2012 Predictions Scorecard

It’s the end of the year, the time when many pundits like to publish their predictions for 2013. I have already started working on mine but since I am not an industry analyst, I like to first revisit how I did with my Content Management Predictions for 2012. So, here is the scorecard for my 2012 predictions:

1. Big Data will be the hype of the year
Boy did I get this one right! There is hardly a day without some article published about the Big Data revolution. Throughout 2012, Big Data was the solution for the problem - any problem. You take 10 experts and you’ll get 10 definitions of Big Data. In reality, most people started saying Big Data when they just meant ‘data’ or when they meant ‘understanding the data’ which really means analytics. Yet, no conversation could go on and no press article could be written without mentioning Big Data. Big Data became the hype of the year.
Verdict: Hit, Score: 1/1

2. “Social” becomes a feature
This prediction has also come true. Salesforce already had released Chatter last year, now SAP has Jam, and Oracle has different social offerings integrated with the respective applications: Oracle Social Relationship Management, Oracle Social Network, Oracle Social Marketing, etc. OpenText (my employer) ships today OpenText Tempo Social as well as capabilities such as Social BPM which is a social-based decision-making step in a business process. The stand-alone social software market is being rapidly consolidated with players such as Yammer acquired by Microsoft and the once red-hot Jive trading below the level from 12 months ago.

My prediction that SharePoint 15 - now called SharePoint 2013 - would be the catalyst for this featurization of social software has also come true. Well, at least that was the message about Yammer that Microsoft offered at the SharePoint Conference 2012.
Verdict: Hit, Score: 2/2

3. SharePoint will solve every problem, again
My prediction was that Microsoft would freeze the market in 2012, with aggressive marketing of the not yet shipping SharePoint 2013. That’s what happened with every previous version of SharePoint and it was not a stretch to expect that it would happen again. Yet, Microsoft has had a different idea. They have bet the farm on Office 365, Windows 8, and Surface. SharePoint didn’t get anywhere near the attention of the years past. In fact, Microsoft recently increased the pricing of SharePoint by 15% which makes me speculate that they have reached the point of market saturation. This move suggests that Microsoft came to the conclusion that new features no longer help to add new customers. I’ve failed on this prediction as SharePoint is obviously no longer a strategic priority for Microsoft (I’m sure the SharePoint product team will disagree with me but well, my blog my opinion...Besides, I’m losing a point here, OK?)
Verdict: Miss, Score: 2/3

4. Rise of the hybrid cloud
Throughout 2012, it became apparent that the cloud is the way to go. Many original concerns related to cloud deployments such as security have been set to rest. That said, customers are in no rush to move their existing applications, and certainly not existing data into the cloud. That leads ultimately to discussions about what information should reside in the cloud and what should remain on premises. A private cloud is a popular alternative when concerns about issues such as legal discovery and data sovereignty arise - as the public cloud services are usually fairly ignorant about such issues. Finally, I also see that some of the mature cloud vendors developed many on-premises add-ons and integrations - just see how Salesforce is being integrated with on-premises ERP and Marketing Automation software. All of that mix of public, private, and on premises deployments is basically the idea behind a hybrid cloud.
Verdict: Hit, Score: 3/4

5. Cloudy outlook for open source
My argument here was that the cloud would obscure the open source argument - if I’m running my software in the cloud, who cares if it is open source or proprietary, right? On one hand, I stand behind my prediction. Customers using cloud services such as Evernote or Dropbox don’t care whether such services are based on open source software or proprietary code. That said, many of the clouds have been heavy adopters of open source technology, primarily motivated by the need to keep the cost as low as possible. That actually promoted open source to some degree in 2012. Also, my point above about integrating cloud applications with on-premises software makes open source cloud applications interesting for developers again. Hence, this one is a tie.
Verdict: Tie, Score: 3.5/5

6. Consumerization is here to stay
Oh yes, consumerization has taken hold in the enterprise. The new term is “bring your own device” or BYOD. If Big Data was the top buzzword on 2012, BYOD was a close second. Consumerization arrived and it is wreaking havoc in the enterprise. The plethora of mobile devices in the enterprise is actually a much lesser problem than the consumer-class services that are being used by employees with no regard to corporate policies, regulations, legal exposure or compliance. I expect that fixing this issue will be a major source of my paycheck over the next ten years.
Verdict: Hit, Score: 4.5/6

