Dethroning the big guys will take more than a cool app
Sam Lawrence of Jive software has an excellent blog - www.gobigalways.com. I enjoy reading it because Sam often brings a new perspective on things. He is clearly a talented marketer and someone who can create an opportunity out of an unpleasant situation.
Sam's recent post talks about how digital photography had impacted the Kodak film business. He also proposes that social software may be in a similar position vis-a-vis the big software players. This is where I found myself disagreeing with Sam - my response is below.
1. The analogy itself doesn’t make sense because replacing a camera (overnight) is far easier than ripping out a software system within the Fortune 1000 environment (months or years). We are talking about two completely different markets.
2. Social software is highly unlikely to dethrone the big guys because software is and will continue to be a platform game where scale matters.
More details below:
Social software will become a commodity like all almost all other software does over time. I don’t know exactly how this will happen, but there are plenty of examples of this happening in enterprise software: small companies come up with a cool idea, big guys catch on and either buy the companies or put them out of business (what happened to the companies that offered calendaring software after Microsoft Outlook became a calendaring solution?).
Microsoft will be a likely culprit in this. They have the power to commoditize software. SharePoint commoditized Enterprise Content Management and helped drive the consolidations that recently happened in that space (FileNet acquired by IBM, Open Text buying up several companies and so on).
What’s to stop Microsoft from adding more social features in the next release of SharePoint? I’m willing to bet that next version will include more and better social software features. Also, consider that SharePoint is now a billion dollar business as MS has recently announced. At the prices that they charge per license - that’s a lot of seats! Upgrades are easier than migrations to new software and SharePoint within organizations stores more and more data every day inside (lists, files, discussion forums, etc).
What’s different now that may favor your position? The increase in SaaS acceptance changes the equation a little bit because it changes the delivery model. At the end of the day though - it’s about reach (sales force, marketing budget, executive mindshare), resources, and scale. Microsoft will figure out SaaS before the current Fortune 1000 IT guard will retire to be replaced by the younger generation who would be more likely to consider “in-the-cloud” solutions for social software.
Let’s keep in mind that the big guys don’t jump on things until there is money to be made. Social networking is a small industry now. As the opportunity to make money in it grows, we can safely expect the big guys to pay a lot more attention.
At the end of the day, software business is a platform business and there is room only for so many platforms. The transition towards SaaS has made things even more complicated for smaller guys, because platform now includes the infrastructure needed to run the software in the cloud - another area where scale is an advantage.
If you ask me, the big guys (IBM, Microsoft, Oracle, Amazon, SalesForce.com and Google) aren’t going anywhere for a long time. Their businesses reach so wide that it will take a lot more than a really cool social software app to dethrone them.
