The Impending Enterprise 2.0 Software Market Consolidation

Talk about a trip down memory lane…  Another excellent blog post yesterday by my friend and fellow Babson College alum, Sameer Patel, snapped me back a few years and gave me that spine tingling sense of deja vu.

Sameer wrote about how the market for Enterprise 2.0 software may evolve much the same way the enterprise portal software market did nearly a decade ago. I remember the consolidation of the portal market very well, having actively shaped and tracked it daily as an analyst and consultant. I would be thrilled if the E2.0 software market followed a similar, but somewhat different direction that the portal market took. Allow me to explain.

When the portal market consolidated in 2002-2003, some cash-starved vendors simply went out of business. However, many others were acquired for their technology, which was then integrated into other enterprise software offerings. Portal code became the UI layer of many enterprise software applications and was also used as a data and information aggregation and personalization method in those applications.

I believe that much of the functionality we see in Enterprise 2.0 software today will eventually be integrated into other enterprise applications. In fact, I would not be surprised to see that beginning to happen in 2010, as the effects of the recession continue to gnaw at the business climate, making it more difficult for many vendors of stand-alone E2.0 software tools and applications to survive, much less grow.

I hope that the difference between the historical integration of portal technology and the coming integration of E2.0 functionality is one of method. Portal functionality was embedded directly into the code of existing enterprise applications. Enterprise 2.0 functionality should be integrated into other applications as services (see my previous post on this subject.) Service-based functionality offers the advantage of writing once and using many times.  For example, creating service-based enterprise micro-messaging functionality (e.g. Yammer, Socialcast, Socialtext Signals, etc.) would allow it to be integrated into multiple, existing enterprise applications, rather than being confined to an Enterprise 2.0 software application or suite.

The primary goals of writing and deploying social software functionality as services are: 1) to allow enterprise software users to interact with one another without leaving the context in which they are already working, and 2) to preserve the organization’s investment in existing enterprise applications. The first is important from a user productivity and satisfaction standpoint, the second because of its financial benefit.

When the Enterprise 2.0 software market does consolidate, the remaining vendors will be there because they were able to create and sell:

  • a platform that could be extended by developers creating custom solutions for large organizations,
  • a suite that provided a robust, fixed set of functionality that met the common needs of many customers, or
  • a single piece or multiple types of service-based functionality that could be integrated into either other enterprise application vendors’ offerings or deploying organizations’ existing applications and new mashups

What do you think? Will history repeat itself or will the list of Enterprise 2.0 software vendors that survived the impending, inevitable market consolidation consist primarily of those that embraced the service-based functionality model?

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11 responses to “The Impending Enterprise 2.0 Software Market Consolidation

  1. Pingback: Twitter Trackbacks for The Impending Enterprise 2.0 Software Market Consolidation « Together, We Can! [lehawes.wordpress.com] on Topsy.com

  2. Indeed it would be nice to see certain E2.0 applications being more reusable and embeddable into any company existing content infrastructure. Call it SOA, WOA or CCA (Content Composite Apps).

    You mention it: Micro-blogging is a perfect example of such a E2.0 composite. As every traditional business software is now being “socialized”, a company will soon not only get a single unified river of information but plenty of heterogeneous streams.

    So is Twitter working on its own copy of a “Twitter for Enterprise” edition (with 1bn value they can)? Will software players such as Yammer or SocialText only focus on their micro-blogging appliance and desk without also trying to compete with other on the wiki, forum, wcm, … side? Will players such as TweetDeck, Seesmic and others finally offer a version “for employees” letting them mount their own custom e20 activity streams?

    What is sure is that there is a need for such a E2.0component (e.g: http://stephanecroisier.jahia.com/a-call-for-opensocial-support-in-activity-str ). And the same is true for others:
    – Do you need one single “expert directory” or one per application?
    – Do you need one discussion service à la Disqus.com or à la IntenseDebate or one per applications
    – Etc…

    The second key factor is that we will see a convergence between traditional intranets and new E2.0 social platforms. The situation is rarely black or white. So for departmental use the fast and easy installation of ready-to-use SaaS based offerings is ok. But for larger initiatives intranet managers want to understand now how they could best leverage their existing content assets, all their knowledge bases and all their existing investments in costly ECM or WCM solutions with the new suggested social offerings. And clearly there are currently quite a lot of functional overlap which is quite normal in such a recent and still-fastly changing market space the time to let each actor find its new role.

    Meanwhile the widespread use of new emerging standards such as CMIS could perhaps also help all these new information silos speak together and then help an organization federate a bit all its various content-based initiatives. This will perhaps also slow down the future market consolidation as it could help create this “service/content-based” model you are mentioning.

  3. How about a platform that is not dependent on a database, does not require developers or IT administration either to install or to administer, appears to function like a portal (supporting add-in widgets), fully leverages the Google Web Toolkit capabilities and is better that ECM or WCM systems?

    And it’s not Google Wave…

  4. Thanks so much for the reference Larry. Trip down memory lane for sure.
    I totally see how the scenario that you lay out will most likely be how things play out.
    I for one am secretly hoping that it’s not the case though. I never really considered Portals to be much of a game changer. It certainly met a need (i.e. unified access and for very few, personalization) but it never had the substance to really change how we interact, collaborate, or accelerate performance.

    Social software, on the other hand, has those attributes and so I’m hoping that in 2010 we see some of the promising vendors move off the general purpose application strategy and start to dig into core process and fix large scale business problems. And in turn avoid becoming a “the price of acquisition for this technology purchase was not disclosed” type exit but rather, blow it out of the water.

    The good news is that the market needs that both on the services and technology side.

  5. Stephane: Thanks for your extended comment! The large, managed intranets that you mentioned are a good place where service-based social functionality could be added to preserve and extend the investment in the existing intranet. That scenario is a clear example of where individual pieces of functionality, delivered as services, could be purchased from one or more vendors and integrated into the existing system.

  6. Sameer: Indeed. The general purpose strategy was the death of many portal application (not platform) vendors. They did attempt to make a business case around accelerating performance, but in the form of increased personal productivity, not in more rapid execution of specific business processes.

    I was largely ignored when I suggested to one portal platform vendor that they could create tremendous value and differentiate their offering by delivering integrated portal and BPM technology to large enterprise customers. They had both components, but couldn’t see the forest for the trees.

    I share your concern about repeating that mistake with Enterprise 2.0 software. I find hope in the example of SAVO, which has focused it’s offering on improving sales enablement. I’m also aware of the early efforts of a large platform vendor to integrate social, process, and content services into a custom solution for a company in the financial services sector. There are signs that some might heed our advice this time.

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