But one class of software company may end up benefiting more than anyone ever imagined: start-ups and the smaller, more nimble companies we used to call "best of breed" until the term was drummed out of fashion. At a time when the conventional wisdom says that massive suites and limited vendor choice is what customers are looking for, the unconventional view may favor the little guys more than ever before.
The hard evidence is still to come -- this latest dust-up is far from over, and most buyers are in wait-and-see mode -- but the evidence that small companies and specialized vendors could be the beneficiaries of the battle of the big guys is beginning to pile up.
Let's start with customer choice. Customers have definitely had a surfeit of choice lately, even at the suite level, and that fact has led many of them to actively limit the number of vendors they work with. But present these same customers with a suddenly restricted set of choices, as could happen if Oracle swallows PeopleSoft and possibly J.D. Edwards too, and you're apt to hear a different story. Choice is a safety valve that few customers are really willing to give up entirely. While having 15 different products to chose from is a pain, having a short list of three or five or six is often very welcome.
Choice doesn't just help get the customer better prices and more features, it also helps solidify internal customer thinking about exactly how technology is supposed to be applied to real-world business needs. Choice also means that gaining competitive advantage from technology has a greater chance for success. The more contenders for the corporate software budget, the more new ideas are going to be on the table. And that table, I believe, will have even more room for smaller vendors as the larger companies roll each other up.
Choice isn't the only way in which the smaller vendors may suddenly find an advantage. Once vendors start measuring their revenues in billions of dollars and their customers in increments of ten thousand, proximity to the customer becomes harder and harder. The personal touch becomes less personal, and the ability to have enough senior-level staff to maintain that elusive "partnership" between vendor and customer becomes itself ever more elusive.
Smaller vendors, at least the successful ones, know that nothing short of 100% customer love will do. Every happy customer can say that they love their vendor in part because the vendor understands the customer's business. And no big vendor can do customer love for the greatest percent of its customers the way a small vendor can.
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Finally, web services, services architecture, and the evolution of application integration are making it much easier to be a successful little fish in the greater software pond. Integration cost and complexity were what pushed us into the suite mindset in the first place.
As services architectures, XML and SOAP interfaces, and other technologies diffuse into corporate IT, plugging in "integration-friendly" third-party applications is becoming less of an issue. Removing that burden -- and cost -- from IT removes a major reason why companies wanted to buy suites in the first place. Services architectures may democratize software choice more than anyone ever imagined.
As I said, we won't know for sure how this trend pans out until we know more about the market's new make-up. But there are a lot of bets on the table right now in favor of the return of the specialists. Enterprise software start-ups are suddenly getting funded at a decent clip, and there's a healthy number of customers out there willing to take a chance on a new company's innovation and attitude.
None of these vendors think they are necessarily going to take on an SAP and whatever is left of the current market leadership head to head. But success doesn't have to be measured in billion of dollars and thousands of customers. Best of breed may be back before it ever really left.