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November 14, 2014

Is customisation the future of enterprise software?

While the old guard stays generic, newer players are becoming more specific.

By Jimmy Nicholls

There is no doubt you will have heard the truism that "every company is a software company". The slogan has become ubiquitous among the techno-evangelists in Silicon Valley, where people find it hard to believe that not everybody wishes to be a programmer.

With the Internet of Things ramping up and corporations installing the internet in every machine they can find, the need for enterprise software to meet the requirements of specific industries is bringing the matter to a head. The drive for collecting big data and analytics, in addition to the efficiencies of increased automation, mean that needs are more granular than ever.

The main response from enterprise software has been to stick to its guns. As Matt Mullen senior analyst of social business at 451 Research put it: "You go generic and then customise through professional services, which is the way most of the industry works." The trouble is that not every customer wishes to be an IT pioneer.

Lightning strikes in Silicon Valley

Back in October, Salesforce launched the development platform Lightning in a cavernous hall in San Francisco. "With Salesforce1 Lightning, we’ve made technology barriers disappear so anyone can create the apps they need," said Mike Rosenbaum, executive vice president of the Salesforce1 Platform.

The move followed the old model of a generic platform, a rather conservative move for the one-time pioneers of software-as-a-service (SaaS). "We were sniggering at the office at how it looked similar to our tool," said Matt Calkins, chief executive of software vendor Appian, adding that he thought the ploy would popularise the concept of customisation and widen his own firm’s market.

"We could have chosen to have narrowly defined, constrained products that were not customisable, and a platform that was not extensible," said Adam Seligman, VP of developer relations at Salesforce. "Instead you can go and tackle any market you want, and customise it for whatever industry you want."

Not everyone is convinced. Clive Longbottom, founder of research firm Quocirca, views customisation with some suspicion, saying that it can lead to fragmentation and diminish economies of scale. This in turn impacts companies’ ability to invest in what differentiates them from their competitors.

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"What we have got to go for is composite app that can pull together different business processes," Longbottom said. "By creating functions rather than providing apps – assuming they can be pulled together in real-time – we can create this composite app that is far more flexible."

Why your firm is not in IT

Such an approach is the hallmark of Infor, a software company from New York that focuses on delivering verticalised enterprise packages that run on a largely standardised base. This week the firm drew attention to its conflict with the rest of the industry, singling out NetSuite, which had showcased the customisation potential of its SuiteCloud platform just the day before.

"When you think of the functionality across human capital management (HCM), supply chain, PLM (product lifecycle management), expense management, asset management – look at the richness of functionality and [NetSuite] are just over here in the corner," said Infor president Stephan Scholl, adding that he thought the history of enterprise software validated his view.

Yet 451’s Matt Mullen thinks that Infor is probably the vendor that best understands the way businesses work on a day-to-day basis, "especially around their core competencies in ERP". He added that strategy was borne out of acquiring specialised vendors in fashion and automotive before combining them with standardised elements.

"NetSuite is in their sights right now as they’re about to embark on this big marketing push on SuiteCloud, but really it’s SAP and Oracle that they are looking to unseat," he said. Quocirca’s Clive Longbottom added that SAP and Oracle were still trying to break down their monolithic business structures, a process that clients on Wall Street opposed.

In the end what will decide the fate of both models is not the vendors, but the users. Some see computing as a means to achieve a good business, others believe it should be the focal point. Either way, the quarrel will turn enterprise software on its head all over again.

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