Enterprise 2.0 General

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Perspectives on the Enterprise 2.0 Movement

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Enterprise 2.0 General

  1. 1. Perspectives on Innovation and Enterprise Computing Timothy B. Jones Sloan Fellow In Innovation and Global Leadership 2007
  2. 2. Overview <ul><li>Background </li></ul><ul><li>Observed trends </li></ul><ul><li>Market Dynamics </li></ul><ul><li>Implications for Software Infrastructure </li></ul><ul><li>Business Opportunities </li></ul>
  3. 3. Background <ul><li>Who is Tim Jones? </li></ul><ul><ul><li>Education </li></ul></ul><ul><ul><ul><li>MIT ²: B.S., Sloan Fellow (MBA); Georgia State M.S. Computer Information Sys. </li></ul></ul></ul><ul><ul><li>Business Development, Channel and International Sales experience </li></ul></ul><ul><ul><ul><li>Oracle, Sybase, OpenVision </li></ul></ul></ul><ul><ul><ul><li>Executive Leadership w/ OnDemand, Eba Systems, BionTTech </li></ul></ul></ul><ul><ul><li>Early Stage Venture experience w/ Mohr, Davidow Ventures on East Coast </li></ul></ul><ul><li>Core Competencies </li></ul><ul><ul><li>Enterprise Software, Middleware, and Infrastructure </li></ul></ul><ul><ul><li>Internet Applications </li></ul></ul><ul><ul><li>Wireless Applications </li></ul></ul><ul><ul><li>Network and Homeland Security Infrastructure </li></ul></ul>
  4. 4. Innovation and The Fifth Wave Source: Carlota Perez, 2002
  5. 5. Where IS innovation occurring? <ul><li>Since 2000 (i.e. Frenzy), more innovation has occurred in consumer technology than enterprise technology </li></ul><ul><ul><li>Google for internet search vs. Verity (10 years old) </li></ul></ul><ul><ul><li>Apple IPod, as music player AND storage device </li></ul></ul><ul><ul><li>Gaming Platforms driving processor, user interface, and network development </li></ul></ul><ul><ul><ul><li>X86 commoditization, NVIDIA, AMD </li></ul></ul></ul><ul><ul><ul><li>Second Life, Worlds of Warcraft </li></ul></ul></ul><ul><li>These shifts in the locus of innovation from enterprise to consumer markets have led to significant disruptions that create business opportunities </li></ul>
  6. 6. Disruption #1: Prosumers in the Enterprise <ul><li>Educated, professional consumers, or “prosumers” are bringing consumer technology into the office as alternatives to corporate solutions </li></ul><ul><ul><li>Better interfaces, more user centric </li></ul></ul><ul><ul><li>Higher productivity </li></ul></ul><ul><ul><li>Lower cost! (10X factor) </li></ul></ul><ul><li>This has happened before: </li></ul><ul><ul><li>Apple II vs. Mainframes and Minis </li></ul></ul><ul><ul><li>VisiCalc and Lotus 123 vs. OEM financial applications </li></ul></ul><ul><ul><li>Netscape Mozilla vs. 3GL/4GL applications </li></ul></ul><ul><ul><ul><li>Anybody remember the “Intranet”??? </li></ul></ul></ul><ul><li>CIO’s are increasingly having to manage new devices and applications that are “home grown” </li></ul>
