Ahead of SAP’s annual SAPPHIRE event, we took a look at our research regarding buyer preferences for Cloud-based business software over the past few years. We’ve looked at this several times previously, including in our past Cloud Business Summit events, and after our 2013 global Cloud survey (1243RA, Survey Says: Single-vendor Suites Winning over Best-of-Breed and Multi-vendor (Loosely-Coupled) Cloud Solutions, 24July2013).
Given buyer and user statements and positions over the past few years about embracing “digital business,” enabling greater business flexibility and adaptability, and enabling greater business innovation, one would expect that their preferences to shift more and more toward loosely-coupled solutions that utilize Cloud platform-based middleware and other forms of integration – especially, and increasingly, APIs – to provide “good enough” interoperability that enables greater flexibility in solution and provider choice.
As this buyer/user movement grows, as the paces of business and Cloud change increase, and as more and more business software providers embrace API-driven interoperability and other forms of technological and functional integration capabilities, one would expect to see significant moves toward more diversity in the types of Cloud-based business software desired and acquired.
Review and analysis of Saugatuck’s buy-side research regarding Cloud business software types suggests the opposite has been happening. Figure 1 presents an aggregation of our research on the subject from early 2012 through mid-2014, including web surveys, work with clients, and ongoing conversations with business software buyers and providers. The net result: there’s almost no change in buyer preferences since late 2011-early 2012. In fact, they may be moving toward more preference for single-vendor suites.
Business software buyers, as a whole, still overwhelmingly prefer to acquire and deploy business software as single-vendor-provided, tightly-integrated suites. There is a continuing and very strong preference for “Best of Breed” solutions – i.e., software developed and optimized to enable and manage specific business processes and functions. There is also a continuing and strong preference for “suites” of solutions from multiple vendors, enabled by middleware, APIs, and other integrative technologies. But not only do Cloud business software deployment preferences remain relatively static overall, they remain heavily tilted toward traditional, integrative suites.
This hypothesis will be tested in future Saugatuck surveys, but the potential for such a trend is clear.
What would make things change, and especially accelerate preferences for less-integrative approaches? We would have to see rapid and widespread improvements in widely-available, well-supported, inexpensive and highly-effective, easily-transposable, and highly-reliable approaches such as APIs and middleware that work in standardized manners across a substantial range of applications and data types.
Much of this is available today, and more APIs and improved middleware capabilities are regularly released by market-dominating Master Brands and by smaller, more narrowly-focused technology providers. But too few industries, solution types, and business operations today can benefit from a critical mass of such capabilities. Given the pace of Cloud-related IT and services innovation, we may see some shifts occurring by the end of 2015, but any widespread, significant change in buyer preferences is unlikely before 2017.
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