Lets look at some of the problems with enterprise software today:
High Cost: Most of the enterprise software companies think of the companies in the developed world as their target market. Nothing wrong with that, except that a whole world of enterprises in the emerging markets of the world gets left out because they cannot afford the high costs. Considering that many of these enterprises are now also becoming part of the extended value chain of the bigger companies, the information flow is only as good as the weakest link. Yet, the economics do not allow massive deployment across these small and medium enterprises (SMEs).
Lack of Integration: Typically, business applications software have tended to be bought separately for different functions. This ends up creating silos of information within and across enterprises. While this has created a booming market for enterprise application integration (EAI) tools, it is not necessarily the best approach from the customer viewpoint. Enterprises would like to enter data once and have a consolidated view across the enterprise.
Buy and Customise Approach: Enterprise Applications lack flexibility. They are a consultants delight. For every one dollar they spend on the product, they are likely to spend five times more on consultants who can customise the software for their needs. This also means that projects become expensive, open-ended and take longer to implement.
Internet as an after-thought: The legacy of most applications is still the desktop-centric or client-server world. The Internet is still not being leveraged in its entirety. This is the typical Innovators Dilemma: the existing applications are doing well, so why change? Its the thinking that made Lotus stick to the keyboard-centric DOS world and ignore the Windows world. This allowed Microsoft to overtake it in the spreadsheets segment first and the suites segment later.
The Tyranny of Upgrades: Every version upgrade is a huge exercise, especially if it means syncrhonising it with the different applications the enterprise is using. Cost is another issue, as the software companies try and milk their existing customers.
A couple years ago, it was thought that Application Service Providers (ASPs), who offered software as a service via the Internet and at a much lower price point, would solve most of these problems and therefore rule the world. But that hasnt happened. ASPs are still to realise their promise even though some have been doing better. Storing mail on remote servers is okay, but remoting a companys financials and customer lists will take some time! Connectivity hassles havent made things easier. The silos on information havent gone away yet. A couple of companies which have been well: Salesforce.com, which has garnered over 3,800 customers, and NetLedger, which has been rebranded as the Oracle Small Business Suite. But, for the most part, the numbers are too small compared to the millions of SMEs which are there in the world.
What are some of the new trends which can be leveraged to create a mass market, low-cost solution for SMEs? How can we rethink the world of enterprise software, especially for the SMEs in the emerging markets?
Tomorrow: Emerging Trends