7. End of convergence
My argument was all those electronic gadgets will not be replaced by your smartphone. This is  one that many pundits might disagree with. I’ve been reading about how smartphones are replacing cameras and GPS devices. Yes, they do, when you don’t have a camera handy and forget to bring your GPS! Similarly, the iPad didn’t replace my laptop and I have my little Canon camera always with me. While the Swiss Army Knife is very cool and every guy wants to have one, it doesn’t replace your bread knife, butter knife, and carving knife.
Verdict: Hit, Score: 5.5/7

8. HTML5 won’t kill apps
On November 19th, Apple supposedly reached 1 million apps submitted to the App Store. Those are native apps. There is nothing wrong with HTML5 and it will gain a huge popularity but no, it hasn’t replaced the native apps in 2012.
Verdict: Hit, Score: 6.5/8

9. Tipping point for analytics
Analytics have been enjoying a big buzz in 2012. Mostly because of Big Data - analytics seem to be the universal cure for all aches related to Big Data. In fact, when people say Big Data, they usually mean “understanding the data” and that’s where analytics comes in. Analytics are hot and a lot of innovations occurred in 2012. At OpenText, we've released Auto-Classification - a new product based on a powerful content analytics technology. Other vendors are following suit. Yet, analytics have not quite entered the mainstream as I had predicted. It’s happening but it takes longer and I’ll call it a tie.
Verdict: Tie, Score: 7/9

10. ECM, what’s next?
I had predicted that the industry’s quest to find a replacement term for ECM would continue but that we would stick with ECM yet again. We did. The vendors tried various terms. AIIM’s “systems of record” and “systems of engagement” terminology actually stuck, but it didn’t replace ECM. In fact, even the hip new vendors like Box are now talking about Content Management. OpenText introduced its new positioning leading with Enterprise Information Management (EIM), but ECM remains a key EIM category. ECM is still the term that rules.
Verdict: Hit: Score: 8/10

Well, that’s it. The score of 8 out of 10 is not bad, is it? This has been an exciting year. The convergence of many technology trends continued and their impact on the enterprise started to take shape. 2013 will be even more interesting, I’m sure! I plan to publish my 2013 predictions in the first week of the new year. Until then, Merry Christmas and a happy new year!

The Future of Content Management

Last week, I had the privilege to participate in a panel at the new AIIM 2012 Conference in San Francisco. The conference was a smashing success for AIIM, selling out weeks in advance and attracting the who-is-who in the content management industry. My panel was titled the Future of Content Management and my fellow panelists were Roland Benedetti, VP of Products at Nuxeo and Robin Daniels, Head of Enterprise Product Marketing at Box who was standing in for Whitney Tidmarsh Bouck, the head of enterprise business at Box. The session was moderated by Laurence Hart, the CIO of AIIM and Cheryl McKinnon,  AIIM’s CMO - both of whom were an essential element to the success of the session.

The goal of the session was to debate the future of Content Management and sure enough, all of the panelists had an opinion about SoLoMo and also cloud, big data and other trends. Prior to the conference, we stated our views in writing which Laurence has published on his blog. But while everyone kept talking about the of cloud, mobility, and user experience, the selection of panelists alone suggested that a different question was hanging in the air.

The panelists represented a traditional vendor (OpenText), a cloud vendor (Box) and an open source vendor (Nuxeo). The elephant in the room was not the technologies of the future but rather the business models.

As for the technologies, everyone agrees on the key trends. What’s important to mention though is that the given 3-5 year time frame for the future was relatively short. At OpenText, we have roadmaps and business plans that go at least 3 years out - we have a pretty good idea what capabilities we plan to deliver in our software. At the same time, anyone who tries to predict the future 5-10 years out and whose name is not Steve Jobs or Bill Gates is probably just making things up. After all, the smartphone didn’t exist 5 years ago, not to mention the iPad.

But back to the business models. The big question hanging in the air was what will the future bring in terms of a business model. Is every piece of software going to be replaced by the cloud? Will all software go open source? Are the on-premise (aka traditional) software vendors going to even exist a few year from now?

