The 2013 Enterprise Guide For Dummies

The enterprise. People give me a sideways glance when I tell them that's what I cover. They want to know why I find it so compelling. They ask because, truly, they have no goddamn clue what the hell the enterprise is in the first place.

But who does? The enterprise is a Byzantine world that's as easy to untangle as a ball of string that 10 cats have tied to their tails and left to roam free in a data center for a week. And many of our readers here at TechCrunch, for the most part, don't love to read about virtualization and the passionate word of storage backup. Hardly. You just want to know what the enterprise is about – what makes it what it is. And why the hell it makes tech sound so boring.

Alexia Tsotsis says we need an enterprise guide for dummies. Of course we do. So here it is, and it's pretty simple:

IT'S ABOUT GETTING THE WORK DONE!

It's not about social this and social that. It is about working together, meeting goals, making new stuff, finding new customers and keeping existing ones happy.

But it gets quite complex when you step beyond this initial truth and look behind what it actually means. As David Byrne would say: "Well – how did I get here?"

Step back to 1997 and Larry Ellison is starting to say to people: "Do you know who I am? I am going to crush you with my sailboat." Well, I'll say one thing about Larry. He is one dude who figured it out pretty fast. All those industrial barons, big-box sultans, and the rest started to realize that, yes, they needed a solid database. Bill Gates from the mother ship in Redmond sold Windows licenses by the score so the office world could start really showing us how PowerPoint really does kill your soul. And then there was SAP, with co-founder Hasso Plattner, orchestrating installations that would make a CEO nonchalantly say: "Well, we are in year six of our SAP integration and we are making progress, real progress."

Guide Post: Today, that's all changed. Andreessen Horowitz Partner John O'Farrell said in an interview that in the old enterprise, it would cost $1 million to $2 million for Accenture to do a six-month custom integration project. In today's world, small and mid-sized companies have an advantage. They are not constrained by massive, on-premise, resource-heavy projects. We are reversing how things get done. Mid-market and small companies can take advantage of SaaS. Small companies are adopting all types of apps and big companies are the followers. The order of the market is being turned on its head. The big companies are scrambling to catch up.

Back in the day, big business was in heaven. It could use the enterprise software to get the work done, make more money and create new ways to entice parents into buying soda for the five-year-old. Enterprise software gave all those sugar-water makers, drug peddlers and oil tycoons new ways to produce more, develop new brands and so on. They could use software to figure out just how much of a bonus they could make if the company exceeded some target revenue goal. Salespeople had an incentive to use software that helped them get seven-figure country club deals. They could get the important stuff done.

All these titans had software that ran on mainframes in their own data centers. IT got a hard on, set up networks and basically became autocrats – managing software, rationing projects and essentially making business groups beg for their custom projects.

Then came the web, and the software kings decided they still needed those fat margins. So, they bolted on what they called "web services." Make this stuff work together and you actually had a rock-solid set up. It only cost you a small fortune but the consultants had your back. Their customers still could get their work done pretty fast. But by this time, there were a few signs the enterprise custom solution game might not be an endless road of riches.

Guide Post: The rise of web services signaled a shift in how developers integrated different applications. Enterprise vendors chose heavyweight web services based on XML.  Later, open-source RESTful APIs became the standard for integrating applications.  The technical shift reflected how accustomed the Internet had become to find things, buy and sell — you name it. It marked what HelloFax C0-Founder Joseph Walla said to me in an interview just before the holidays: Once you start using Internet services, the tools become indispensable. He continued:

There are moments when you use a consumer app, such as a calendar, and it is useful but not critical. But when you get into a business, the calendar is indispensable.

Server sprawl hell arrived with a vengeance as the software bloat from the vendors left companies with little choice but to manage not one but two, three or more data centers. It became a Charlie Chaplain exercise to manage it all. Soon a few geniuses figured it out. That server can hold more than one software installation. All that we need to do is magically create a virtual one on top of the physical one and, Eureka! Now that server sprawl can be squeezed into one nameless warehouse across the highway from the Denny's somewhere in the suburbs. That meant more fortunes for companies like VMware. EMC encased hard disk drives in big metal boxes. Customers needed lots of those big boxes because the IT manager required lots of storage to keep the virtual machines humming. Cisco was the natural third leg. And they arrived with more big boxes to install networking gear by a group of wizards who waved their wands and talked of switches, routers and controllers.

