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The Evolution of Buying Habits in Enterprise IT

The way enterprises are buying IT is changing, and so are the characteristics of the buyers. Several big trends are driving this transformation, from the need for agility to different expectations of time to value and the liberating possibilities of the cloud. Now, IT departments can stitch everything together to meet their exact needs much faster than ever before.

01 February 2022 • 7 min read

Photograph: Nikhil/Unsplash

There have been several transformational changes in my nearly thirty year IT career. The most profound was the rise of the internet – the precursor to the significance of the cloud as enterprises became comfortable with paying for software on a subscription basis and having their internal data stored in public data centres. While there’s starting to be talk around whether AR/VR, the metaverse or Web3 may be the ‘next big thing’, to me, those are all logical evolutions from the changes we’ve seen over the past few decades.

Instead, the biggest change to enterprise IT revolves around how the IT buyer is changing and how software will be sold, purchased and consumed.

To understand these impacts, we have to dig into and unpack a few converging trends:

  • The global pandemic demonstrated that even the stodgiest enterprises can be ‘agile’;

  • The shift in worker demographics is changing what buyers look for and how enterprise software is consumed;

  • ‘Everything-as-a-service’ and ‘everything from the cloud’ are transforming how enterprise platforms are architected.

Taken together, the next five to ten years will lead to an enterprise software environment that would have been unimaginable just a few years ago. Let’s drill down into each.

Every enterprise is agile now

Everyone reading this knows the value of agile development and how important it is in our SaaS and cloud-based enterprise environment. The concept of doing single, massive software releases once a year is as anachronistic today as the idea of someone finding out who won last night’s game by reading it printed on a dead tree the next morning (i.e. ‘my childhood’).

The agile software movement was so successful – and so transformational – that business leaders recognised these agile concepts could revolutionise entire businesses.

The agile software movement was so successful – and so transformational – that business leaders recognised these agile concepts could revolutionise entire businesses. This ‘agile enterprise’ is such a critical topic that CXO Magazine dedicated an entire issue to it! Of course, the fact that people are still writing about its importance in 2022 means that not every enterprise believes in or has adopted this approach yet. Plenty of enterprises are still far from agile. Or are they?

One of the interesting ways the pandemic affected the enterprise was it forced everyone to be agile. We all remember That Week in March 2020, where we were talking about ‘that coronavirus thing’ on Monday, figuring out how we were going to move 95% of our knowledge workers out of the office on Wednesday and doing it on Friday.

Did we have 100% success by Friday? No, but we probably had 70%. By the next Friday, we were at 90%, the next 95%, and after a month or so, we had 100% success with a fully dispersed workforce. We took one of the largest and most profound technological transformations of our careers from ‘never even considered it’ to ‘fully implemented’ in a month. Now that is an agile enterprise!

This new-found agility didn’t stop last March. The past two years of the pandemic forced enterprises to rethink and re-implement their product designs, marketing, talent management and nearly every other aspect of their business. So in 2022, every enterprise is agile whether they realise it or not.

The shifting worker demographic

The second trend affecting how enterprise software is bought and implemented relates to the shifting demographics of the workplace. Millennials, now in their 30s and 40s, are moving up the ranks in corporations, and everyone entering the workforce now is Generation Z. Even older workers, like me (I can’t believe that my own Generation X is now an ‘older worker’), are used to the consumer world where we get everything instantly. Apps delivered in seconds. Groceries in two hours. Air fryers and snow shovels in 24 hours. These buying and consumption habits – and the related compressed time to value – are pervasive regardless of demographic cohort.

IT practitioners are notoriously risk-averse and prefer staying in the comfort zone of what they know. “No-one ever got fired for buying IBM” may be a relic of a different era, but the sentiment still holds. Not only do they buy what they know, they buy how they know it. Gantt charts, consultants, RFPs, proofs of concepts, pilots, phased implementations – this is their comfort zone.

These generations are accustomed to things being faster and easier, meaning they expect to see real and immediate value from their spending. In enterprise IT, they’re less willing to accept spending millions of dollars and years of work.

Or at least, this was their comfort zone. Gen Z and Millennials now make up the majority of workers in many enterprises, and if you figure the average career is 40 years, every year their share of the workforce demographic goes up by 2.5%. These generations are accustomed to things being faster and easier, meaning they expect to see real and immediate value from their spending. In enterprise IT, they’re less willing to accept spending millions of dollars and years of work before a new IT system proves it’s going to meet their needs.

These younger generations are also less willing to blindly accept what some random sales team at a vendor tells them. The classic, “Yes, our product can do that. We just have to bring in professional services who will spend six months integrating everything,” doesn’t work as well as it did 20 years ago. Today’s buyers are more comfortable saying, “Give me your API specs and a week, and I’ll build all the integrations I need.”

