Oracle is buying Sun, and bankers are looking forward to the next wave of consolidation. To somebody who remembers the innovation and excitement of earlier enterprise hardware and software start-ups, this is a bit gloomy. CHOI (Cisco, HP, Oracle, IBM) does not spell "choice" for buyers, employees, or investors. Choose your behemoth. If consolidation means lower prices -- and it will -- buyers will be happy. But, it all sounds like cost-cutting, layoffs, and less innovation to me.
Meanwhile, in a parallel universe called cloud computing and SaaS, start-ups are starting and growing, innovation is happening at a staggering pace, and it all looks rather fun and fast-paced.
Are both types of companies living in the same universe? Clearly, they are. Could the boom on one side and gloom on the other be connected?
Is it possible that the cloud and SaaS are the backdrop to all this consolidation?
Very Large, Gloomy Eeyores
Back in October, we wrote about why some traditional enterprise IT vendors are selling the line that SaaS is a passing phase, that it is "old wine in a new bottle."
"There are people who really believe that SaaS is a passing fad, just Service Bureau 3.0. These people are like Eeyore, the old gray donkey from Winnie the Pooh. They think the Tigger types who are constantly running around excited about new technology are just, well ridiculous. There are others, like Piglet, who are just scared of anything new and big. The Wisdom Of Pooh, is just humbly asking questions.
"But the guys running large enterprise IT vendors are smart. They are just putting on the Eeyore act to appeal to Eeyore clients to keep buying the old stuff as long as possible."
Behemoths Selling to Behemoths
"Ah, but surely, mate, you understand that this stuff ain't enterprise-ready." That is what the enterprise veterans tell the SaaS startups. Well, at least they do until one accepts the offer from that fast-growing SaaS startup.
If you set the agenda as being whatever passes muster with the internal IT department, then yes, the CHOI behemoths will always win. But a much bigger wave of change is happening, a more radical wave, which we described in our post "Enterprise 2.0: The Nature of the Firm."
In this world, SaaS wins. The CHOI vendors know this. They are only pretending to be Eeyore. They are bulking up so that they can defend the declining part of their business while investing in the SaaS future.