Well, my answer was very simple. I have met many enterprise customers and the one thing that I have learned is that almost no customer has ever managed to adopt a single stack or single vendor environment. The reality is that most enterprises have EVERYTHING. I’m not talking about the small or medium sized companies. I’m talking about enterprises with over $1 bln in revenue. They almost always have a mix of different environments, systems, architectures, and applications. It may be not the most efficient solution or the cleanest architecture, but it is the reality. Most enterprises have a lot of software in different stages of maturity and these past investments have to be leveraged.

My answer to the question which business model would prevail in the next 3-5 years was: all of them. Our customers have to find their place of comfort on the scale between all-in-the-cloud and all-on-premise. Most of them are already somewhere in between. Today, many companies in the US use ADP for their payroll which is a cloud-based offering. Many companies use cloud-based talent management or document sharing offerings today. But most enterprises have many on-premise applications today and they will have many 3-5 years from now. There will be a few extreme cases on each end of that scale but most enterprises will  find their comfort zone somewhere in between.

As for open source vs. well, “closed source”, I think a similar scale exists. I have explained before that customers fall into different categories in their desire to customize and enhance on their own vs deploy out of the box solutions. There are other similar scales, by the way. For example, customers will find their comfort zone on the social media scale between conservative and controlling vs. open and engaging.

The bottom line is that the future is not going to be black or white. The last few decades dominated by the Wintel architecture were an anomaly. It is not likely that we will see such dominant monopoly ever again - and that was just the desktops. No doubts about it, more and more services will move into the cloud because it just makes sense. Some services will only become available through the cloud and rest assured that vendors like OpenText are busy innovating their offerings to take advantage of the cloud. But real customers will have plenty of on-premise software to deal with. In the future of content management, we will deal with customers who each have a very different mix of requirements and the successful vendors will be able to cater to them all.

Many thanks to Laurence and Cheryl for inviting me to participate on this panel. It has been a great fun and AIIM put on an awesome conference. I hope to be there again next year, on March 20-22 in New Orleans!

Customizations - Heaven or Hell?

There are many traits that make enterprise software different from consumer software or even software packages used by small organizations. Scalability, security, and the ability to integrate with other software usually come to mind. But none of them are as polarizing as the ability to customize enterprise software deployments.

The idea is pretty simple. As organizations compete with each other, they want to tailor the deployed solutions to match their business processes and other organization-specific needs. Enterprise software vendors usually design their software in a way that allows for a significant amount of customization with technologies such as modular architecture, web services, application programming interface (API) and software development kits (SDK).

You might think that all of this is going away in the new world where software is delivered as a service (SaaS). It is certainly true for the SaaS software that targets the small and medium sized businesses or simple generic applications. But if we consider the leader in SaaS - Salesforce.com - as the sign of the things to come, we must realize that most of the Salesforce deployments today are being heavily customized.

Customizations are important. In fact, a big part of the appeal of open source software is the ability to significantly customize it; even re-write entire functionality modules given that the developers have the actual source code. Of course, customizations matter in the world of commercial ‘closed source’ software just as much.

Customizations, however, come at a price. Not only does a typical enterprise deployment often require an investment into professional services that comes at a multiple of the cost of the software licenses, customizations also carry a significant hidden cost.

Every time the software goes through an upgrade cycle, the customizations have to be upgraded as well. There is no easy way around it even if the vendor provides tools to make the work easier. Those are your customizations, they are a one-off type of software and nobody but you can upgrade them. Often the work to migrate the customizations can be significant. If the customizations actually contain significant amounts of original code, migrating them may be akin to a complete re-write.

Consequently, customers tend to struggle to keep up with the vendors who are trying to maintain the pace of innovation. It is important, that the customers are allowed to do that - not to keep up. The ability to skip a version is becoming a critical requirement for enterprise software. Many vendors handle it by providing the notion of safe-harbor releases that ensure that from here, you can move to the next level at your own pace.

In the end, there is no magical solution. Customers shouldn’t avoid customization because they do need the competitive advantage that highly customized software can provide. In many industries such as insurance or financial services, there is very little differentiation possible on the product side. Car insurance is just car insurance and mortgage is just a mortgage. Only the customer experience and the process efficiency can differentiate competitors. Those differentiators require customized software. But customers have to think beyond the customizations of the current release. The ease of migrating customizations is one of the key issues overlooked by many vendors in their slick demos.

Closed or Open Source

There are many ways to segment a market. One of them is based on how customers expect to run their enterprise software deployments. The definition of enterprise software implies a degree of customization - no deployment is the same. Even the same process or function in the same industry is done differently. Just think about accounting and how difficult it is to compare financial statements from any two competitors in a particular sector.

