Wednesday, 31 August 2011
After a small conversation with Frank Scavo - whom I hold highly - it struck me: we old enterprise boys that keep kicking the #socmed chins might be on our way to retirement. Not saying that Frank's one of them, but I certainly count myself to the pack as I've only been around multinationals and global companies for the past 15 years. I've never consulted a national company - save governmental agencies - let alone SMB or even smaller
I'm talking IT, of course - as usual. And I had a moment of revelation. IT used to be so expensive decades ago, that only big (or in the very beginning, huge) companies could afford it. Buy a mainframe (currently you all have one of those in your hands when you use mobile) 30 years ago? Cost a fortune, and you'd write that off in 20 years - you'd hope
Then, the pace accelerated. Mainframes got company from midframes, a little later the client-server concept kicked in: one slim server but fat clients on all sides so eventually it would all end up to the computing power we were used to. The time-sharing invented in the 1960's which I now equate to Cloud, at least when it comes to PaaS, was a predecessor of the "we want more for less" paradigm
Still, with the client-server concept, it was purely business oriented: IT consumers didn't exist in the last century until the nineties, when that market slowly came to rise. Main applications back then were Microsoft Office, and games - but it was a market in which both were priced too highly to get any decent spin-off, and floppy disks were easily exchanged - there goes the profit
Then, the 21st century came - and Linux along with it, targeted at the consumer. Did that work? Not at all, even Linux was used by businesses to lower the cost of operation. It coincided nicely with the rise of web servers to offer business-to-consumer (B2C) services via internet sites and web shops. Some raving lunatics equated those web servers, supplying functionality to customers, with web services and the biggest mistake in IT since object orientation saw the light - services have always been channel-independent and always will be, so after 10 years I can finally smile at the demise of web services, XML and SOAP. REST, JSON and ... are now taking their place - there's still a lot of work to do before we can get back to the blessings of the 20th century when it comes to information exchange
Back to topic: the market became increasingly more consumer-oriented, yet the only commodity offered was internet browsers, email and search engines - and how extremely difficult those were!
At the same time, Google arose. They focused on a search engine, and did a great job. It wasn't business-oriented, it wasn't consumer-oriented, it was just a search engine and entirely Internet-oriented, and free
Many fanbois whine about Apple being so great - well memory serves me correctly and Apple just sucked hard in the 20th century. Way too expensive, compatible with nothing, and as arrogant as a queen-bee. Apple is still way too expensive, compatible with nothing, and as arrogant as a queen-bee, but at least Google provided them with a means of existence (and of course Microsoft saved them from bankruptcy in 1997, not to mention Intel gave them another much-needed boost in 2005) - but the real reason that the consumer market finally broke through, was the fact that you could actually go onto the Internet, go to Google and know where you had to go - Apple finally found an audience
My first computer was a P-2000, back in 1981, and I wrote a game on it - in BASIC. 8 years later I owned my first PC, and I fooled around on that in DOS and Windows 3.1, changing everything to my liking. Oh and I did play games that my friends handed me on diskettes, and vice versa. I went online in 1997 and didn't have a clue where to go - what was I looking for? Browsers and email and search engines kept struggling with the new model where unknown people would use their product with unknown results, and the outcome was simply bad
Then, Google came along, as the new kid in town, and was applauded for its bravery. Today, it's a billion dollar company with only 20,000 employees that revenue 1.2 million dollars each, and generate an operating profit of $ 420,000 per employee - and increasingly their "don't be evil" slogan gets questioned
Compare that to the old enterprise world: Oracle, HP, SAP and IBM. Together they don't have 20,000 employees, no, they have 1,000,000 employees: 1 million, 50 times as much as Google. What is the combined revenue per employee of those four then, you might ask? I have the answer
The combination of Oracle, HP, SAP and IBM has a virtual average employee that revenues 310 thousand dollars a year; 4 times less than Google.
How much operating profit do they get from that then? Well, if you fasten your seat belts, I'll tell you. Ready?
The combination of Oracle, HP, SAP and IBM has a virtual average employee that generates an operating profit of 55 thousand dollars a year; 7.5 times less than Google. Remember now, you old lovers of economies of scale: that virtual combination has 50 times as many employees as Google, and operates almost exclusively in the enterprise market
So, does Google get enterprise? Maybe, maybe not - but please do tell me under which rock the business case is hidden where it shows them that they should.
The enterprise market is dying, the consumer market is adolescent - faites vos jeux - carefully...