This was a banner year for enterprise software that saw mega-vendors continue shifting their on-premises license business to the cloud, many major acquisitions and the continued emergence of IoT and AI as factors driving next-generation applications. Here's a look back at three key stories that exemplify the year in enterprise software and which will have resonance in 2017.
Intelligent applications: Microsoft CEO Satya Nadella made a splash with the unveiling of the company's "conversation as a platform" theme, in which advanced-capability chatbots and voice inputs will represent a primary way for users to interact with software. SAP, Salesforce and Oracle followed suit with chatbot-related announcements for their own software suites.
Beyond chatbots, AI and machine learning in general loomed large over the enterprise application market this year, but it's 2017 when vendors start shipping more product and functionality, as opposed to merely announcing their plans. It will be interesting to see whether 2017's major software conferences feature customers that are using intelligent applications for real-life gains in their businesses, versus just slick demos and Powerpoint presentations.
Oracle's Cloud Machine innovates in hybrid cloud: Oracle in March rolled out Cloud Machine, a hardware appliance implemented behind customers' firewalls, running application workloads using the same software stack as that powers Oracle's public cloud, with subscription-based pricing. Customers only need to write applications once and when desired, can shift workloads to Oracle Public Cloud without changes, the company says.
Microsoft is doing something similar with Azure Stack, but doesn't directly provide the hardware as Oracle does. Overall, Oracle Cloud Machine represents a key milestone as enterprise software customers continue to grapple with cloud migration. Constellation Research VP and principal analyst Holger Mueller spelled out the logic in a blog post:
That Oracle makes the move only now (and recently Microsoft, too) shows that Oracle thinks it cloud architecture is so mature, that it can ship it out to customers. At the same time it is clear that customers cannot replicate the full extend (and complexity) of Oracle’s Cloud platform across multiple servers and system landscapes – so offering the same on premises is the logical consequence. No surprise Oracle will have to offer the management of the Oracle Cloud Machines, something CxOs should definitively consider using as a service.
In both Oracle and Microsoft's cases, this sort of move is aimed at keeping on-premises workloads that may eventually move to a public cloud 'sticky'—keeping customers in the fold rather than see them move to Amazon Web Services or other competitors. It's obviously an approach with benefits for the vendor, but at the same time one that goes to the place where many customers remain today. Expect 2017 to see more variations on the theme.
Microsoft shakes up its licensing policy, for the better: Early in the year, it emerged that Microsoft was planning to raise the minimum threshold for Enterprise Agreements to 500 users/devices, up from 250, and then direct companies that didn't meet that mark toward two newer, more flexible licensing programs: Microsoft Products and Services Agreement and Cloud Solutions Provider.
MSPA offers flexible terms for contract lengths, even as low as one month in some cases, a feature targeted at companies that bring in temporary seasonal workers. CSP is a partner-driven program aimed at helping Microsoft's massive reseller community sell its cloud services to SMEs while providing a local "face" for IT support.
The changes went into effect July 1, and one report suggested that over time, Microsoft will kill EAs altogether. Given the complexity and risk EAs are known to create when it comes to software asset management, audits and other factors, Constellation can already hear the applause for that among larger Microsoft customers.
Here's hoping Microsoft's move has a ripple effect among other heavily entrenched enterprise app vendors, and customers gain even more flexibility during their 2017 planning and buying cycles.
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