When Vendors Don’t Play Nice, the Enterprise Loses
Microsoft is leading the way to the future of the enterprise business model.
This might be hard to believe considering the company’s track record of locking users into its stack by creating a strong affinity between those users and its products.
However, several months ago, the tech juggernaut announced its Cloud Storage Partner Program, which allows third-party providers to directly integrate Office 365 into their cloud services. For example, if you use Salesforce.com or Citrix, you can open and edit Office documents natively on the web.
This is significant for two reasons. First, CEO Satya Nadella is making good on his promise to make Microsoft a friendlier, more open, and more platform-agnostic company. Secondly, most of its competitors are afraid to make similar moves.
In fact, most cloud services are doing their best to lock customers in. This might make sense as a business model, but Microsoft is highlighting just how problematic a closed vendor ecosystem can actually be (and why you should look to openness for your own company).
How Vendors Take Data Hostage
Since the runaway success of the iPhone, virtually every company with a stake in mobile has been trying to find ways to lock users into its ecosystem. In some instances, this is obvious (e.g., when you buy movies from iTunes, you can’t play them on a non-Apple device), but other companies are craftier.
Some vendors treat customers like frogs being boiled: closing the walls around them so slowly that they don’t notice until it’s too late. For example, SaaS products lure users into vertically integrated ecosystems through “freemium” models, free trials, and loss leaders. After a while, users are so rooted in the ecosystem that they bend beneath the pressure of becoming paying customers or go to the trouble of switching vendors. It’s an expensive bet, but some investors are willing to put money into this business model.
In the future, we will see other vendors adopt Microsoft’s new open culture. Companies — like Amazon — will align with cloud services to unleash the power of their own ecosystems so data isn’t on lockdown and can travel with enterprise customers to make it easier to do business.
On an individual level, it’s not that big of a deal. A single user might not have that much data to store. But for businesses, migrating to new services (even if they offer better features or lower prices) is a much larger, more convoluted process. Oftentimes, you’re forced to use several different SaaS solutions across departments to get what you need, creating silos that can cause major headaches for users and IT.
The Trouble With Silos
There’s no question SaaS has a good reason to make it difficult for consumers to leave. If another service pops up with better features or lower prices, what will stop the enterprise from jumping ship? But openness isn’t an altruistic gesture; it’s a selling point.
As an enterprise buyer, you know how easy it is to look at closed ecosystems and think, "What’s the big deal?" Apple, after all, provides an excellent user experience — partially because it owns the hardware, software, and nearly everything in between. But think about how annoying it is when you have to convert a Google Doc into a Word document because your boss can’t open it otherwise. Sometimes, it’s seamless; other times, it’s like pulling teeth.
Now take that feeling, thread it throughout your entire company, and multiply it by 10.
Each department (and even each employee) has different requirements and workflows. Some, believe it or not, even have to work without a data connection. If you can’t integrate your company’s services, productivity suffers — and employee frustration skyrockets. As a result, you can end up with a closed system, squelching collaboration.
Buyers can try to force employees to use the same systems and adjust their workflows accordingly, but more often than not, employees will go rogue. Entire networks that aren’t regulated by IT pop up more than you think. On average, enterprise end users deploy more than 400 cloud applications, 90 percent of which aren’t brought in by IT departments. It drives up costs, drives down security, and makes collaboration nearly impossible.
Open Up With the Right Technology
To ensure your enterprise fosters collaboration and allows employees to work in ways that best suit them (and the company), you need to know what to look for.
Vendor evaluation and crafting a strategy for implementation are the two most important aspects when seeking an open cloud service. Look for SaaS vendors and cloud services that can transform over time. You don’t want to be stuck with a system that is unwilling and unable to adapt — especially when it comes to seamless integration with any products or services your enterprise is already familiar with.
After you’ve found the best cloud service for your company — and before you’ve purchased the technology — create a strategy for how it will work for you. Know what the cloud will hold, what security systems you’ll use to conserve your company’s information, and how it will work across all sources of data.
The more a cloud service can combine with others, the more integral it will be to your company. It’s why some are calling Microsoft’s new approach its "Trojan horse" strategy to enterprise dominance. An open, integrated world is good for enterprise and for SaaS.
About the Author:
Vineet Jain is the CEO and co-founder of Egynyte, a platform that powers adaptive enterprise file services for thousands of customers worldwide. Vineet has 20 years of experience building nimble, capital-efficient organizations.