  7. 7. Disruption #2: The new software stack <ul><li>In addition to the management problem, a new hybrid class of applications, based on the low cost “LAMP” stack is undermining existing enterprise software </li></ul><ul><ul><li>Carr’s “Death of IT” is overblown, but this IS a threat to existing vendors dependent on high margin information goods </li></ul></ul><ul><li>Despite Carr’s pessimism new applications are emerging that enhance productivity in knowledge workers </li></ul><ul><ul><li>Brynjolfsson’s “Scale without Mass” and IT intensity </li></ul></ul><ul><li>Characteristics of these applications include </li></ul><ul><ul><li>“ Pull” vs. “Push” orientation </li></ul></ul><ul><ul><ul><li>Driven by real-time user needs not vendor designs </li></ul></ul></ul><ul><ul><li>Customer Self Service orientation vs. Central IT Planning </li></ul></ul><ul><ul><li>“ Good Enough” computing contrast with serialized release process </li></ul></ul><ul><ul><ul><li>The “Perpetual Beta” </li></ul></ul></ul>
  8. 8. Redefining the software stack Apache Perl/PHP MySQL Linux Web Applications Operating System Database Service Layer Small-Medium Business Applications Enterprise Applications Mobile and Wireless
  9. 9. Good Enough Computing leverages the new stack Agile Development methodology: Develop a Vertical “Slice” of the complete stack, then release to customers for acceptance R1 R2 R3 Multiple Slices enable fast, constant releases and ensure compatibility with previous releases => The “Perpetual Beta” Web Applications Operating System Database Service Layer Small-Medium Business Applications Enterprise Applications Mobile and Wireless
  10. 10. The “Long Tail” of Enterprise Computing Source: Rod Boothby, 2006
  11. 11. Evolution of the Long Tail in the Enterprise Source: Rod Boothby, 2006
  12. 12. “ Long Tail” + Disruptions #1 & #2 lead to Enterprise 2.0 Source: Rod Boothby, 2006
  13. 13. Enterprise 2.0 Definition <ul><li>Utilization of 2 nd Generation Internet technologies inside the enterprise firewall to </li></ul><ul><ul><li>Enhance collaboration, “tacit” interactions and user-generated content to solve problems below the threshold of traditional IT </li></ul></ul><ul><ul><li>Replace client server architecture with more flexible, user-centric applications and access to data </li></ul></ul><ul><ul><li>Improve intra-enterprise communications and processes in real time at low cost (Inside the Firewall, “IFW”) </li></ul></ul><ul><ul><li>Facilitate inter-enterprise transactions between supply chain and channel partners with heterogeneous IT infrastructure (Outside the Firewall, “OFW”) </li></ul></ul><ul><ul><li>Engage customers and partners more fully by increasing integration with their data and applications (OFW ⁿ) </li></ul></ul><ul><ul><li>L ³CAT – Long Lived Loosely Coupled Asynchronous Transactions </li></ul></ul>
  14. 14. Deployment/Synergy - beginning of the Enterprise 2.0 era Source: Carlota Perez, 2002
  15. 15. Enterprise 2.0 Software Model Source: Dion Hinchcliffe, 2006 The Enterprise is the market “white-space” where web 2.0 technologies have not yet been fully utilized
  16. 16. The Enterprise IS Content, too! <ul><li>Consumer Content </li></ul><ul><ul><li>HTML Pages </li></ul></ul><ul><ul><li>Music </li></ul></ul><ul><ul><li>Video </li></ul></ul><ul><ul><li>Structured links </li></ul></ul><ul><li>Enterprise Content </li></ul><ul><ul><li>Applications </li></ul></ul><ul><ul><li>Database information </li></ul></ul><ul><ul><li>Unstructured Content </li></ul></ul>
  17. 17. New Software Model reflects needs of more fluid IT Integration Source:Adobe, Inc.
