3 ways big software companies may fail in the cloud

Enterprise software providers need to understand the new world order if they and their customers are to succeed

Be careful what you wish for: "Big Software" -- the multi-billion-dollar companies selling enterprise software -- have discovered the cloud, and they are now providing cloud apps and services. That should be good news, except that Big Software's history over the last 30 years shows it could easily get the cloud transition wrong -- and harm users in the process.

So, here's my free advice to Big Software about the right way to understand the cloud for the ultimate benefit of customers while looking at the three dangerous shifts enterprise providers need to understand.

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1. It's not just a platform change. Software providers that look at moving to the cloud as an A-to-A port are in for a surprise. The movement to the cloud needs to come with a complete reworking of the application architecture -- in many cases, from the ground up. Skipping this step means your software won't properly support resource and tenant management; users will quickly feel that limitation, and you'll fail.

2. You can't charge the same amount. Traditional enterprise software providers typically work multi-million-dollar deals with lucrative maintenance agreements. The cloud makes all of that unnecessary, so traditional enterprise providers that insist on receiving the same margins will find out fast that it won't work. The cloud is cheaper for you, so it should be much cheaper for your users as well.

3. It's changing your world. Many in enterprise software don't understand, or perhaps refuse to understand, that their world is changing forever. Can you say Blockbuster meets Netflix? I understand the reality is like turning a battleship because you're so fat and happy with the software profits you've been collecting for years. But the fact of the matter is that the playing field is now much more level. New providers are entering the game, and the cost of switching is actually pretty close to free.

It's time for some companies to get a clue.

This article, "3 ways big software companies may fail in the cloud," originally appeared at InfoWorld.com. Read more of David Linthicum's Cloud Computing blog and track the latest developments in cloud computing at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.


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