Age of (expensive) Enterprise Software is over as another mainframe killer emerges; Targets IBM’s $4bn market!

Funny thing is that with Cloud comptuing the regular software firms and open source projects that had nothing to do with the cloud or any internet-related brouhaha, started getting calls from customers on how much it is to save money and look at places where you all can save money!

Look at the cost of the Enterprise Software

Think of the following that the customers had been totally oblivious of when adopting virtualization on their low hanging fruits such as print, web servers:

• Licensing costs of enterprise software

We have been spending a lot of money, truly a lot of money, on these goliaths. We made these software companies goliaths ourselves! Now they are the richest companies in the world with hindreds of billions of dollars of market cap. Go ask yourself, what is your own market cap. If that is reducing, so should your costs and that simply means go back to your software vendor and negotiate [Wait: Soon in these blog series you will see that your next call will be simply to your vendor telling him that you are reducing your enterprise software footprint and thus the licenses*]

• Support/maintenance costs of enterprise software

If you got expensive hardware you can also spend a lot of money on support/maintenance. Spend more with more, right? WRONG!

• Hardware costs for enterprise software

More big scale, mainframe software , more biggie hardware so you can spend more there as well.

• Floor costs to host those datamarts

Well this adds up as well.

• Energy costs for those enterprise software

This adds up too [Despite the energy efficient chips and all environmentally friendly data in your gear]

• Complexity/Administrative costs for managing the software

Need to hire/retain/train those expensive staff is a hugely expensive exercise

• Dramatically high upgrade costs that shake the whole TCA (Total Cost of Acquisition) periodically

Upgrade is the moment where the sales are planning to skin the cat [here you are the cat] and it can be a very costly affair. See study on SAP, for instance, where costs of upgrades are huge. Same applies to upgrading your all sorts of enterprise apps. It always costs a lot of money to upgrade.

• Transition costs when merging/acquiring or splitting (like the Banking Industry)

Should your two or more companies merge or split, it always is a way to make a lot of money. I tell my customers that by virtualizing they don’t need people like me and everyone thinks I’m crazy. but that is a fact, you automate and make your systems self-healing so they are movable/malleable without hurting the running operations. But with expensive inflexible software, you’re stuck for a long one! It should be inexpensive and flexible

Look at the losses now

• Loss of productivity for planned downtime

When you are performing upgrades, batch loads, backups, recoverys, it all costs time and in a 24×7x7 economy, it all costs you money and edge

• Loss of face for unplanned downtimes

This loss is money, value, edge and brand-name/image - not good in a 24×7x7 economy

• Loss of manpower/creativity as workforce plugged only to manage this beast

Folks are stuck to their routines and forget that they are in a steel business, airline business, insurance business, banking business, education business, energy business, oil business etc etc. Get your folks to FEEL your business. They will come each day to you telling you how you could run your business faster and smarter without spending much on IT. Get them out of the server rooms!

• Loss of a lot of money, obviously

Well you do all this while losing more money, while your investments in these expensive enterprise solutions are not entirely wasted, a big chunk of it certainly is wasted!

Here’s the story of one such mainframe killer start-up

In the wake of the zPrime launch, IBM trotted out letters from Mark Anzani, chief technology officer for IBM’s System z mainframe line, warning customers that IBM did not know back in July, when the letters were written, how zPrime worked and that its use might be a violation of a customer’s mainframe software license agreements to make use of the tool. Edwards said this was nonsense back in July, and he is not saying anything different today.

“IBM is continuing its aggressive campaign to scare customers away,” says Edwards. “We have had over 200 customers’ lawyers look at this, and not a single one agrees with IBM.”

The customers who have kicked the tires on zPrime, or who are just interested in the possibility of using it, stand to save big bucks, perhaps millions to hundreds of millions of dollars per year in software licensing fees, hardware charges, and maintenance fees. zPrime has the potential to really hurt IBM’s $4bn mainframe hardware franchise and the very profitable mainframe software business it has - both of which go a long way towards funding those stock buybacks that IBM is so fond of.

In the Anzani letters from July, IBM was hinting that in creating zPrime, Neon might be violating its own license agreements with IBM for mainframe software and added that it might also be violating IBM’s intellectual property.

“IBM has backed off on making any statements that zPrime violates any intellectual property or license agreements,” says Edwards. “And IBM has not provided, in writing, any specific provisions in the customer license agreements where zPrime violates the licenses.”

Disclaimer: I am directly involved in another Enterprise Software killer start-up which is to target a similar segment. Only we ARE offering the new enterprise class cloud management solution with it. PoCs will be starting with our first customer anytime soon.

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