Check out this must-read post from Aaron Levie on TechCrunch about how startups are replacing old guard software companies - Brian Madden - BrianMadden.com
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Check out this must-read post from Aaron Levie on TechCrunch about how startups are replacing old guard software companies

Written on Jan 21 2013
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5,401 views, 4 comments


by Brian Madden

Over the weekend, Box CEO and co-founder Aaron Levie wrote a blog post on TechCrunch called "The Changing Of The Enterprise Guard." It is a must-read for anyone in our industry, and it gets me excited that I'm part of this hot space even though my 17-year career is in "boring ole' enterprise IT."

Levie opens with what we all know, that now workers are circumventing archaic enterprise software by bringing in new unsanctioned services into their organizations, tablets were launched, and CIOs became comfortable with the cloud. He points out that just a few years ago, the incumbent enterprise vendors played the game of "You can't trust the cloud," and now we see them all scramble to bolt "cloud" onto whatever they offer. (Crazy how many times this has played out in history!)

But the main thrust of Levie's article is that "enterprise" is finally a major opportunity for startup companies—something that's been missing in the past.

Looking ahead five years, Levie writes, "we're realizing that the scale of disruption is far greater and deeper than we originally imagined. The advantages and opportunities we saw in 2007 were just vibrations on the surface of much more violent tectonic shifts. We’re about to witness a decade-long changing of the guard, and nearly $1 trillion dollars of enterprise value is up for grabs."

Levie continues to make the point that the traditional software vendors just aren't prepared for this. "Only five years ago, a CIO could deploy software from Microsoft and not wince about integration concerns, but today that’s far from the case. In speaking with hundreds of CIOs, they all share a common concern: Legacy vendors won’t move fast enough to support these new platforms at the rate they’re being adopted by employees."

"In the previous predominant IT architecture (client-server)... mixing and matching independent solutions was wildly impractical if not impossible. ... The consequence of this aggregation was that startups had little chance to compete for customer wallet share.

But today and over the next few years, "Thanks to the emergence of an all-new IT architecture and the rise of the cloud stack, once-loyal customers are ditching slow-moving incumbents for a new guard of enterprise vendors. Meanwhile, customers that were never served by the old guard are getting access to best-in-class technology for the first time. We’re just at the beginning of this shift, but it will be one of the most profound and disruptive turnovers in the history of technology."

The comments posted to his article (including one from Ed Iacobucci) are more supportive of the traditional vendors, pointing out that they can build (Office 365) or buy (Citrix/Podio, Microsoft/Yammer, Oracle/Eloqua, Cisco/Meraki, etc.)

What do you think? I just can't express how excited I am to be part of this space. I love that my job is cool and that I don't have cover photo chatting apps to be part of the "startup" culture out here in San Francisco.

 
 




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Comments

Aaron Parker wrote re: Check out this must-read post from Aaron Levie on TechCrunch about how startups are replacing old guard software companies
on Mon, Jan 21 2013 11:48 AM Link To This Comment

"I don't have cover photo chatting apps" - huh?

Le_Baron_Samedi wrote re: Check out this must-read post from Aaron Levie on TechCrunch about how startups are replacing old guard software companies
on Mon, Jan 21 2013 12:02 PM Link To This Comment

Totally agree.  Inevitability is here but contrary to Dinosaurs, they have the chance and pleasure to see the Meteor coming.

Cost of developing Enterprise grade solution has dropped tremendously over the last few years and the “Old Guard” software vendors simply cannot redevelop years of over engineered solutions. Both for technical and commercial reasons: how to switch the install base without massive disruption at all levels, and how to compete on the license and service/management cost without cannibalizing existing revenue.

Combine that with their super high cost base plus natural ossification of organizations that make them risk averse, and you have an opportunity for start-ups.

As for market access, we and other new comers are proving every day that you can compete and win on large accounts if you bring huge increase on value and ROI.

Brian Madden wrote re: Check out this must-read post from Aaron Levie on TechCrunch about how startups are replacing old guard software companies
on Mon, Jan 21 2013 12:34 PM Link To This Comment

@Aaron, I just meant that I love that I can cover the enterprise IT space and still be part of the "startup" community.

Benny Tritsch wrote re: Check out this must-read post from Aaron Levie on TechCrunch about how startups are replacing old guard software companies
on Tue, Jan 22 2013 6:54 AM Link To This Comment

Brian, do you agree with Aaron Levie that in the past too many startups only concentrated on the consumer market and kind of ignored the enterprise market? If that's the case, many new start-ups may now focus on the enterprise market to fill the gap. So "Enterprise Consumerization" may well be the next big thing - combining simplicity and compliance in a smart way.

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