Many mature software companies are now in the awkward position of trying to migrate their heavyweight legacy solutions from the desktop into the uncertain domain of the cloud. Fortune 500’s are slow to adapt, preferring to leverage their cash-cow back catalog for as long as possible while gently testing the waters with lightweight solutions more aligned with marketing than their core execution layer. The results often paint the erstwhile-giants as out-of-touch and late to the game, delivering simple offerings that fail to successfully integrate with the evolving needs of their user base. The solution is not an easy one, requiring much greater commitment and risk than most CFO’s can stomach. But the cloud is not going away and the alternative to full adoption is to be resigned to a narrowing niche.
A typical mature tech company has a portfolio of desktop products arrayed across discrete business units that operate more-or-less independently from one another. Each product has its own cost center and revenue stream, and generally tries to align its specific strategic objectives with those of the C-suite while still accommodating the unique needs of their market. The business unit execution layer is padded with seasoned engineering professionals who know everything about the product but are often necessarily insulated (and self-insulating) from emerging trends that move more quickly than the corporate controllers care to admit. These point products evolve from being the innovative centers on which the brand was founded to becoming conservative mutual funds that drive & secure the corporate bottom line. As the business becomes more dependent on defending these revenue streams, investment in innovation drops, being replaced by M&A of new technologies and outside resources.
A consequence of this typical lifeline is that adjacent business units typically do not communicate with each other any more than is necessary in order to integrate shared core components and resources. In fact, they are often pitted against one another internally for budget and resources and the ability to actually innovate outside the constraints of risk tolerance imposed by the CFO. This effect is amplified by sloppy M&A that forces existing talent to integrate with incoming teams that are supposedly better able to innovate (M&A, after all, is essentially telling your existing employees that they aren’t good enough at innovation). The result is a mature and sluggish portfolio that functions not as a unified whole but rather, as several competing companies within the larger corporate shell.
Around the start of the ‘Naughties efforts to bundle point products into integrated suites kicked off the conversation about the most critical element necessary to the successful integration of products into coherent services: communication. Bundled suites forced business units to start collaborating with each other in order to build an elemental skeleton of interoperability across their products. Otherwise, they risked being seeing as merely a discounted box of apps. Adobe Systems was, at the time, the flagship model for this process, bundling its production apps into a single Creative Suite offering on top of which they could build interop services.
Procedurally, these efforts are reduced to minimum requirements set by product managers that prioritize development tasks in engineering. New product features must then compete for priority with cross-application integrations. A product with a lot of weight can defend its own features and push back on integrations with weaker adjacent apps in the product portfolio. Most mature companies confront this reality as their cash cows push back on requirements to integrate with weaker performers, new acquisitions, and efforts to address emerging markets. While the market often sees a company as a monolithic whole, internal politics more closely resemble a league of nations.
While many software houses have had the better part of 10 years to try to integrate their point products into coherent suites, most have not successfully built in service layers, much less effectively integrated the cloud. Many are still trying to figure out how to build some form of professional social network or notifications system on top of their legacy applications. Now they have to extend a mobile, three-screen service layer across their duct-taped ecosystems while biting the sour bullet of an out-dated monetization scheme that can’t accommodate multiple interface points and Agile, eternal-beta product development. In other words, cloud services & free mobile apps don’t make sense to accountants that see the world in terms of discrete products and channel sales. Most have barely been able to execute effective subscription services. Likewise, business units with revenue models built around the sales of their individual products are usually de-incentivized to collaborate on service layers with other groups. Revenue recognition is not aligned with platform collaboration.
So it’s with this legacy that mature software companies are lumbering into the cloud. Their CEO’s want to be Steve Jobs but fail to understand that Apple’s success has had more to do with organizational restructuring and engineering discipline than vision or celebrity “reality distortion”. They pin execution on short-term marketing efforts rather than investing the time and money and painful re-orgs necessary to build infrastructure that can actually scale to an effective cloud solution. (If your mobile development is considered part of your marketing efforts, then you will fail to make anything truly useful and sticky. A “free” mobile app that effectively extends the functionality of your core desktop/cloud solution is actually a feature, not an independent development line looking for it’s own revenue.)
Autodesk is suffering from this right now with the roll-out of its mobile 360 service – a well-intentioned effort to migrate its existing paid users onto mobile that managed to break their relied-upon (and paid for) workflows. In the rush to plant the mobile flag they failed to take the time to communicate requirements effectively to their internal stakeholders; to prioritize a bottom-up infrastructure build out; and to develop a coherent top-down design architecture in alignment with their core user base. Their best users are suffering the effects of this hesitancy to adequately commit to the cloud.
Integrated solutions are not built from the periphery. The cloud is not going away. Software companies must evolve and adapt. In this space, risk aversion results in poor execution. CFO’s must commit the resources necessary to build scalable solutions. Understand that cloud-mobile service solutions are first and foremost about back-end infrastructure. The execution layer must be refreshed with engineers who understand how to build for the cloud. Revenue recognition models must be re-oriented to incentivize collaboration across point products instead of fostering competition. All efforts must center on building effective communication between internal stakeholders. And please please please stop de-funding user studies and ethnography. Your senior principle architects may have big brains but their ideas are very likely out of touch with how your products (and those of your competitors) are actually being used. And, whether they mean to or not, your sales team in the channel will tell you more about how they defend their commissions than how the market is changing. Implementing an analytics layer can rationalize use and should be of highest priority across all interface layers – desktop, mobile, & cloud. Make the data work for you but don’t get starry-eyed about Big Data. Get better at analyzing the little data that’s within reach. If you don’t really know the needs of your users, then how can you effectively prioritize product requirements?
Lone visionaries often sell gullible VP’s & CEO’s on shiny solutions that the company is simply unequipped to implement. The result is a lot of pain, a lot of wasted money, and unbelievable burn-out of employees who really genuinely want to do the best for the company and the users (and who very often raise red flags left and right that are ignored by management until it’s too late).
If you really want to be the next Steve Jobs, then take your time to implement effectively instead of racing to meet quarterly targets with poorly-thought-out half-solutions. The cloud is not easy. And effective cloud solutions are not built on lightweight marketing ploys. This is a tectonic shift in how we all do work. Success requires tectonic implementation strategies. Otherwise, the lightweight upstarts will build the solutions for you from the ground-up. And the market may accord them so much value that they can casually dismiss your attempts to buy up their innovations for your aging and tired portfolio.