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© 2005 MIT Sloan School of Management May 11, 2015 Perspectives on Innovation and Enterprise Computing Timothy B. Jones Sloan Fellow In Innovation and.

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Presentation on theme: "© 2005 MIT Sloan School of Management May 11, 2015 Perspectives on Innovation and Enterprise Computing Timothy B. Jones Sloan Fellow In Innovation and."— Presentation transcript:

1 © 2005 MIT Sloan School of Management May 11, 2015 Perspectives on Innovation and Enterprise Computing Timothy B. Jones Sloan Fellow In Innovation and Global Leadership 2007

2 © 2007 MIT Sloan School of Management Overview Background Observed trends Market Dynamics Implications for Software Infrastructure Business Opportunities

3 © 2007 MIT Sloan School of Management Background Who is Tim Jones? –Education MIT ²: B.S., Sloan Fellow (MBA); Georgia State M.S. Computer Information Sys. –Business Development, Channel and International Sales experience Oracle, Sybase, OpenVision Executive Leadership w/ OnDemand, Eba Systems, BionTTech –Early Stage Venture experience w/ Mohr, Davidow Ventures on East Coast Core Competencies –Enterprise Software, Middleware, and Infrastructure –Internet Applications –Wireless Applications –Network and Homeland Security Infrastructure

4 © 2007 MIT Sloan School of Management Innovation and The Fifth Wave Source: Carlota Perez, 2002

5 © 2007 MIT Sloan School of Management Where IS innovation occurring? Since 2000 (i.e. Frenzy), more innovation has occurred in consumer technology than enterprise technology –Google for internet search vs. Verity (10 years old) –Apple IPod, as music player AND storage device –Gaming Platforms driving processor, user interface, and network development X86 commoditization, NVIDIA, AMD Second Life, Worlds of Warcraft These shifts in the locus of innovation from enterprise to consumer markets have led to significant disruptions that create business opportunities

6 © 2007 MIT Sloan School of Management Disruption #1: Prosumers in the Enterprise Educated, professional consumers, or “prosumers” are bringing consumer technology into the office as alternatives to corporate solutions –Better interfaces, more user centric –Higher productivity –Lower cost! (10X factor) This has happened before: –Apple II vs. Mainframes and Minis –VisiCalc and Lotus 123 vs. OEM financial applications –Netscape Mozilla vs. 3GL/4GL applications Anybody remember the “Intranet”??? CIO’s are increasingly having to manage new devices and applications that are “home grown”

7 © 2007 MIT Sloan School of Management Disruption #2: The new software stack In addition to the management problem, a new hybrid class of applications, based on the low cost “LAMP” stack is undermining existing enterprise software –Carr’s “Death of IT” is overblown, but this IS a threat to existing vendors dependent on high margin information goods Despite Carr’s pessimism new applications are emerging that enhance productivity in knowledge workers –Brynjolfsson’s “Scale without Mass” and IT intensity Characteristics of these applications include –“Pull” vs. “Push” orientation Driven by real-time user needs not vendor designs –Customer Self Service orientation vs. Central IT Planning –“Good Enough” computing contrast with serialized release process The “Perpetual Beta”

8 © 2007 MIT Sloan School of Management Redefining the software stack Mobile and Wireless Web Applications Enterprise Applications Small-Medium Business Applications Service Layer Database Operating System Apache Perl/PHP MySQL Linux

9 © 2007 MIT Sloan School of Management Mobile and Wireless Web Applications Enterprise Applications Small-Medium Business Applications Service Layer Database Operating System 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”

10 © 2007 MIT Sloan School of Management The “Long Tail” of Enterprise Computing Source: Rod Boothby, 2006

11 © 2007 MIT Sloan School of Management Evolution of the Long Tail in the Enterprise Source: Rod Boothby, 2006

12 © 2007 MIT Sloan School of Management “Long Tail” + Disruptions #1 & #2 lead to Enterprise 2.0 Source: Rod Boothby, 2006

13 © 2007 MIT Sloan School of Management Enterprise 2.0 Definition Utilization of 2 nd Generation Internet technologies inside the enterprise firewall to –Enhance collaboration, “tacit” interactions and user-generated content to solve problems below the threshold of traditional IT –Replace client server architecture with more flexible, user-centric applications and access to data –Improve intra-enterprise communications and processes in real time at low cost (Inside the Firewall, “IFW”) –Facilitate inter-enterprise transactions between supply chain and channel partners with heterogeneous IT infrastructure (Outside the Firewall, “OFW”) –Engage customers and partners more fully by increasing integration with their data and applications (OFWⁿ) –L³CAT – Long Lived Loosely Coupled Asynchronous Transactions

14 © 2007 MIT Sloan School of Management Source: Carlota Perez, 2002 Deployment/Synergy - beginning of the Enterprise 2.0 era

15 © 2007 MIT Sloan School of Management 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 © 2007 MIT Sloan School of Management The Enterprise IS Content, too! Consumer Content –HTML Pages –Music –Video –Structured links Enterprise Content –Applications –Database information –Unstructured Content

17 © 2007 MIT Sloan School of Management New Software Model reflects needs of more fluid IT Integration Source:Adobe, Inc.

