Quarterly Results for Enterprise ISVs Signal Missed Opportunities to Service Market Needs for Cloud Solutions

The financial performance of Oracle® and IBM® as reported for the first calendar quarter of 2013 reflects a failure to provision the solutions enterprise customers require. The strongest example, to date, of the lack of success these businesses are experiencing as they try to meet the needs of their target market is the provisional award, by the U.S. CIA, of a $600 Million contract to Amazon for a private cloud. We have to ask why this award went to Amazon rather than to a traditional partner of U.S. Federal markets like IBM could also have provided the needed solution.

We think these failures are closely entwined with the kind of counter productive business processes Microsoft® hopes to eliminate with its well publicized “One” reorganization. In our view, the entire structure is rooted in the methodology of “complex sales”, which is ill fitted to service the coming needs of large customers.

Complex sales literally take years to mature. We think a deal like the CIA’s need for a private cloud likely arose from a decision to back away from purchases of complex solutions. In 2013 the imperative is to deliver a substantial reduction in the cost of IT systems. “Substantial reduction in cost” can be defined as a lower system acquisition cost along with a zero to very low cost of system operation. Let’s face it, cloud offers shoulder the vendor with acquiring, maintaining, and providing computing services (inclusive of hardware, technical expertise, storage, firewalls, etc). Enterprise markets are fascinated with them (just consider the U.S. Federal Government’s “Cloud First” initiative, which directs internal government agencies to look into any/all multi-tenant cloud offers before proceeding on an on premises solution). So we are saying the shift reflected in the quarterly reports of enterprise ISVs is not likely to end anytime soon. These companies will do well to plan on a lot less complexity than used to be the case for enterprise business requirements.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved

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