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Enterprise Software Trends: A Look Back at 2012

Written By: TEC Staff
Published On: December 28 2012

Here’s what TEC analysts have to say about some of the more significant enterprise software developments of 2012.

Aleksey Osintsev, TEC Research Analyst, on cloud ERP:
For the ERP software space, 2012 was a year of extensive appraisal of the suitability of cloud-based ERP software to the manufacturing industry. The software-as-a-service (SaaS) concept is being clarified, and lessons are being learned by manufacturing companies around the globe. New vendors are offering various cloud-only ERP solutions for manufacturing, while many traditional vendors have developed cloud or SaaS versions of their existing applications, or new cloud systems that parallel the older on-premise ones. Even more significantly, manufacturers are giving cloud deployment serious consideration as part of their IT strategy for the future.

From what I saw during 2012, businesses are starting to realize that perhaps they should not be lemmings in following the crowd to the cloud. In manufacturing, a deployment decision depends on a large number of factors, and these are unique to each business. While some manufacturers can adopt the cloud readily, it won’t work for everyone. It is obvious now that cloud ERP adoption is sometimes a controversial process, more complex than it originally appeared, and not that different in terms of long-term total cost of ownership. Some ERP vendors have had to discontinue their cloud offerings. In my view, cloud ERP offerings are not yet mature enough or sufficiently diversified to fully fit the entire manufacturing industry. So far, pure multitenant cloud-based manufacturing ERP software packages do not (and may never) fit some types of manufacturing at all.

Raluca Druta, TEC CRM Analyst, on customer value co-creation:
Customer value co-creation was, in my opinion, the most spectacular development of the year. In 2012 more companies acknowledged that the knowledge a person accumulates from using a product is priceless, and as such, customers need to be involved in product and service development. As word-of-mouth now spreads across ever larger, global communities, organizations have lost their controlling power over what people consume. Nevertheless, businesses did find a way to turn that loss into profit as they came to see their clients less as passive consumers and more as a valuable knowledge repository.

Consequently, customers are invited to participate in idea jams where they, first, recount their experience with products and, second, can be creative or critical about the goods that they consume. Social platforms and analytics are an integral part of this phenomenon. Social platforms facilitate collaboration between customers and companies worldwide. Analytics can reveal clients’ reactions as they develop and become public via social networks. Instead of simply being reactive to customer feedback, organizations can ask their clients directly what exactly they are looking for in products and services; in other words, companies want to know how customers define value, instead of defining that value for their clients.

Josh Chalifour, Director of Knowledge Services, on information management systems:
Organizations seeking content management solutions were putting a surprisingly high demand on security, even outpacing (slightly) the demand for some of the more obvious types of enterprise content management (ECM) and Web content management (WCM) functionality.

Toward the end of year, document management and repository concerns came to the fore to form top information management requirements alongside demands for editorial controls and managing business processes. Wise vendors already cater to these trends, while other concerns are emerging and will likely become more prominent in 2013. For example, some WCM vendors are reckoning with the relevance of their label and their specificity for Web content.

One midrange vendor vehemently explained to me that WCM systems were goners and nobody really wanted this commoditized application anymore. Not exactly an encouraging position for this vendor, which hadn’t been innovative in bringing other products to market.

But demand for WCM systems didn’t disappear. Instead, savvy vendors have extended their relevance by providing more user-centered "intelligence" features (from engagement techniques to design flexibility, and more). Even without considering those features, there remains a spectrum of products providing hugely varied degrees of functionality—arguing that these systems are being commoditized doesn’t hold up.

Ted Rohm, TEC Senior ERP Analyst, on cloud computing:
Cloud computing went mainstream in 2012. Not since the movement of technologies to the Web in the late 1990s have we seen a technological trend garner so much attention—“cloud” is no longer just a techie term bandied about by the Silicon Valley crowd. The biggest players in the IT business now fully support the cloud movement: SAP, Microsoft, IBM, and Oracle have announced large cloud initiatives. Almost every major business and financial journal ran stories and created focused content on cloud computing. Finally, millennials have been overheard saying that they're walking under an iCloud!

P.J. Jakovljevic, TEC Principal Analyst, on SAP HANA:
SAP HANA's early success is the most newsworthy development of 2012. I think that HANA is a game changer in how enterprise apps will be developed. Almost everyone thinks of HANA in terms of its ability to access and deliver information up to 100,000 times faster than what was traditionally possible, and its unprecedented ability to run transactions and perform analytics on a single architecture. But HANA is much more than a database on steroids; HANA is a Swiss Army knife of tools, with an innovation engine. SAP expects more than $420 million in HANA revenue for 2012—impressive considering HANA was only made generally available in June 2011. However, this revenue should be much higher if you factor in SAP’s growing portfolio of "Powered by HANA" solutions; there are now more than 30 of them, and SAP intends to have the entire SAP Business Suite running on HANA by next year. In addition, HANA underpins SAP’s other three major growth drivers—business intelligence (BI), mobility, and the cloud—and moving forward, HANA will dictate how SAP conceives, designs, builds, and sells new products

HANA’s beauty is that it is equally applicable to both the SAP and non-SAP worlds, and because of this, it is conceivable that in the not-too-distant future, there are likely to be more custom-built HANA applications touching non-SAP systems than commercially available HANA-based solutions marketed by SAP (in fact, approximately 40 percent of SAP’s HANA customers don’t run core SAP applications). While speed and in-memory analytics come first to mind, HANA’a abilities include text analytics, structured and non-structured data, predictive analytics, complex event processing (CEP) and data streams, a cloud-enabled platform (HANA Cloud and NetWeaver Cloud, like database.com and Force.com by salesforce.com), business rules engine, and much more.

Bob Eastman, Senior SCM Analyst, on the effect of the economy:
For all of the attention that “big data,” Apple, and mergers and acquisitions (RedPrairie/JDA, SAP/Ariba, PTC/Servigistics, Amazon/KIVA, Honeywell/Intermec) get, one of the more interesting stories in the supply chain space continues to be how software customers are responding to the still changing and uncertain economic forces.

The supply chain vendors have continued their pace of innovation, offering new capabilities of particular interest in the areas of supply chain visibility, sales and operations planning, analytics, cloud/software as a service (SaaS), mobility, and supply chain execution.

The end-user community has, in general, continued to proceed cautiously. We have begun to see in 2012, however, a bifurcation in the end-user strategy. While some firms maintain an internal cost-focused IT strategy, other firms have started this year to take a more market-responsive approach to their software investments.

There are two aspects to this. As some firms have taken cost out of their supply chains, they have seen this strategy play itself out, and their strategy then “matures” or shifts over to the revenue side in response to where they see opportunity.

Other enterprises have shifted their focus, we believe, to respond to a market opportunity. These companies sense that the economic conditions have improved sufficiently that investments now to enhance their competitive capabilities will allow them to better respond to customer needs and expectations as the economic upswing brings more customers to them.

The year 2012 has seen a shift in how companies are approaching their IT strategies. The supply chain vendor community is continuing to innovate in many interesting areas that TEC will be talking about in 2013. If enterprises can shift their attention from a singular focus on internal cost-cutting to leveraging more of the strategic technology offerings from vendors, they will be in a terrific position to respond to market needs in the event of a more robust economic upswing.
 
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