Isn’t it sad to watch the demise of what was once a technology icon? Isn’t it ironic that Kodak is having a fire sale of its patent treasure chest in a last minute effort to avoid bankruptcy? From the Wall Street Journal:
The one-time blue chip suffered with the transition to digital cameras and lost much of its traditional film business to foreign competitors. Intellectual property licensing and lawsuits have largely funded Kodak’s cash needs but stalled earlier this year, prompting Kodak to decide to sell 1,100 of its digital patents.
In the enterprise software world we have already seen at least one “Kodak moment” with Salesforce and its SaaS model completely disrupting the CRM space and claiming the leadership position at the expense of previously well-established players such as Siebel. Today we are seeing SaaS players such as Success Factors, Workday, Netsuite, ServiceNow and others making significant inroads into markets previously dominated by large on-premise vendors. Will a “Kodak moment” materialize for these traditional vendors? History certainly points this way.
With this in mind, I found two observations in a recent Computerworld article to be more than interesting.
Firstly, Yefim Natis, a Gartner vice president appears to be challenging history. His position is that CIOs are only comfortable with major vendors and consequently will delay moving to cloud services. From the Computerworld article:
He expects all the major enterprise software companies, including IBM, to have detailed or launched their cloud strategies by the end of next year. Those could include PaaS, infrastructure-as-a-service and software-as-a-service plans. “By that time, when all these guys to whom mainstream IT organizations listen endorse this model, then the mainstream will start moving in that direction,” Natis said.
So, Mr. Natis believes that CIOs will wait for 15 months and longer for the big guys to deliver before they start taking advantage of cloud technology. I have to disagree with this. Markets don’t wait for leaders to act. The reality is that when leaders are slow to act they get replaced. We have seen it so many times — the “Kodak moment” being the latest example. Importantly, today’s fast-moving technology markets will not wait for anyone, regardless of size. The very same article provides a surprising rationale for why the big vendors are being slow to move:
The big vendors have been slow to move to the hosted model in some cases because it’s tricky, said John Rymer, an analyst at Forrester. “It’s got everything to do with pricing and the business model,” he said. Currently, software makers such as Oracle make money by licensing their software per server core. They’re still working out how to charge users in a virtualized, cloud environment.
In other words, the major vendors haven’t quite figured out how to move to the cloud without seriously impacting their profitability. Can CIOs be so beholden to the major vendors that they will elect to not benefit from cloud technology while they wait for the vendors to figure out how to continue receiving what some may consider to be exorbitant costs for on-premise solutions? I don’t think so.