The Small Business Web vs. the enterprise suite

I spent the last couple of days at a high energy gathering of the Small Business Web, an organization dedicated to helping small businesses grow through an expanding network of integrated Web applications. Members sign a manifesto supporting excellent customer service, open APIs, the free market, and "not being a jerk."

Small Business Web Logo

The idea is that small pieces of software, loosely joined together, will unleash the same sort of innovation for small businesses that the the so-called "Open Web" has brought to consumers. Nearly 175 companies have signed up so far (full disclosure: including my employer, Podio!).

Contrast this vision for the Small Business Web with today's reality of providing large enterprises with on-premise software: The decade-long consolidation of the enterprise software industry continues (with more acquisitions on the horizon, according to the Financial Times), and enterprise CIOs are stuck with massive, inflexible "suites" of technology that inhibit their ability to innovate in the face of changing market conditions.

My years in this part of the industry convinced me that the dominance of these "suites" has cost us at least 10 years of innovation in the enterprise software industry. Why? Here are just three key differences between Enterprise Suites and the Small Business Web:

Lowest common denominator functionality vs. best of breed: Suites try to be all things to all people. The result? Nearly no one is happy with the functionality of their business suite -- it simply doesn't fit the way that anyone actually works. Apps should be built by people laser focused on delighting a specific group of users.

Tight vs. loose coupling: Because the components of a suite are all built by the same company, they tend to be tightly coupled to each other. While done for short term expedience when releasing new features, this dramatically increases the complexity of making improvements. Loosely coupled Web software, on the other hand makes it very easy to extend one solution by connecting it to another.

High barriers to entry vs. an ecosystem of innovation: Broad software suites are hard to build, hard to implement, and nearly impossible to replace. These barriers to entry make suite vendors lazy, but competing with them head on takes very deep pockets (as demonstrated by the amount of money raised by those attempting to challenge the industry head on). Targeted Web software for small business, on the other hand, is easy to build, easy to implement, and relatively easy to replace. This means more competition and more innovation.

These effects are most obvious in suites of business applications like ERP, but the same can be said for productivity "suites." Contrast the rate of innovation in Microsoft Office with the loosely coupled apps in the Google Apps Marketplace.

In large enterprises, it will take decades to undo the effects of business suites -- the reality is that in many cases suites are "good enough" to postpone the pain of replacing them for as long as possible. But small businesses are different -- new businesses have the potential to start with a fresh sheet of paper, and even established small businesses face relatively low switching costs.

Of course, there's a lot of work to do to make the Small Business Web a reality. Discovering and assembling the right set of Web applications needs to be dramatically more simple for small businesses. Web applications need to be far more easily integrated with each other, without an army of consultants or IT staff. There needs to be a system of trust and accountability across solutions, so that customers have the same confidence that there's of "one throat to choke" that they get when they buy a suite.

These are steep challenges, but worth tackling. The emergence of Web software gives us a chance to invent a new future for our industry, one beneficial to both customers and a rich ecosystem of vendors. It was exciting to spend a couple of days with a group focused on making this happen, and they're not the only ones.  Rawn Shah describes the efforts of the W3C to achieve "Interoperability in Social Business." The Cloudbeat Conference will be tackling similar themes at the end of November, and of course this is always a big topic of conversation at this week's Enterprise 2.0 Conference in Santa Clara.  

I hope there's a sense of urgency to these efforts. If we don't find a way to solve the problems of the Small Business Web, history will repeat itself: today's rich ecosystem of Web applications will be replaced by a few broad, slow moving suites of closed technology (that happen to be online). The worst part? The industry would once again lack a “don’t be a jerk” rule.

Interested in continuing the conversation?  Ping me @rynnic and we'll connect at Enterprise 2.0.

Ryan is VP Apps at Podio, an online collaboration platform for getting things done with others.

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