The impact of cloud services

The final trend has to do with the cloud and software-as-a-service (SaaS). In the 1990s and 2000s, even after the x86 server revolution, IT systems were still monolithic, closed and massive. Customer lock-in was a key part of vendor sales strategies. (Seriously, entire books were written about this!)

A great example of this was Oracle in the 2000s. Larry Ellison believed traditional enterprise systems were expensive. The customer had to start paying right away rather than when the project was done – and they’d have to spend millions of dollars to ‘finish’ everything. Oracle’s avant-garde approach was to tie every business system – CRM, SFA (sales force automation), HR, finance – to the same backend, unlocking insights and efficiencies never seen before. The catch was that individual modules might only deliver 80-90% of the functionality a customer was accustomed to, but it was a worthwhile trade-off for the overall business.

When a customer pays for software by the month, they’re not going to pay if they’re not getting value.

Over time, the cloud and SaaS started to change the conversation, both in terms of how software was capitalised and implemented and around how companies thought about time to value. When a customer pays for software by the month, they’re not going to pay if they’re not getting value. They start paying only after the value is there. This was a huge mental shift.

The larger effect of this was that IT buyers started to become more sceptical of large IT systems implementations that cost millions of dollars and take years to fully implement with the hope they’ll get value when it’s done. What they really wanted – even if it wasn’t possible – was to break the implementation into lots of little pieces that could be implemented quickly and easily with fast ROI. This led to a resurgence of best-of-breed type solutions that solved a single particular need. Each individual component shrunk down what it did, but it did it well.

But how does an enterprise get the ‘enterprise-ness’ out of a rag-tag collection of disparate systems? Via custom integrations via all those systems’ APIs. We even saw vendors and products (available via the cloud as a service, of course) that rationalised and translated APIs, and in order to be competitive in the market today, everything now has an API.

This massive customisability of nearly everything meant that enterprises could build and integrate just the specific things they needed. In the old days, if you wanted to update your employee badge system that unlocked doors, you had to get the facilities, security and IT teams to agree on a standard and then replace all your door locks. But in 2022, every building access system has an API. If you want a digital badge system, there are dozens of software vendors with solutions that work with all the door lock vendors. Same goes if you want to extend the door entry so it checks with your learning management system (LMS) to ensure an employee has Covid-training before it unlocks the door. Or extend it to your hot desk reservation system to ensure an employee has a valid reservation before you let them in the building. Or to your VPN to ensure that an employee doesn’t have an active VPN session open remotely. All those systems have APIs that can be integrated by the customer.

And thanks to the ability to run code as native functions in the cloud (such as AWS Lambda, etc.), these integrations don’t require on-site servers and infrastructure like they did ten years ago. Customer-built integrations mean they know how they work, how to maintain them and how to quickly add additional functionality as the business needs.

The result is that individual business units can each make their own decisions about what’s best for them. The enterprise can choose any door lock system, any learning management system, any building reservation system and any VPN they want. Every group is happy, and the integration is built for exactly what they need.

The march of progress is lowering the barrier of entry: ten years ago, this type of integration was out of reach for many people. But now we are witnessing an explosion of the ‘citizen coder’.

The march of progress is lowering the barrier of entry to this as well. Ten years ago, this type of integration was out of reach for many people. But now we are witnessing an explosion of the ‘citizen coder’ as the market is inundated with low-code or no-code solutions and robotic process automation products that make such integrations almost trivial.

People tend to think this would be a nightmare. It’s spaghetti code! How do we know what’s what? How do we ensure everything is secure? Fortunately, there are ML- and AI-based security and API mapping systems that can watch over everything. Diagrams for how everything is linked together are drawn automatically. And for everything the enterprise wants – executive dashboards, data analytics, SaaS app management, employee experience management, mobile app – there are cloud-based solutions for all of these, ready to be consumed and provide value from day one.

Putting it all together

If we look at all these together, we see that every enterprise is an agile enterprise; IT buyers expect quick value from their investments; and the cloud, API and a ‘maker attitude’ mean that individual IT departments can stitch everything together to meet their exact needs much more quickly than the larger monolithic platforms and IT systems that enterprises have been buying for the past 20 years.

The days of expensive vendor conferences at exotic locations, products being chosen based on fancy dinners and years of implementations that never seem to go right are numbered. The IT buyer of today (or the near future) will buy what they need, as a service, from as many different sources as necessary, and they’ll handle the final wiring together of everything themselves. Even if they don’t get full functionality after a week, they’ll iterate until it’s right. They’ll have the freedom and flexibility to swap out individual components on the fly as the needs of the business change. And they enjoy a level of experience and capabilities that old-timers like me only dreamed about.

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