Erik Keller: The new IT campaign: Just SLOG it

Erik Keller -- Manufacturing Business Technology, 4/1/2007

Today, the enterprise software business is supposed to be all but dead, and dominated by Microsoft, IBM, SAP and Oracle—or MISO. That might sound snarky, but I think MISO is so retro and represents the status quo much like Burroughs, UNIVAC, NCR, Control Data, and Honeywell—or BUNCH—did in the 1970s for computer manufacturers.

Like the BUNCH, MISO will not fade away immediately, but as a group it is likely that at least one or two will be acquired in the next decade, and that a new set of kids—for which I coin the acronym SLOG—will grab much of the growth, and eventually the installed base—of the enterprise market.

SLOG stands for this:

• Software as a Service (SaaS)

• LAMP (Linux, Apache, MySQL, Perl/PHP/Python, open source)

• Offshoring

• Generational change: Google, Amazon, Yahoo!, FedEx

Let’s go through the list:

Software as a Service (SaaS): SaaS is a business model that will force increased quality and reliability of sellers while over the longer term lock in buyers to even a larger degree than they do today. The increased quality is due to the fact that releases and upgrades will occur quickly in time, measured in days or weeks rather than years. While the theory of switching out services is possible, I don’t think it will occur, and SaaS vendors will be even sticker than their licensed counterparts.

LAMP: Open source will be used not only for infrastructure—i.e., LAMP stack—but increasingly for applications as well, including simple office functions, document management, and collaboration. This use of open source also will have the effect of keeping software companies on their toes, and adding value rather than cost and useless functions to their products. If buyers just want a simple commodity, they will tend toward buying open source, which implies that software vendors need to increase the value of their software every year.

Offshoring: Right now there are many views as to how well—or how poorly—offshoring works, but face it: An R&D or serviceperson in any high-tech area represents $150,000 and up in fully loaded costs. And it is no coincidence that end-user companies such as GE, United Technologies, and others—as well as sellers—have been steadily adding offshoring assets while aggressively lowering their internal costs.

Generational change: Google, Amazon, and Yahoo!—as a group—lead in the consumer enterprise with the potential of moving into the business world. FedEx already is in the business world. While each has a different perspective on computing, they all share a very disruptive business model and approach that none of the standard bearers can fight easily.

What this means for buyers is a dynamic rebalancing of budgets, upgrade plans, and deployments that will occur over the next decade. And you thought things were boring! In cricket—a sport I love to watch but struggle to understand—a slog is a play where the batsman attempts to swing for the fences or go for broke, as we would say here in the states. It’s a Babe Ruth type of shot.

If you want to be successful in the future in your use of IT, SLOG IT. You won’t be disappointed.