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?

Emerging Enterprise Content Management Trends

I was at the Gilbane Conference in San Francisco last week, where I answered questions as a panelist, moderated another panel, heard many excellent presentations, and joined in many engaging discussions. On the plane ride home, I took some time to piece together the individual bits of information and opinion that I had absorbed during the two-day event. This reflection led to the following observations regarding the state of enterprise content management practices and technologies.

Up With People

Many content software vendors are now focusing on people first, content second. This is a huge shift in perspective, especially when voiced at a content management conference! Kumar Vora, Vice President & General Manager, Enterprise at Adobe was the first person to proclaim this philosophical change during his opening keynote presentation at Gilbane San Francisco. He reported that Adobe has shifted its business philosophy to focus on serving people and their needs, as opposed to thinking about content first. Many other vendor representatives and attendees from end user organizations echoed Kumar’s emphasis on people during the event. It is too early to say definitively what this radical change in perspective means, but we should see more user friendly enterprise content management tools as a result.

Keyword Fail

Keyword search has largely failed end users and incremental improvements haven’t been able to keep up with the explosion in newly created content. Jeff Fried, VP Product Management for Microsoft’s FAST search engine actually proclaimed that “keyword search is dead!” The business world is at a point where alternatives, including machine-generated and social search techniques, must be explored. The latter method was on many attendees minds and lips, which should not surprise, given the shift to people-centric thinking identified above. Social search will be an increasingly hot topic in 2009 and 2010.

SharePoint Upheaval

Microsoft SharePoint 2010 has the potential to completely shake up the information management market. The next version of SharePoint will likely include a raft of (as of yet unconfirmed) Web Content Management features that have been missing or rudimentary. In her keynote address, Tricia Bush, Group Product Manager for SharePoint said that the promise of content management has not yet been realized and that her team is focusing diligently on the opportunity. This increased emphasis on content management is contrary to the first trend that I described above, and the negative perceptions many hold of SharePoint may increase unless Microsoft also better enables people in SharePoint 2010 (it is rumored that the product will also see substantial additions to its currently limited social collaboration functionality.) Those placing bets should do so knowing that Microsoft intends to, and probably will, be a major force in enterprise information management.

Simplicity Trumps Complexity

Enterprise applications and systems managed by IT departments continue to grow in complexity. As this happens, end users turn to simpler alternatives, including consumer oriented Web 2.0 applications, in order to get work done. The “problem” is that these consumer applications aren’t approved or controlled by the IT function. The opportunity is a potentially large market for software vendors that can create enterprise ready versions of Web 2.0 applications by adding security, reliability, and other attributes demanded by CIOs. For those vendors to succeed, however, they must retain the simplicity (intuitiveness and ease of use) that are the hallmark of consumer Web 2.0 applications.

Communication Beats Publishing

Communication applications are increasingly being used by end users to collaborate, because enterprise content management applications have become too complex (see the trend immediately above). Additionally, communication tools are favored by end users because they can use them to simultaneously create and distribute content. This increased speed of content publication also accelerates general business process execution, allowing users of communication tools to be more productive than users of formal enterprise content systems. Communication tools will continue to become an important and growing back channel that employees use to share content when overly complex publishing tools impede or fail them.

Having one’s ideas validated by a reputable peer is always rewarding. John Mancini, President of AIIM, published a blog post in the time between when I first formulated these thoughts on the flight home from San Francisco last week and when I published this post today. Reading John’s post should encourage you to believe that the trends I (and he) have described are for real. The question for all of us now is how will we respond to these emerging realities.

Photo credit: Charles Soper (via Flickr)

Video Conferencing Uptake Is Really About Changing Role of Organizations

I was interviewed last week for an article on how companies are using collaboration technologies to reduce operating costs during the current economic downturn. The article, entitled Virtual Conference Victory for Cisco Systems, was published in the Technology section of the Financial Times today.

When I spoke with the author, Joseph Menn, I tried to make it clear that using Web-based collaboration technologies like video conferencing to avoid travel costs was simply a baseline management activity. The most effective organizations use these technologies in bad and good times to not only minimize operating costs, but also to maximize productivity. After reading the FT article today, it was clear to me that Joe had indeed understood my point.

There is a larger story here though. The quote from me that was actually published,

“There’s a real, fundamental change going on in the way we work, both as companies and as individuals.”

is a c. 5 second sound-bite of a much longer conversation, in which Joe and I discussed how enterprise collaboration and social software are changing the way organizations are structured and how work gets done. Most of that didn’t make it into the article, but that’s OK. We can discuss it here.

Increasingly, organizations exist to provide specific assets and services to employees, including:

• a clearly defined and shared business mission and strategy
• a favorably recognized brand
• marketing and sales
• project management
• bookkeeping and accounting
• legal services
• organizational knowledge networks and repositories

Individual employees can provide pretty much everything else they need to work efficiently and effectively themselves.

The role that corporate IT departments play has evolved markedly over the last decade. Ten years ago, IT departments laid infrastructure, built and deployed applications, and managed both as their primary function. The focus was not on the end user. Today, the IT function is viewed as providing assets and support services that enable workers to do their jobs in a productive manner. A huge and important change in perspective has occurred.

I believe we are nearing the time when entire organizations will make that same shift of perspective. Hierarchical command and control structures already have (mostly) given way to matrixed organizations. The next step in organizational evolution will be the formation of networks of individuals who work together to solve a specific business challenge, and then disband. The organization will support their endeavors by providing the assets and services listed above. Organizations will endure only as long as they can continue to form networks of knowledge workers and supply the assets and services those workers need.

How do I know this? I already work for such an organization!