The pace of technology innovation continues to accelerate - New Florence just had a record month of posts. But innovation without adoption = duds. This Harvard Business Review article and the graph from it below show technologies are getting adopted at a much quicker pace than ever before.
But talk to many enterprise execs, especially at large software, outsourcing and telecom vendors who did so well in the last decade, and they will point out these are consumer technologies, the enterprise is “different”.
So, SAP fans howl when I point out HANA has barely been adopted by 1% of its customers even after 4 years, forget the rest of the world. They argue I should ignore the 250K customer count on its corporate site. They argue I should ignore SAP authorized I could discuss its in-memory plans in my 2009 book, The New Polymath. IBM execs continue to market Watson heavily but clearly cringe when asked to explain why there are barely double digit installations even after 3 years. Microsoft’s Azure cloud saw plenty of investment but usage only took off after its own Office365 rollout. SAP’s cloud BYD and Oracle Fusion have similarly had fitful ramps.
Why is the enterprise such a laggard? I see several explanations
Many customers are investing in product versus process technology
Most vendors are still selling process technology, whereas customer exec excitement is about technology in their products and services. As I wrote here
There is plenty of innovation in ERP, CRM, SCM etc etc with cloud flexibility, improved analytics, mobile UI etc, but you can “gamify” and “future of work” all you want, it will not deliver autonomous driving to an auto maker or telematics to an auto insurer or visualization algorithms to a medical device maker.
Customers have many more choices
In outsourcing, the number of new cloud, social, analytical players is staggering as I wrote here. In telecoms, globalization is allowing enterprises to consider Korean and Indian players they would not have considered a few years ago. In software, you just have to go to one of THINKStrategies conferences to see the proliferation of cloud solutions available to customers. In Analytics, names like Hadoop, Mongo and Vertica are starting to show in airline magazines – a sure sign they have gone mainstream. Most tech sectors are “un-consolidating”.
Vendor go-to-market has been conflicted
Vendor executives may be saying pc stuff about their new products, but their field is continued to be incented to sell old products or is not equipped with compelling use cases for the new products. In many cases, their economics for new stuff reflects longing for the old. It will take radical pricing changes like Microsoft is doing with Office365 to get customer attention. It will take executive leadership like Francisco D’Souza has done with Cognizant’s Three Horizons to shepherd new products
Customer “punishing” incumbents
Many CIOs have frozen incumbent vendor budgets. They have unwritten “no net new business” policies for several vendors. After being soaked with over priced maintenance, storage, roaming, MPLS, systems integration costs and poor service levels and high staff turnover over the last decade, they have guided their staff to not invite incumbents to many new opportunities. This is an industry secret few talk about publicly, but it will take radical restructuring of incumbent contracts for many vendors to get back into the good graces of many customers.
Yes, enterprises look like laggards when you look at revenues of most large IT vendors. Except that is the wrong place to look. Enterprises are spending on a new set of areas with a new set of vendors and a new set of economics. Innovation and adoption is alive and well.