/// A Tiger Can’t Change Its Stripes: Three Reasons Why Vendors Can’t Do Both Legacy and Cloud

July 5, 2013  |  All Things Digital


Whether you call enterprise software sexy , cool or still super nerdy , there is no denying that this space is hot. There’s no shortage of headlines, industry reports and blog posts that cover the surge in business technology — many of which pit legacy behemoths and emerging cloud players against each other in a heated battle for the future of the modern enterprise. Software put forth by legacy providers and emerging cloud players may look similar in terms of user interface and bulleted features on marketing collateral or websites. However, if you go one step further to dig into their respective technology and business models, you’ll realize that the only similarity is their shared ambition to dominate a $270 billion enterprise software market. The funny thing is that we continue to see industry analysts, CIOs and pundits believing new offerings like Microsoft Azure or HP Cloud stand a chance against Amazon Web Services and Google Cloud Infrastructure. Or that the likes of Oracle can buy their way into the cloud via acquisitions such as Taleo and Eloqua to remain competitive. They could not be more wrong. Software vendors that focus exclusively on delivering cloud-based services have a big advantage over those trying to support both legacy and cloud ambitions. There’s just too much territory to cover — and not nearly enough overlap — to have it both ways. This reality will play out in a big way during the next few years. Here are three reasons why: 1. An Entirely New Way of Thinking (About Revenue) Legacy vendors such as Microsoft, IBM and Oracle built their businesses through local installations, expensive licensing deals and big upfront investments (followed by ongoing maintenance and consulting fees), whereas the onslaught of cloud-based players have gained market share through multi-tenant architectures and monthly subscriptions. Moving pieces of a decades-old organization to a subscription-based cloud model is a big deal. Not only does it shift how you compensate your sales team (not an insignificant adjustment), but also changes expectations set for investors, capital requirements and financial planning objectives. It’s an entirely new way of doing business that global behemoths with 100,000+ employees and public market standing can’t do successfully because of their history with traditional software models. 2

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A Tiger Can’t Change Its Stripes: Three Reasons Why Vendors Can’t Do Both Legacy and Cloud


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