Guide Post: Here marks the turn to the cloud — a key moment to understand where we are now. Essentially, virtualization abstracts the hardware. With consolidation came the question of why a company needs the servers at all when they can be leased and operated by people who specialized in this new type of factory designed to make digital goods.

But of course by the time virtualization became a thing there were the wise asses who basically told Larry Ellison to go to hell. Licenses, maintenance? Are you fucking kidding me? We'll rent that software to you. You don't need the software. We'll give it to you as a service! Enter Marc Benioff and the SaaS circus. In the meantime, the geeks were gathering in their caves, whispering of speed and feeds. They talked again of reading the web and writing to it. They made cute web sites that they called blogs. Reverse chronological rantings, each post with its own permanent link. Google had emerged as a growing power. There came the realization that pretty much anything can be categorized and algorithms really could change the world.

HP started acting very odd but still sold servers by the tens of thousands. Intel made a bet on making chips for the big giants, not seeing that something quite disruptive was starting to happen. The hippie from Cupertino, the Willy Wonka of the Silicon Valley, kept showing up dressed in black showing off tiny little machines that were more than phones. They were goddamn candy machines that pumped out apps that might as well have been sugar-coated digital snacks. But they were more than that. Some of the apps actually had business applications. And those business groups, for years beaten back by IT, now realized that something had changed in cubicle land. They could bring their candy machines to work. And there were all these new services to enjoy that they did not need permission from IT to use. They could expense it! Hail to the expense account! Email, task management, and the cloud, the lovely cloud, had changed everything.

Scott Sandell is a General Partner at NEA. He said this to me in an email:

The incumbents who dominated the earlier shift from mainframe to client-server computing (Microsoft/PC, Oracle/DB, IBM/computing, EMC/storage, Cisco and Juniper/networking) have struggled to hold their positions in the SaaS revolution, with most of their innovation coming by way of acquisition (think Oracle's acquisition of Eloqua). All too often, these promising technologies are ultimately stifled within a monolithic sales organization. Agility and efficiency are no longer nice-to-haves within the enterprises, but doing this at scale presents mighty challenges and inconvenient changes to the incumbents' business models. This has created big opportunities for startups to disrupt.

Guide Post: Here's where confusion starts to surface. What is the enterprise, anyways, if the consumer apps can get the work done as well as the clunky old software? It becomes a point where you have to really focus on what makes the business a success. Too many companies go to the cloud without a business strategy. You need to know what you want to do before you do it.

By 2009, Amazon Web Services (AWS) became the denizen of every geeky developer in app land. They had become kingmakers. They built apps fast and pushed them to the cloud. Enterprise startups by the crap load showed up thinking through every arcane process imaginable and turning it into an app.

AWS had cracked the enterprise. New celebrity CEOs like Box's Aaron Levie started lucidly explaining why the old enterprise could not move as fast as the new startups. His message boils down to what I will say for the next year. There is a new way to get the work done faster than that time when the software ran on a server, tuned by armies of IT people. Now the game is about closing down that data center, moving to the cloud and using it to help you build a business that runs on data. Data is the special sauce.

Guide Post: AWS marks the end of the traditional enterprise. It's now possible to get your work done in the cloud almost as easy it is to do behind a corporate firewall. Processing power, storage and networking are getting as reliable on the cloud as a data center.

So let's boil this all down to how work will get done faster in the year ahead:

• Data is the secret sauce: Watch how companies like SAP adapt by taking a startup pose and rebuilding their business on what meta understanding they can give their customers.
• Hardware – I don't need no stinking hardware: Want to understand the enterprise in 2013? See how the big vendors talk about the hardware they sell. Customers really want to get rid of hardware. It's better off in the hands of a company like Dell or Rackspace that can use it to prop up OpenStack, do-it-yourself clouds.
• Lighter and Leaner Mobile Devices: A PC looks like a phonograph sitting on a desk. Hell, even a desk seems odd. I take notes on my smartphone these days. Interesting trend to watch: What is the ratio of PCs to mobile in your work?
• Life and work existing as one. This is a good thing and a bad thing. But the tools we use in our personal lives define how we get our work done. We are not tweeting about kitty cats but a notification does get sent when the package gets sent from the distribution center.

The enterprise is for dummies. In other words, it's for all of us.