A decade of “consumerisation” of IT has, according to Gartner, succeeded in shifting the balance of power within organisations — across departments and from hierarchies to individuals.
For IT companies traditionally dominating the B2C market, the opportunities to target the enterprise space looms large. Already consumer tech providers are burrowing into the enterprise and fast becoming staples of the IT fabric.
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From Google evolving from search to browsers and Apps targeted predominantly at developers, book retailer Amazon now punting AWS, and Apple going beyond the Mac to push its iPhones and iPads to the enterprise market – the shift is clear, driven by a transformation of end user expectations in the enterprise over the last few years.
“When we log on to software in the enterprise we expect the same easy-to-use interface that we get with Facebook or Twitter,” said head of technology and digital media at M&A advisory firm Results International Julie Langley.
“The large enterprise software groups, such as Microsoft, Oracle and VMware, traditionally don’t have those user experience skills in-house. They don’t understand user experience and design in the same way as the consumer tech vendors.”
At the same time, an explosion in the use of mobile devices and cloud computing is giving traditional enterprise software groups a run for their money; they’re left playing catch up on enterprise mobility skills and pondering the challenges of migrating from a historically on-premise mentality.
“Public cloud — principally Amazon — and hybrid cloud is causing a rethink and gradual change in how IT is consumed,” according to research vice president at analyst firm 451 Research, William Fellows.
“Enterprises are looking for ways to extend the use of cloud across their organisations, beyond individual projects, applications and modelling tasks. Consequently they are seeking suppliers that can bring expertise in running specific workloads or application tasks, whether as SaaS or hosted business process.”
As a result, the stakes are changing for a majority of service providers. “To crack the next wave of cloud buyer opportunity, suppliers will need to raise their IQs to offer a broader catalogue of services,” Fellows adds.
Mike Ni, chief marketing officer at eCommerce provider Avangate, claimed that something called “B2i” (Business to individual) has overtaken both B2B and B2C as a blurring of the boundaries between consumer and enterprise markets has taken hold.
While the sales process for very complex products may not have changed as much as the hype would have us believe, the difference is more likely to be in the way you pay for products.
“Enterprise consumers act as if they are consumer tech buyers. Enterprise software and services are more commonly bought through subscription, trial and freemium business models today. These models originate from how consumers purchase on mobile devices and apps,” Ni explains.
Gordon Fletcher, co-director of the Centre for Digital Business at Salford Business School, says the tipping point for a software decision could be the fact that it’s a service people can get their hands on. “Not just try before you buy but the whole learning curve around it, so there’s a sense of familiarity.”
But, for enterprise IT users more used to dealing with the Microsofts, IBMs and Oracles of this world, how easy or painful has the transition been? Relinquishing control is an obvious challenge facing enterprise level users. Ni says within smart businesses, the relationships between vendor and customer is at an individual level.
“Information weaned from social media as well as forums give businesses an opportunity to understand their customers better,” said Ni.
Meanwhile, other signs of a shift in the customer/supplier sales and support relationship have taken place over recent time. A global partnership struck between Apple and IBM a year ago on mobile made clear Apple’s intention to firmly position itself in the enterprise space. As part of the IBM MobileFirst for iOS agreement, IBM sells iPhones and iPads with industry-specific applications to business clients worldwide.
At the time of the tie-up, Apple chief executive Tim Cook claimed that more than 98 per cent of the Fortune 500 and more than 92 per cent of the Global 500 were using iOS devices in their business. Combining IBM’s big data analytics at iOS users’ fingertips would open up a large market opportunity for Apple, Cook added.
For enterprise, the launch of iOS 8 offered improvements in the way users are informed of how their devices are configured, managed or restricted, with expanded security, management and productivity features. Meanwhile, AppleCare for Enterprise provides IT departments and end users with 24/7 assistance from Apple’s customer support group, with on-site service delivered by IBM.
Amazon offers choice
Amazon’s assault on the enterprise market has resulted in a tiered structure to AWS support. With all offering an unlimited number of support cases with pay-by-the-month pricing and no long-term contracts, Amazon hopes it will give enterprises some level of choice over the sort of help they can expect to receive.
AWS Basic Support offered to all AWS customers for no extra charge includes access a Resource Center, Service Health Dashboard, Product FAQs, Discussion Forums, and Support for Health Checks.
In addition, Enterprise or Business level services include customer support via phone, chat email and screen share, including help to configure third-party software and architecture guidance.
While all customers get access to a technical account manager, an Enterprise level package promises a 15-minute response time (one hour for business level), business review and customer built reports.
AWS charges $49 per month for the Developer-level tier. But the Enterprise level support will cost a minimum of $15,000 — or a percentage monthly AWS usage ranging from 10 per cent for the first $150,000 to three per cent of monthly AWS usage over $1m.
Even factoring in discounts as usage grows, an enterprise customer with a monthly usage of $1.2m will fork out a monthly support cost of $70,500.
Meanwhile, all customers have access to AWS Trusted Advisor, an automated tool that inspects the AWS environment and identifies opportunities to save money, improve system performance and reliability, or help close security gaps.
For enterprise IT users who are more used to dealing with the Microsoft’s and Oracle’s of this world, Results' Langley says the change in dynamic is a non-issue: “The consumer tech companies have already built huge enterprise businesses and are geared up for this – AWS is a $5bn business already and used by companies as large as Pinterest, Netflix and htc.”
JAMF Software is an Apple specialist helping commercial and public sector organisations manage their Apple devices. The company is also an enterprise AWS customer. “When we first started on the AWS platform [in 2002] it was very similar to the consumer proposition and the support channel was either non-existent or unknown,” said CTO Jason Wudi.
The shift towards community-based support and the prevalence of support information available in a self-service format is one thing. But while AWS has certainly changed the model it hasn’t cracked the enterprise engagement model entirely yet. “Enterprises still want suppliers that speak enterprise language – that includes multi-year terms, upfront payment and indemnification. There’s still work to do,” Fellows warned.
Wudi agrees that the speed of development of today’s technology platforms means support structures needed to step up a notch. He’s not kidding. Last year AWS issued 516 feature releases.
“Enterprises are used to visibility into what’s going to happen down the road," said Wudi. "An IT department want to have an annual budget or a plan for IT services and standards. And you can’t do that it you don’t know about something until three months before it’s launched.”
Nonetheless, for traditional suppliers playing catch up with consumer invaders to the enterprise market, the lessons are clear, Langley says. “They have recognised that they don’t have the expertise in user experience and mobile apps that are now a must-have for all enterprise IT solutions. They’ve responded by trying to bring those skills in-house through acquisitions and partnerships.”
In addition to IBM’s deal with Apple, she cites SAP’s acquisition of travel and expense management software company Concur last year for $8bn. “Concur had created user-friendly apps for business travellers to use on any mobile device and its expertise in creating user experiences that mimic those that customers have from their personal smartphones apps was a big driver behind that deal.”
There is certainly some evidence of a change of approach among more traditional IT suppliers, no doubt prompted by the entrance of IT providers more versed in a Business-to-Consumer (B2C) dialogue.
“Microsoft for example is going about a re-invention and is recognising that the world has changed, but it’s uncomfortable with going the full distance,” Fletcher said.
Increasingly, the firms with a consumer pedigree are becoming mainstays of corporate IT.
Their presence is helping drive a trend toward consumption based, service driven and monthly billed tech. What they lack, though, is the support pedigree owned by the Microsofts, SAPs and Oracles. This trio, meanwhile, are changing they way they deliver IT in response to the Apples, Amazons and Googles.
It’s just a matter of how far both sides meet in the middle and, then, where customers chose to place their money. ®