ERP News

New-FANGled IT – It’s Guitars Against Saxophones

Who could have imagined Netflixisation to change the plot of enterprise software? Who could have thought that Facebook, of all the players, would change the hardware game? But the electric strums of FANG are unmistakably digging their heels in. The slow waltz of old-school enterprise IT is surely facing the music on this one
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New-FANGled IT – It’s Guitars Against Saxophones

JUST a few years back if someone would have mentioned words like open hardware, elastic software, modular data centres or everything-on-cloud; s/he would have either been dissed or ridiculed with a lazy glass of wine. Long-windedness, after all, was the signature-flavour of conversations that were about enterprise IT, whether at a conference cocktail or a licence-meeting. No one questioned the complexity, weight, confusion and customisation pangs that came free, like buttons with a shirt, wrapped inside any enterprise software or hardware deal.

Until – FANG arrived.

Facebook, Amazon, Netflix and Google were, suddenly, no more harmless and orthogonal disruptions that were busy using IT in their own creative ways. What they were trying out in their backyards was soon to cement graveyards of many legacy products and models.

EDM strikes Opera

Cloud, as-a-service ware and on-demand IT became the new toasts of enterprise parties. Something as innocuous as Facebook’s Open Compute Project (OCP) – just to mention one instance- completely upended the enterprise hardware game in the industry.

Yes, as sales of servers, networking switches, storage, peripherals, racks, and other hardware-gear that was whipped up on OCP designs made up for one per cent of the $137 billion data center hardware market in 2017 (as per IHS estimates). Taking Facebook, Microsoft, Rackspace, and Goldman Sachs out from this math shows the fierce graph of a non-board market. It is expected to touch $6 billion in 2021 (jogging at an average annual rate of about 60 per cent).

As we submitted, that is just one instance. There is cloud, there are containers, there are as-a-service soups – all making unexpected dents on the traditional players in their own ways. Gartner has already predicted the worldwide public cloud service market to jump from $182.4 billion in 2018 to $331.2 billion in 2022. Picture how, by the end of 2019, over 30 per cent of technology providers’ new software investments are slated to shift from cloud-first to cloud-only. This is a tipping point for cloud but a dipping one for license-based software spending.

• Spending on Infrastructure-as-a-Service (IaaS) can climb to $38.9 billion in 2019.
• Platform-as-a-Service (PaaS) spending is expected to rise to $19 billion in 2019.

This move to a new way of thinking, making, serving and consuming IT cannot be a co-incidence. Note what a Forrester Research unraveled in a recent report. It listed five factors that tech giants offer to provide the same types of experiences – intuitive, intelligent, contextually aware, ecosystem driven, and ubiquitous. By the way, the report was titled – ‘Four Tech Giants Dominate Your Customer Experience’.

The Guitarist is Jamming

Clearly, this world of enterprise IT is moving on a new axis now. Adjectives like fluid, agile, open, heterogeneous, compatible, interoperable, easily-coupled, swift and scalable are not just brochure-talk anymore. They underpin the very models of selling and buying IT. FANG has affected well-entrenched enterprise names. Be it an incumbent who sold lots of servers or a label that adorned almost every second ERP box.

Amazon and Google have had more impact on the strategies of the Oracles, Microsofts, and IBMs of the world than Netflix or Facebook, Tony Baer, principal analyst at Ovum weighs in. “The most obvious change has been the urgency of repositioning themselves for the cloud, both from a technology/infrastructure sense, and business sense.”

As Mike Guay noted in Gartner ERP Primer for 2019, ERP is rapidly changing. Cloud adoption, emerging technologies and evolving digital business requirements are affecting the very definition of ERP. He introduces us to the world of post-modern ERP where a loosely connected portfolio of heterogeneous applications carves a new business application strategy.

Virendra Bansal, Group CIO, SAR Group observes some impressive changes that he has seen with SAP. “They have exhibited and expended a lot of improvement in the product – driven by ease, feedback, digital era and customer-awareness. The company is definitely on the path of making the product simpler.”

The way this new breed of IT-answers has influenced traditional ones is multi-fold as seen from the lens of Anshul Srivastava, CIO at Union Insurance. “The way these new companies run their infrastructure and applications is completely different – it is modular and data-based compared to the off-the-shelf kind that traditional vendors were used to. Those vendors thought about customisation after the product was put on shelf.”

That means, as he explains it further, that the product came with its own set of limitations which were then leveraged in a spare-tyre model of sorts. “That could account for the part that ERP applications relied on the vendor side of the world while FANG companies have an outside-in view instead of an inside-out one.”

Head-banging with Data

This emphasis and advantage can be attributed to the colossal volume and variety of data that FANG companies have, Srivastava surmises. “The old world developed a product first, and often without a clue about what the market needs. This is not the case with data-driven companies who deliver on-demand services. They have both an appetite and the wherewithal to know what a customer needs.”

“Microsoft is the one that took the hint early. But Microsoft has succeeded in staying relevant for larger reasons having to do with internal business and cultural transformation that came under Nadella.” Baer, with a sharp and deep work of expertise in Big Data, picks out some tough fighters.

Don’t just get a tattoo. Earn it

Where will the lazy and comfortable notes of yesteryear-players move to next, specially as they have inured not just vendors, but also customers, to a certain way of looking at IT. Replacing slow notes with livewire strings is not a quick switch to be flicked. It is a lot of hard work for fingers and feet too.

The big world today would be composed of GAMAs and FANGs that will rule the roost parallel to the traditional enterprise IT world, Srivastava ventures a solid guess. But what he highlights here is of grave importance. The legacy shift is a difficult one to undertake given the layers and layers of bureaucracy as well as the huge cultural shift that FANG set-ups call for. “A digital mindset and a readiness to disrupt the world- that is what old-school players would need to match the FANG brigade. He also augurs about a hiring spree that can happen at a good pace when FANG companies pick talent from traditional enterprise players.

As Guay from Gartner also warned in an ERP Primer, many organisations persist in outdated thinking regarding ERP that inhibits success. The potential value, he points out, from a post-modern ERP strategy will be eroded without proper planning and management of application environment. Integration, maintenance, acquisition, design and deployment – these words may have just donned a new challenge factor altogether for the CIOs entering this FANG-shaken world of ERP.

It is not just about re-spelling IT now. It is about rethinking it. Like an instrument and not as a chorus.

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