Death of Innovation in Enterprise Software

posted on the current buzz in a recent Microsoft conference for VC – Seeing Both Sides: Microsoft VC Conference.

The buzz that is mentioned in the post creates for me the general atmosphere of an end of in the s space and I do not necessarily agree with this perception. The two out of three bullets mentioned there are:

1) The enterprise software business model is dead – "…VC appetite for standard enterprise software appears to be dwindling to nothing."
Today enterprise customers focus on making the best out of past investments and that in turn makes their appetite for discussing new s low. Still if we take a longer term look at what role IT took and will take in corporations life, then IT is more and more becoming a crucial part of the core competencies many corporations in many industries own. On the contrary many industries and the largest corporations in the world rely on their IT for conducting their business.

So this perception seems to me a result of current atmosphere dictated by current market conditions and not a trend that points to a general lack of interest from enterprises on innovation that can make there business better.

Participants in IT industries contribute to this state of mind in a reciprocal manner by not norturing innovation. A deadly vicious cycle.

2) Microsoft is no longer the Big Bad Wolf – "Believe it or not, Microsoft feels downright warm and fuzzy lately to a VC. It used to be that VCs would complain that investing is software is dumb because Microsoft will simply build it and give it away for free. Nowadays, you hear much less of that. The law of large numbers has settled into 's decisions. If a business is less than $1 billion in platform revenue potential, it's not interesting enough to warrant Microsoft's attention. Therefore, there are plenty of multi-hundred million dollar software segments that Microsoft is thrilled to help young companies build (on top of their platform, of course). Also, Microsoft's is now all about aggressive cross-licensing rather than offensive litigation. This company has really grown up over the years."
This new laid back approach of Microsoft means to me that there is a consensus on the general lack of innovation from both sides, VC and Microsoft. The first and so called "past" complain of VCs seems to me as still relevant while it is almost rare to justify today due the low level of threat new entrants pose on Microsoft nowadays. Google, and , although being used in many examples, were able to shake the ground by setting new rules to the game.

Although Microsoft is mentioned here it is for me just an example of a very large vendor that has strong financial/R&D/marketing capacity.

My general objection to the buzz is that innovation in enterprise software as I see it has just begun. Corporations are doing today realignment of their investments and are connecting all their systems and processes into an enterprise platform; an infrastructure that will be serve many new applications.

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