And when we say ‘customization’, customers turn out to have different expectations. There is a scale from expecting out-of-the-box functionality to in-house developed solutions. All customers fit somewhere on this scale and it would be foolish to say that one end of this spectrum is right or wrong. As a result, customers tend to flock to two distinct camps:

1. Shrink-Wrappers
Shrink-wrappers is my label for customers who expect as much functionality as possible coming out of the box (which is a figure of speech - enterprise software doesn’t come in boxes much these days). Of course there is rarely such thing as out-of-the-box enterprise software but the customers want more pre-packaged modules, pre-defined object models, and ready-to-use interfaces and templates for everything. The shrink-wrappers are more likely to lean heavily on a professional services organization - from the vendor or from a system integrator (SI) - to do any necessary integration and customization work. They don’t want to employ a team of developers for the on-going production system. These customers buy primarily software from ‘closed-source’ vendors, not least to have a throat to choke if something doesn’t go the expected way.

2. Tinkerers
Tinkerers is my label for customers coming from the opposite side of the spectrum. They know that no out-of-the-box software will ever match their needs and they would prefer to just build it themselves. But past experience with cost of maintenance of a home-grown deployment steers them towards a vendor. They do have a team of developers on staff and they intend to keep it that way. They are likely to do most of the customization and integration work themselves. These are the kinds of customers attracted by open source - software built by developers for developers. The developers on their team like to participate in the open source development community and they can whip out a solution very quickly. And then change it again and again as needed.

Customer expectations on enterprise software deployments

There is nothing wrong with either type of customers. Both, the shrink-wrappers and the tinkerers are right and most customers fall somewhere along this scale. Some are heavy into open source, some use it just a little and some don’t accept open source software at all. The only wrong would be to claim that some of these customers have made a mistake and that they will eventually switch sides. Customers are always right.

Are Closed Systems Winning After All?

Ever since the networked PCs started replacing mainframes, openness became the mantra of information technology. Indeed, for years we have been taught and we kept repeating that open systems give customers the ultimate benefit of deriving value from solutions while keeping our options open and prices low. But now, after three decades of pushing open systems, we may be proven wrong by Apple, the company with the overall highest market capitalization and tremendous success.

Back in the 80s, IBM was able to quickly gain huge market share with the open system-based PC in which components from many vendors could be added and swapped. The PC has quickly obliterated all players in the market, including Atari, Commodore, Sinclair, and for the most part Apple. It was apparent, that open system was the winning formula. Or was it?

While killing off existing competitors, IBM quickly faced a new set of competitors such as Compaq, Dell, HP, and hundreds of other clone manufacturers who took away IBM’s market share and who eroded the pricing down to unattractive margins. IBM also learned that giving up the operating system to Microsoft was a huge mistake, even though this move has promoted the success of the PC. In the end, IBM struggled to keep the business profitable and eventually exited it by selling out to Lenovo. Even though IBM made a ton of money initially, the open concept of the PC has failed to make it commercially viable for IBM in the long run.

Apple on the other hand, has held on to its completely closed system. Sure, it took Apple two decades to figure out all elements of the system to make it a success – computer, mobile devices, and content – but they are in an incredibly strong position today. Apple is piling up cash while running circles around any potential competitor.

So is a closed system the way to go? Well, there are skeptics who are already predicting trouble for Apple due to an attack from Google. But while Google is also bursting with cash as it created its own money tree based on advertising revenue, it is easy to see how the various Android phone vendors will kill each other quickly as they drive down prices and margins. That price war may put pressure on Apple but Apple demonstrated an amazing pricing resilience over more than three decades and they have a lock on the customers that Google does not have – content. In the end, the choices may be cheap devices with little content but plenty of advertising or expensive devices with a lot of great content.

While I don’t know the outcome of the iPhone versus Android battle, I keep wondering about the original question. Is an open system commercially viable or is it better to keep the system closed or at least some parts of it? That question is particularly interesting given the current open source movement which is the ultimate embodiment of openness. Is open source as a model commercially viable in the long run? Or is closed or a mixed model the right approach? Well, the time will show. What I do know is that to be commercially viable, both sides of a transaction need to benefit. If one side doesn’t benefit, the long term viability is in question.