Most people assume Gartner analysts spend their lives drawing up magic quadrants. Actually the biggest single activity for most analysts is handling client calls as they look for new solutions. When I run into Gartner analysts at industry events I will sometimes ask them how many calls they average a year. Best I can tell, it is less than half what we handled when I was there from 1995-2000.
It was a very different time. Y2K led to a frenzy of software evaluations. Gartner had a higher mix of buyer as against vendor clients. The analysts today are more specialized by market category than we used to be.
But there is a much bigger factor. The conversion to cloud applications in the last decade has gone much slower, especially in larger customers, than the conversion to client/server solutions in the 90s. Salesforce and NetSuite have been around for two decades. Workday and Oracle have been offering cloud solutions for a decade, SAP and Infor for at least five. The last wave of applications are 20 to 40 years old and ripe for modernization. There are lots of drivers which would suggest a much more vibrant cloud applications market.
There are proportionately fewer calls to analysts, and even where they are made, much fewer actually result in purchases. The last point is concerning and bears investigation.
From my conversations I believe there are several reasons for the relatively slow migration
“Square peg, round hole”
There are lots of mismatches in the market. Many customers want to modernize their shop floor or their warehouse with sensors and robots and are instead expected to buy complete ERP and Warehouse Management systems which, by the way, were designed to interface with humans, not machines. They want predictive maintenance around their major assets and are offered old school depreciation-calculating asset management software. They want social marketing and are offered bundles of SFA-centric CRM software. They want to modernize industry functionality and find little of that has been moved to the cloud.
Cost of moving to the cloud remains high
While multi-tenancy has reduced cost of upgrades, hosting and application management, the cost of getting there is still too high. Very few software vendors have developed automated migration tools. Fewer have learned to manage their systems integrator partners. Implementation costs and failure rates remain stubbornly high.
Cost of staying put keeps going down
Third party maintenance, new business models for outsourced application management, infrastructure-as-a-service all make staying with legacy applications palatable. End users may not like it, but cannot argue with the improving economics.
The lag compared to consumer tech now seems permanent
A decade ago, most companies were willing to give enterprise vendors the benefit of the doubt to catch up with consumerization of technology. These days consumer tech companies are offering far more sophisticated infrastructure and artificial intelligence. The big surprise today is when Oracle or IBM delivers anything ahead of Amazon or Google. Even then, no one really expects their economics to be attractive.
It’s not all bad news. With so much of the market still wide open, we may see a second onslaught from Workday and Salesforce. Oracle, SAP, Infor and others may jolt their laggard on-prem customer bases to migrate. A new generation of vendors offering point solutions may make them move to a new category of applications.
The market needs much more of that. We are in the summer doldrums with too many no-go decisions.
(Cross-posted @ Deal Architect)