There’s a common meme floating around IT circles about the
end of applications in the enterprise. There’s definitely a change in the enterprise software environment that we’re all picking up on; however, I’m not sure that this is the end of applications as much as it represents their maturation as a tool in enterprise software.
For years we’ve been in an arms race—rushing to beat our
competitors to market with a new application designed to automate a
previously manual area of the business, making us more efficient than
our competitors and thereby providing us with a competitive
advantage. Wal*Mart is the poster child for this. By being first to
market with an end-to-end logistics solution Wal*Mart was able reduce
their operating costs, which they leveraged to deliver “Every day low
prices” drastically undercutting their competitors. Wal*Mart used this
advantage to become the largest retailer in the world. Dell pulled of
a similar stunt in their own market, pioneering an IT enabled direct
to customer model that allows them to hold hardly any inventory,
drastically reducing their operational costs. Dell used this advantage
to become the largest PC company in the world.
These enterprise applications have become so successful that it’s impossible to do business without them. You can now buy mature products from a range of vendors to meet most needs. Some even make a good case that these applications are becoming a commodity, and in the last couple of years we’ve even seen consolidation in
the market as larger vendors snap up smaller niche players to round
out their product portfolio. This has levelled the playing
field, and it’s no longer possible to use an application to create
competitive advantage in the same way.
Today, how we manage the operation of a business
process—dealing with business exceptions and optimizing key
business decisions—is becoming more important that the business
process itself. If we can deal with stock-outs more efficiently then
we can keep less stock on hand and run a leaner supply
chain. Improving how we determine financial adequacy allows us to hold
lower reserves, freeing up cash that we can put to other more productive uses. Providing joined-up IT support for our mortgage product
model allows us to put the model directly in the hands of our clients,
letting them configure their own, personal, home loan.
A company’s ability to differentiate now resides in the
exception-rich business processes that exist between applications,
rather than inside the applications themselves. The business has been
quick to pick up on this trend, and their focus is shifting to funding
capabilities enabled by IT, rather than IT assets themselves.
Making a case to spend four years and $50 million fielding a major
IT asset is becoming harder; however justifying a project mixing
integration, a rules engine and some new application components to deliver
a tangible business capability has never been easier.
Enterprise architecture is not far behind the business. Just yesterday we
concerned ourselves the most efficient way to populate a company’s
application portfolio. Now our challenge is in finding a way to
effectively combine a portfolio of applications so that the whole is
greater than the parts, and the application-centric approach is
starting to break down. We’re looking at new technologies in order to
capture, automate and deliver those things that make a business
distinctive in the marketplace. These technologies run from enablers
like SOA (providing us with a more granular approach which can change the way we engage with IT), rules engines and BPM,
improved support for unstructured information and collaborative processes
(wikis, group book marking, etc) though ideas such as software
The IT environment we live in is changing, and changing rapidly,
but I think it’s for the better. We’ve addressed the problem of simply
supporting the business, and our focus has shifted from what goes into
an application, to what lives between applications. Applications do
take a less prominent role, but that is because we can rely on them to
provide a solid foundation of business functionality. Now that we have this foundation we can get
on with the really interesting job of enabling the complex and
interesting processes that live in the seams between applications.
I think this is a fascinating time to be involved in enterprise software.