Bruce Cleveland, ex Siebel and now a VC, knows enterprise software as well as anyone. He writes at Sandhill.com about themes I harp about all the time – lock-in of the MISO vendors , lack of funding for enterprise software startups, innovation stagnation. In fact he has a bleak title “The Death of Enterprise Software?”
He then proposes a “spin in”
“a company formed with the explicit endorsement and investment - including personnel, cash and IP - by a large software company and venture investors. The express purpose of the spin-in is to build strategic products and/or go after new markets with the ultimate objective that the large software company will acquire the spin in at some point in the future.”
Having just come from Sapphire and seeing SAP’s struggles with BusinessByDesign, you wonder what if SAP had funded it as a separate company?
But then I rethink. With the spin in model, the very forces that are killing the software industry would continue to rule it. Not a personal statement, that of customers.
I have heard from at least a few potential buyers they will not consider salesforce.com or NetSuite even as they look at SaaS because they think they are closet “spin in” candidates for Oracle (Larry Ellison has investments in both). You can argue till you are blue that is an irrational fear – but the emotion is out there and a statement on the angst a growing number of buyers are feeling against MISO.
Not a day goes by where I do not hear about shenanigans one of the MISO executives or salespeople has pulled off somewhere and royally pissed off a customer or set of customers. This week Microsoft had the gall to tell some of its customers to say “stop Vista deployment” after haranguing them last couple of years to get there. And it is still including in proposals to some customers they implement it. See the open letter Bob Evans at Information just sent Leo at SAP. Dennis Howlett reported yesterday on Oracle’s games with virtualized deployments. It’s to the point where I don’t even flinch when I hear such reports.
I think the only way the enterprise software industry blossoms again is the role of MISO continues to diminish. It’s already happening. SaaS, Third Party Maintenance, Open Source, BPO, Vertically specialized software, Custom development are all chiseling away at the MISO base.
What we need is for tech buyers and investors like Bruce to keep encouraging these disruptive and innovative players.
Life is about balance. MISO has a role to play. It just needs to be a 25% of enterprise budget role. Then may be we can talk about their “spin ins”