Cognitive Labs

Enterprise software has always been dependent on selling the upgrade path to well-heeled corporate customers. The business model for software start-ups was to penetrate this market by creating some useful ancillary product, e.g., eai, supply-chain, crm, network security, and so forth. Now that Microsoft, SAP, and Oracle control 75% of the market for business applications, it's hard to see that there will be many opportunities pursuing such a strategy.

In a recent talk, Ray Lane suggests that the "rich customer" model may be going out the window. One of the reasons is the migration to cheap (free) building blocks for new software applications. With the bill of materials being essentially free, the limitation becomes the creativity of the development staff. We're already seeing this in the collaboration space with rampant use of so called web 2.0 technologies and techniques, leading to a green field situation with respect to new stacks of component applications that power a myriad of interface-centric aps.

Shrink-wrapped product sales also may be under seige. On the other hand, can Internet subscription models scale to build a large enough business? Sometimes, yes. Probably not as a standalone in most cases, however. It appears that we are entering the age of a blended business model, where adaptive tactics toward scaling and monetization of the business will bear the most fruit, without the necessary obligation of the cost and infrastructure of traditional business software development...however, if everyone took proactive action to improve their mental processes, this could be seen as a useful first step.

Labels: crm, eai, enterprise_software, soa