EaapThe Evolution of IT Platforms: How Dominant Technologies become Irrelevant, and How the ‘Stack’ will Evolve
The Path to Irrelevance
Back in the 70’s and early 80’s, ‘hardware’ was king. The whole enterprise IT strategy was based on the choice of computer hardware. The ‘hardware’ was the ‘platform’ upon which all IT services and applications were built. Careers were built on choosing IBM, Burroughs, Sperry, or even a minicomputer from DEC or HP, for those big risk takers. On the vendor side, real men sold ‘iron’.
Things began to change in the mid 80’s, when the discussion moved to the choice of Operating System — O/S. Should the enterprise continue running on a proprietary offering ( eg: IBM CICS, DEC VMS, etc ), or instead, should it move to ‘open systems’ running on Unix ?. At the time, epic discussions took place over whether Unix was ‘enterprise’ grade, and secure enough to run serious IT shops. Hardware was becoming commoditized, and the O/S became the leading player in the platform architecture.
A few years later, in the early 90’s, relational databases moved to the forefront. Customers, leveraging the ‘client-server’ architecture (based on standard hardware and operating systems, by the way), began to develop multiple business applications, beyond the financial systems of the past. Since data is at the center of every business application, databases ( eg: Oracle, Informix, Sybase ) ruled the day, and the rest of the stack ( hardware and O/S ) was secondary.
The late 90’s, with the Y2K threat, brought the advent of ERP: an already developed, standard application, capable of running every aspect of the business. Companies stopped developing software and cared more about implementing an ERP. This is when companies like SAP rose to the top. The choice of an ERP became the most strategic IT decision any company could make. Everything else, became commoditized.
Once we passed Y2K, the whole stack, below the ERP, went through a massive transformation with the advent of cloud computing and the SaaS — Software as a Service model. Even though several born-in-the-cloud business applications players were founded at the time ( eg: Salesforce, NetSuite ), the traditional ERP vendors continued their healthy double digits growth rates. What cloud computing did was re-invent the stack below the ERP. Customers began to consume computing power (formerly delivered on premise by server hardware) and its associated infrastructure (O/S and databases) as a service, and paid for it as they consumed it (and not as an upfront capital investment).
Cloud became the ‘platform’; and the acronyms, IaaS and PaaS, were created to label the different models by which a customer could consume the stack below the ERP. Traditional hardware vendors began to decline ( eg: IBM, HP ), database revenues matured, and new IaaS/PaaS vendors started to rise ( eg: Amazon AWS, Microsoft Azure )
And this is where we are today: ERP on top of the ‘platform’, and the stack below moving fast to the cloud. Hardware, O/S and databases relevance it truly disappearing (does anybody care about the type of servers, choice of O/S and database being used by Google’s Gmail?).
The big question is: how will this IT platform evolve?
The next generation IT platform
Today, there are two major forces reshaping the ‘platform’: one is business related, and the other one is technical.
On the business side, standard business process automation, as delivered by ERPs, is becoming more and more standardized. In general, ERP vendors offer very common ERP capabilities. However, extending on top of the “standard” ERP with very specific Industry solutions is the next level of business value creation. The Cloud simplification of the stack, below the ERP, has opened up a universe of industry experts who can now package their knowledge and expertise into industry solutions ( eg: advanced warehouse management for wholesale distributors, formula based manufacturing for the food industry, etc ). Today, these experts with easily available tools, and little knowledge of hardware, O/S and databases, can quickly build modern and agile Industry solutions; and through internet and Cloud platforms they can reach, attract and serve sufficient number of customers in their micro vertical market in a very cost efficient manner.
On the technical side, the advent of micro-services architectures will take the access of ERP at the top of the ‘platform’ to incredible new heights. Micro-services allow the de-construction of the ERP (much like El Bulli did for the fine cuisine restaurant industry). It takes the complex code of an ERP and makes it available in smaller, agile and simple services. Then, such micro services can be used by any industry developer to give full enterprise capabilities to their industry solutions. For example, the developer of a craft spirits production application can call and use just the services required, such as accounts payable, A/R aging, etc. The account payable, A/R aging functions will be taken as “given” in the ‘platform’ by the Industry solution developers.
The Birth of EaaP: ERP as a Platform
As a result of these 2 major trends, I believe we’ll have 2 major outcomes:
First, there will be an explosion of industry specific applications built for every micro industry ( eg: wholesale distribution of pet food and supplies ). It will be the enterprise equivalent of the explosion of consumer apps that we have seen in the Android and Apple world. Marketplaces will be created to make it easy for any customer to find and to contract business applications fitting his/her requirements.
The other major impact will affect the ERP. The ERP microservices will be integrated into the cloud stack, offering developers everything they need from the computing power and database all the way to the specific ERP modules required in one single place.
SaaS, PaaS and IaaS will be buried onto the stack, and the dominant decisions will be on the choice of which ERP microservices to use. This will be the world where industry solutions will rule, and everything else will be secondary.
We are not there yet; but over the next 5 to 7 years, business will start running with industry specific applications, on top of ERP microservices ‘platforms’. There will be millions of industry micro vertical apps developers, and just a select few ERP microservices ‘platform’ vendors. The game is on to get there. The ERP as a Platform — EaaP is on its way.