When the Nature of Business Changes, The Story of Software Value

Last week at SAP TechEd, one of the more abstract ideas I kicked around (during one particularly hairy discussion, with the help of Mark, Tim, and Mike) was the notion that as the nature of business changes, the software must change as well. (I know, sounds cliché, but don’t drop off just yet.) More importantly, as the ideas and in practice definitions of what a “business” is change, vendors like SAP need to be ready.

A Software Story

I talk a lot about “controlling the story” — for example, directly in systems management and echos in the recent enterprise search write-up — and this line of thinking is part controlling the story, but much more pragmatic, getting your hands-dirty reality. Utopia and muck, as I like to put it.

The two trains of thought are these assertions:

• The “raw value” of software is decreasingly; more specifically, the amount of time that any given piece of software “holds” it’s value is shortening. Software may be extremely valuable when it’s first released and there are no other options. But, the community of developers out there has grown and matured to the extent that they can replicate any new software at an astonishing rate that should keep medium to long term software investors awake at night. The answer I get from most vendors to this line of thought is simple: “well, we’re better…and look at WebSpere sales!” The point is more: how much more would WebSphere and WebLogic sales be if JBoss didn’t exist? (Much of the credit for this idea goes whurley and his napkin charts.)
• Culture wise, the parallel point is that there are people and companies creating equivalent (or aiming to be sometime soon) software who are willing to accept less money than the current batch of enterprise vendors. Much of that has to do with the potential for much smaller development and marketing margins in an open source business model, but it can also come from focusing on the Fortune 5,000,000 rather than the Fortune 500. That is, to twist the words to an old song I used to joke about, “we don’t have to use open source to have a good time…but it sure would help.”

The slowly approaching wave that I see coming is, as Dennis helped me clarify, a real and genuine future where the business model is facilitated by the technology instead of the other way around. Implicit in that statement is that the nature of how businesses operates is changing and that the “use cases” that existing software is built around won’t fit these new business. And, as Dennis added, “it’s bottom up, not top down.”

Getting back to controlling the story, as these free-er software options are rolled out, what happens when enterprise buyers start thinking, “well, when you get down to it, what is the difference between SME and plain old ‘E‘?”

Some Meat for all this Vapor-thought

So, it was with quite a bit of glee that I came across this announcement from Amazon. In short, they’ll manage all the meat-world aspects of retail for you: inventory, fulfillment, and (I’m guessing) all the reporting and analytics that go around that. Your job, when working with this new Amazon service is just to sell: the IT department, even the warehouse ceases to exist.

It’s been a long time since the Internet Mall days of the early 90’s (of which i was a part, see above), but it fits well with Joel’s assertion that good software takes about 10 years.

What’s interesting about the Amazon service is that it adds a new passel of features to the idea of an SOA. The story of what “SOA” means has been told by software folks so, of course, it’s composed primarily of software. Now an SOA could mean actually doing things like putting books in boxes and shipping them. We need to update all of our SOA clip-art libraries with fork-lifts.

We often tell companies that they need to offer more “service and support” around their software, and it strikes me that Amazon is going whole-hog on that suggestion. That’ll be an interesting example to lay-out the next time the topic comes up.

Disclaimer: IBM and BEA are clients.

Tags: amazon, business, opensource, sap, sapteched2006, soa