18 © 2007 MIT Sloan School of Management Anatomy of New Software Models

19 © 2007 MIT Sloan School of Management Enterprise 2.0 and Coase The fluid, flexible nature of Enterprise 2.0 confronts Coase(1937) on the nature of the firm => reduction of transaction costs Firewall Core activities External Firms

20 © 2007 MIT Sloan School of Management Enterprise 2.0 Core Components SLATES (McAfee 2006) –Search –Links (e.g.. Clustering IFW) –Authoring (Blogs, Wikis) –Tags (Taxonomies and “Folksonomies”) –Extensions (Recommenders) –Signals (RSS)

21 © 2007 MIT Sloan School of Management Early Adopter Organizations DrKW Razorfish Li & Fung UPS

22 © 2007 MIT Sloan School of Management Target Verticals Financial Services –Asset management –Retail Customer Self-Service Consulting and Professional Services High Technology –Sales, Support, and Marketing –Channel Management –Distributed Product Design –Outsourcing/Offshoring Project Management Pharmaceuticals/Life Sciences –Health Care feedback loop –Distributed Sales forces

23 © 2007 MIT Sloan School of Management Channel Trumps Product Direct Sales must be augmented and extended to be profitable Web/Internet Channels are required The Data Center is a Channel as well –The “One Building Company” Esp. w/SW Appliance

24 © 2007 MIT Sloan School of Management Possible Market Segmentations: End User Type (1) Highly mobile professionals –Work frequently outside of the office –High communication frequency –Expert PC user –Use broad range of software products –Examples: executives, consultants Office-based knowledge workers –Work primarily in an office –High communication frequency –Expert PC user –Use broad range of software products –Examples: engineers, analysts

25 © 2007 MIT Sloan School of Management Possible Market Segmentations: End User Type (2) Task-oriented office workers –Work primarily in an office –Medium communication frequency –Advanced PC user –Use smaller range of software products –Examples: administrators, accountants Task-oriented non-office workers –Work in manufacturing, logistics etc., i.e. not typically in an office, but at a fixed work place –Low to medium communication frequency –Less experienced to advanced PC user –Use small range of software products –Example: bank tellers, factory workers

26 © 2007 MIT Sloan School of Management Possible Market Segmentations: End User Type (3) Highly mobile task-oriented worker –Work mostly outside of the office –Medium communication frequency –Advanced PC user –Use small range of software products –Examples: field service technicians

27 © 2007 MIT Sloan School of Management Deployment Models: Adoption of Software as a Service (SaaS)? Source: Summit Strategies, Saugatuck Technologies Adoption by Company Size Approx. 43% of big Enterprises have no plans to use Software-as-a-service and are therefore potential customers for an installed solution. Adoption by Application Type (all companies) SaaS AdoptionSmallMidEnterprise Currently Use36%30%31% Evaluating16%13%11% Plan to Evaluate15%20%17% Familiar, No Plans 18%28%29% Evaluated, Didn’t Buy 5%3%7% Discontinued2%0% Not Familiar8%5%7%

28 © 2007 MIT Sloan School of Management Other Deployment Models Hardware Appliance –Commodity hardware(x86) and Software(Linux) Akamai, Google Search Appliance Software/virtual Appliance –Software emulation of hardware container rPath, VmWare, Ingres 2006 –Possible Integration with Cassatt

29 © 2007 MIT Sloan School of Management 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 © 2007 MIT Sloan School of Management 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 © 2007 MIT Sloan School of Management Addressable Application Spaces Human Resources (HRMS), Human Capital Management; (Peopletools replacement) Supply Chain Management (SCM) Enterprise Resource Planning (ERP)Knowledge Management (KM) Enterprise Applications Integration (EAI)Project Management ProcurementLogistics and Distribution Marketing Management (Product/Corporate)Risk Management and Compliance Production Planning and Materials Management Business Intelligence (BI) (esp. Real Time vs. Offline)

32 © 2007 MIT Sloan School of Management Example: Knowledge Management in Venture Capital New investment environment requires interdisciplinary investing Physical SecuritySecurity Software Wireless Biotechnology New Environment Chips/Devices Traditional VC Investing Source: Jones, 2005

33 © 2007 MIT Sloan School of Management Real time integration of Knowledge Content better suited for Enterprise 2.0 Sources: Jones 2005, Dion Hinchcliffe 2006

34 © 2007 MIT Sloan School of Management How to ramp an Enterprise 2.0 Company Option 1: M&A of players in KM/BI/enterprise search built during last wave that are undervalued –Public Companies Autonomy –Private Companies FAST Search Endeca Vivisimo –Advantage: Build a cash flow generating, sustaining business quickly Option 2: Early Stage Venture route –Develop the killer app for the emerging market –Advantage: Do one thing REALLY Well Option 3: Develop the Systems/Network management infrastructure –Use Open Source/LAMP (OpenNMS) Option 4: Develop/Acquire the Software/Appliance infrastructure

35 © 2007 MIT Sloan School of Management Thanks for your Time!

36 © 2007 MIT Sloan School of Management Bibliography Enterprise 2.0 (McAfee, 2006) Scale without Mass (Brynjolfsson, 2006) The Long Tail: HBS Amazon Case


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