  18. 18. Anatomy of New Software Models
  19. 19. Enterprise 2.0 and Coase <ul><li>The fluid, flexible nature of Enterprise 2.0 confronts Coase(1937) on the nature of the firm => reduction of transaction costs </li></ul>Firewall Core activities External Firms External Firms External Firms External Firms External Firms
  20. 20. Enterprise 2.0 Core Components <ul><li>SLATES (McAfee 2006) </li></ul><ul><ul><li>S earch </li></ul></ul><ul><ul><li>L inks (e.g.. Clustering IFW) </li></ul></ul><ul><ul><li>A uthoring (Blogs, Wikis) </li></ul></ul><ul><ul><li>T ags (Taxonomies and “Folksonomies”) </li></ul></ul><ul><ul><li>E xtensions (Recommenders) </li></ul></ul><ul><ul><li>S ignals (RSS) </li></ul></ul>
  21. 21. Early Adopter Organizations <ul><li>DrKW </li></ul><ul><li>Razorfish </li></ul><ul><li>Li & Fung </li></ul><ul><li>UPS </li></ul>
  22. 22. Target Verticals <ul><li>Financial Services </li></ul><ul><ul><li>Asset management </li></ul></ul><ul><ul><li>Retail Customer Self-Service </li></ul></ul><ul><li>Consulting and Professional Services </li></ul><ul><li>High Technology </li></ul><ul><ul><li>Sales, Support, and Marketing </li></ul></ul><ul><ul><li>Channel Management </li></ul></ul><ul><ul><li>Distributed Product Design </li></ul></ul><ul><ul><li>Outsourcing/Offshoring Project Management </li></ul></ul><ul><li>Pharmaceuticals/Life Sciences </li></ul><ul><ul><li>Health Care feedback loop </li></ul></ul><ul><ul><li>Distributed Sales forces </li></ul></ul>
  23. 23. Channel Trumps Product <ul><li>Direct Sales must be augmented and extended to be profitable </li></ul><ul><li>Web/Internet Channels are required </li></ul><ul><li>The Data Center is a Channel as well </li></ul><ul><ul><li>The “One Building Company” </li></ul></ul><ul><ul><ul><li>Esp. w/SW Appliance </li></ul></ul></ul>
  24. 24. Possible Market Segmentations: End User Type (1) <ul><li>Highly mobile professionals </li></ul><ul><ul><li>Work frequently outside of the office </li></ul></ul><ul><ul><li>High communication frequency </li></ul></ul><ul><ul><li>Expert PC user </li></ul></ul><ul><ul><li>Use broad range of software products </li></ul></ul><ul><ul><li>Examples: executives, consultants </li></ul></ul><ul><li>Office-based knowledge workers </li></ul><ul><ul><li>Work primarily in an office </li></ul></ul><ul><ul><li>High communication frequency </li></ul></ul><ul><ul><li>Expert PC user </li></ul></ul><ul><ul><li>Use broad range of software products </li></ul></ul><ul><ul><li>Examples: engineers, analysts </li></ul></ul>
  25. 25. Possible Market Segmentations: End User Type (2) <ul><li>Task-oriented office workers </li></ul><ul><ul><li>Work primarily in an office </li></ul></ul><ul><ul><li>Medium communication frequency </li></ul></ul><ul><ul><li>Advanced PC user </li></ul></ul><ul><ul><li>Use smaller range of software products </li></ul></ul><ul><ul><li>Examples: administrators, accountants </li></ul></ul><ul><li>Task-oriented non-office workers </li></ul><ul><ul><li>Work in manufacturing, logistics etc., i.e. not typically in an office, but at a fixed work place </li></ul></ul><ul><ul><li>Low to medium communication frequency </li></ul></ul><ul><ul><li>Less experienced to advanced PC user </li></ul></ul><ul><ul><li>Use small range of software products </li></ul></ul><ul><ul><li>Example: bank tellers, factory workers </li></ul></ul>
  26. 26. Possible Market Segmentations: End User Type (3) <ul><li>Highly mobile task-oriented worker </li></ul><ul><ul><li>Work mostly outside of the office </li></ul></ul><ul><ul><li>Medium communication frequency </li></ul></ul><ul><ul><li>Advanced PC user </li></ul></ul><ul><ul><li>Use small range of software products </li></ul></ul><ul><ul><li>Examples: field service technicians </li></ul></ul>
