May 1, 2020

Why Enterprise Software Will Be Forever Changed

On the earnings call this week for ServiceNow, CEO Bill McDermott said: “Around the world, we see that customers who are farthest along in their digital transformation are better equipped to manage this crisis. Companies lagging behind are realizing that they now have a burning platform. Accelerating digital transformation has become a business imperative.”

He pointed out that—during the next three years—about $7 trillion will be spent on digital transformation. And yes, this process is likely to accelerate.

McDermott’s use of the phrase “burning platform” harkens back to a memo in 2011 from Nokia CEO Stephen Elop. He recounted a story about a worker on an oil rig, which exploded. His choice was stark: either burn in an agonizing death or jump 30 feet into icy waters.

Well, for Elop, he believed his company was facing a similar dilemma! His burning platform was caused by the onslaught of Apple and Google, which were rapidly eroding Nokia’s market share. And even though he did take swift action, this had little effect. Nokia would ultimately abandon the phone market that it once dominated.

“With the COVID-19 pandemic,” said Tom Siebel, who is the CEO of and the author of Digital Transformation: Survive and Thrive in an Era of Mass Extinction, “companies have little choice but to change. It’s existential. And technology will be the way to survive.”

While this will lead to much more spending on IT, this does not imply that the enterprise software industry can rest on its laurels either. There will also be wrenching changes. Siebel believes that there will be many software companies that will simply disappear.

Read the full article here.