinch of salt, but there’s always a degree of useful insight. The articles’ main aim is to alarm you. This one was no different: “the most favored vendors are likely to be reshuffled in the next two to three years…IT leaders will have to make bets very carefully.”
However, ultimately I found that my existing view remains unshaken: The Big Four vendors of most relevance in the IT marketplace will continue to be Oracle, Microsoft, SAP and Google for the foreseeable future. Let me explain why…
The principle point of the article was about speed of innovation: “don’t get locked into a vendor that won’t be able to be an innovation partner” warns reputed journalist Larry Dignan. The premise being that the exciting and innovative companies to watch out for – such as Salesforce, Servicenow, Workday etc – could be the new IT giants of the tech world because they are innovating faster and leaving the incumbent players behind. But while this view is exciting and a compelling angle for the media, how realistic is it…really?
The Enterprise IT landscape changes actually quite slowly when you think about it. Salesforce is 15 years old this year and if you take the view that it was its founder Marc Benioff that innovated the cloud, then the process of cloud adoption in the Enterprise has been extremely slow – compared to, say, how quickly the consumer mobile phone market ‘turned on a dime’ in the middle of the last decade. In that time, both Microsoft and Oracle have built impressive cloud offerings that now rival pure-cloud players like Salesforce and Amazon in terms of revenue. While they might innovate slower, that doesn’t mean that The Big Four’s relevance is any less.
This image of CXO views of future vendor relevance is very interesting.
With the exception of VMware and Cisco, the only vendors with a “more important” rating of 30 per cent or more are The Big Four: Oracle, Microsoft, Google and SAP! Furthermore, when you look at reasons for rating these vendors “more important” in the future, ‘dependability’ is second but ‘innovation’ is third at 51 per cent (relevance is first at 70 per cent). That is because IT buyers instinctively know that these players will always add value, even if they don’t yet know what that value will be. To this point, the article makes one solid message: “Think of your large vendors as a series of divisions that aren’t created equal. Some units may be worthwhile even as you resist the cross-sell and lock-in pitches.”
Oracle and Microsoft are excellent examples of this – The Big Four vendors have extremely innovative and nimble business units within them, competing aggressively with their colleagues for customer wallet-share. The large players have deep pockets and can afford to experiment. If they can’t innovate, they can acquire – as the rush of marketing automation software purchases in recent years has shown.
While these business units are less nimble because of horrendous behemoth-bureaucracy, they have two crucial advantages. They are protected from failure far more by cross-subsidies from the more established product lines; and they have access to gold-standard customer focus groups the smaller players can only dream of. Just look at what is happening now. The once nascent SaaS lines within Oracle now define the corporate strategy; HANA is driving much of SAP’s momentum, and Microsoft’s Cloud business has just delivered the new CEO! Moreover, while Google’s Cloud, search and apps products are most prominent, their emerging robotic, wearable and AI divisions will drive the agenda for the next decade.
But as a customer, take heed of Mr Dignan’s advice – your role in the success of these more innovative business units is an important one every time you sit down to renegotiate a deal on your traditional legacy systems and services. The Big Four will perpetually leverage their commercial advantages to stay crucially relevant at the innovative cutting edge; while at the same time continuing to deliver value at the legacy end of the spectrum too.