  27. 27. Deployment Models: Adoption of Software as a Service (SaaS)? Source: Summit Strategies, Saugatuck Technologies Adoption by Company Size Adoption by Application Type (all companies) Approx. 43% of big Enterprises have no plans to use Software-as-a-service and are therefore potential customers for an installed solution. SaaS Adoption Small Mid Enterprise Currently Use 36% 30% 31% Evaluating 16% 13% 11% Plan to Evaluate 15% 20% 17% Familiar, No Plans 18% 28% 29% Evaluated, Didn’t Buy 5% 3% 7% Discontinued 2% 0% 0% Not Familiar 8% 5% 7%
  28. 28. Other Deployment Models <ul><li>Hardware Appliance </li></ul><ul><ul><li>Commodity hardware(x86) and Software(Linux) </li></ul></ul><ul><ul><ul><li>Akamai, Google Search Appliance </li></ul></ul></ul><ul><li>Software/virtual Appliance </li></ul><ul><ul><li>Software emulation of hardware container </li></ul></ul><ul><ul><ul><li>rPath, VmWare, Ingres 2006 </li></ul></ul></ul><ul><ul><ul><ul><li>Possible Integration with Cassatt </li></ul></ul></ul></ul>
  29. 29. Enterprise 2.0 Segmentation by End User Typical complexity of computing tasks Mobility Low High Low High Highly mobile professionals Highly mobile task-oriented workers Office-based knowledge workers Task-oriented office workers Task-oriented non-office workers Students/ educators Self-directed Innovators Source: Goeldi, Jones, Lo, 2006
  30. 30. Enterprise 2.0 End User Segmentation for Web-based Applications Typical complexity of computing tasks Mobility Low High Low High Highly mobile professionals Highly mobile task-oriented workers Office-based knowledge workers Task-oriented office workers Task-oriented non-office workers Students/ educators Expected development Current positioning for web-based applications Self-directed Innovators Source: Goeldi, Jones, Lo, 2006
  31. 31. Addressable Application Spaces Risk Management and Compliance Marketing Management (Product/Corporate) Business Intelligence (BI) (esp. Real Time vs. Offline) Production Planning and Materials Management Logistics and Distribution Procurement Project Management Enterprise Applications Integration (EAI) Knowledge Management (KM) Enterprise Resource Planning (ERP) Supply Chain Management (SCM) Human Resources (HRMS), Human Capital Management; (Peopletools replacement)
  32. 32. Example: Knowledge Management in Venture Capital Source: Jones, 2005 New investment environment requires interdisciplinary investing Physical Security Security Software Wireless Biotechnology New Environment Chips/Devices Traditional VC Investing
  33. 33. Real time integration of Knowledge Content better suited for Enterprise 2.0 Sources: Jones 2005, Dion Hinchcliffe 2006 Research Slides Email/ Phone Logs Deal
  34. 34. How to ramp an Enterprise 2.0 Company <ul><li>Option 1: M&A of players in KM/BI/enterprise search built during last wave that are undervalued </li></ul><ul><ul><li>Public Companies </li></ul></ul><ul><ul><ul><li>Autonomy </li></ul></ul></ul><ul><ul><li>Private Companies </li></ul></ul><ul><ul><ul><li>FAST Search </li></ul></ul></ul><ul><ul><ul><li>Endeca </li></ul></ul></ul><ul><ul><ul><li>Vivisimo </li></ul></ul></ul><ul><ul><li>Advantage: Build a cash flow generating, sustaining business quickly </li></ul></ul><ul><li>Option 2: Early Stage Venture route </li></ul><ul><ul><li>Develop the killer app for the emerging market </li></ul></ul><ul><ul><li>Advantage: Do one thing REALLY Well </li></ul></ul><ul><li>Option 3: Develop the Systems/Network management infrastructure </li></ul><ul><ul><li>Use Open Source/LAMP (OpenNMS) </li></ul></ul><ul><li>Option 4: Develop/Acquire the Software/Appliance infrastructure </li></ul>
  35. 35. Thanks for your Time!
  36. 36. Bibliography <ul><li>Enterprise 2.0 (McAfee, 2006) </li></ul><ul><li>Scale without Mass (Brynjolfsson, 2006) </li></ul><ul><li>The Long Tail: HBS Amazon Case </li></ul>

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