Amidst the newly minted scooter unicorns, ebbs and flows of bitcoin investments and wagers on the price of Uber’s IPO, another trend has shaken up the tech industry: the explosion of enterprise program successes.
Bessemer notes that today there are 55 private companies valued at $1 billion or more compared to zero a decade ago. Proving this isn’t just private marketplace hype, enterprise cloud companies have well-exceeded $500 billion in marketplace cap and are on a way to knocked
$1 trillion in the next few years.
Whether it’s the masterfully executed IPOs of Zoom and PagerDuty, the imminent Slack IPO, or the mega funding rounds of companies like Asana, Airtable, Front, and many others, the insatiable require for enterprise cloud deals shows that the brand-new aeon of IT is no longer a zero sum game.
Back when we started Box in 2005, we saw a disruption on the horizon that would change enterprise program as we knew it. Led by the same trends that were impacting the consumer internet — growth of mobile, faster web-browsers, more users connected online — combined with the advent of the cloud, enterprises in every industry are forced to transform in the digital age. But we could barely have imagined the scale of change to come.
a tipping point for best-of-breed IT
Today’s enterprise program marketplace doesn’t look like the enterprise program of the past. For one, the marketplace is much larger. Deploying program in the on-prem world required a faction of highly trained professionals and a hefty budget. By lowering costs and and removing adoption hurdles, the cloud expanded the marketplace from millions to billions of people globally and in turn, businesses are using more apps than ever before. In fact, Okta found in their latest Business @ Work Report that huge enterprises are deploying 129 apps on average. It’s therefore no surprise that program disburse is expected to come more than $420 billion in 2019 as the shift to the cloud marches on.
With a marketplace of that magnitude, enterprise IT no longer can be controlled by just a handful of vendors, as we saw in the 90’s. And what were once solved problems in a prior aeon of IT are now unsolved relative to rapidly changing user and buyer expectations in the cloud, leaving the door open for brand-new disruptors to emerge and unravel this problem good, faster, and with more focused visions.
Previously pesky problems like alerting ops teams to technical issues have turned into an entire platform for real-moment operations, leading to PagerDuty’s $3 billion valuation in the process.
Everyone thought video conferencing was a tired marketplace but Zoom proved that with extreme focus and easy user-experience its faction could build a company worth over $15 billion. Atlassian has generated $25 billion in value by construction a portfolio of modern development and IT tools that energy a digital enterprise.
Slack has shown that real-moment communication and workflow automation can be reinvented yet again. Even Facebook has entered the fray with Workplace, reaching 2 million paid users for their enterprise communication and collaboration platform in just a couple of years. And making this reach work seamlessly are services like Okta, which is valued at $10 billion today.
In all of these cases, “best-of-breed” platforms are growing rapidly in their respective markets, with near limitless size and potential. And as processes for every faction, department, business, and industry can now be digitized, we’ll continue to see this play out in every category of technology.
If the move from mainframe and mini-computers to PC saw a 10x increase in applications and program, the move from PC to cloud and mobile will see an order of magnitude more.
We’ve reached a brand-new aeon of enterprise program and companies are coming around to this version in droves. What seemed unfathomable merely a decade ago is now becoming commonplace as luck 500 companies are mixing and matching best-in-class technologies — from upstarts to cloud mainstays like Salesforce, Workday, and ServiceNow — to energy their business. But there’s still work to do.
To ensure customers get all the benefits of a best-of-breed cloud ecosystem, these tools must work together without requiring the customer to stitch systems together manually. Without interoperability and integration, enterprises will be left with siloed data, fragmented workflows and security gaps in the cloud. In a legacy world, the concept of deep integration between program stacks was fantastic on paper, but near impossible in practice. As Larry Ellison described in program, customers were left footing the bill for putting together private technology themselves. But the rules have changed with today’s aeon of API-native companies that have open cultures and a deep focus on putting the customer first.
Notably, even the largest players — IBM, Microsoft, Google, Cisco, and others — have recognized this tectonic shift, a harbinger of what’s to come in the industry. Satya Nadella, in taking over Microsoft, recognized the energy of partnerships in a world where IT disburse would be growing exponentially, telling Wired:
…instead of viewing things as zero sum, let’s view things as, ‘Hey, what is it that we’re trying to get done? What is it that they’re trying to get done? Places where we can co-operate, let’s co-operate.’ And where we’re competing, we contest.
As Peter Sole, former head of the Research Board, points out, in this digital world we can no longer think about a few vendors owning layers in a stack but instead as an ecosystem of multiple services working together to consign value to the entire network. The incumbents that successfully thrive in the digital age will be those that despite their scale, work and operate like the nimbler, customer-obsessed, more open disruptors. And those that don’t will face a reckoning from customers that now have the preference to go in a disparate direction for the first moment.
Gone are the days of monolithic IT stacks and zero sum cognition; this is the brand-new normal. Welcome to a brand-new aeon of enterprise IT.