Could the iPad Finally Make "Consumerization of Enterprise" a Reality?

By Sarah Lacy , written on January 16, 2012

From The News Desk

I was at a dinner last week with Aaron Levie of, David Sacks of Yammer, Lars Dalgaard of Success Factors, author Geoffrey Moore and about a dozen other reporters.

Their collective goal was like that of a first date: To feed us a nice meal, ply us with wine and hope in our gluttonous haze we'd find enterprise software more sexy.

It was indeed an interesting conversation-- in fact, the most interesting part was Dalgaard's detailed description of his acquisition talks with SAP. I'm not just saying that to continue to mess with Alexia.

He was dishing about how horrified he was initially with the idea of SAP owning his company. He says he "rebelled like a teenager" making what he considered outrageous demands to incentivize the salesforce to sell the less-expensive Success Factors product and forwarding emails to SAP's Bill McDermott that showed off the most cowboy parts of his corporate culture. His efforts to scare off the stodgy German giant didn't work. McDermott instead said he wanted more of it.

I've heard that kind of thing before somewhere...Oh yes, here. This will be an interesting integration to watch. If things go badly, don't count on Dalgaard keeping his mouth shut about it anymore than this guy did.

At the end of the dinner, Moore asked why we didn't write about enterprise software more and half the table almost threw a drink at him. This was, after all, the choir he was preaching too-- the rare tech reporters who have continued to do excellent work covering enterprise software even as the consumer world has rocketed in page views, cash and sex appeal.

I mean, the rest of the reporters at the table were the choir. I was a choir-member-turned-sinner. I started out last year with a New Year's Resolution to cover enterprise more, and I didn't do a great job of that. In fact, I did a horrible job at it.

But it's not because I find enterprise boring. It's because I'm not sure if all the hype is real this time. I covered enterprise software for BusinessWeek back in the days when SAAS was the rage and later, when open source became the rage. I wrote story-after-story about all the buzz phrases everyone is saying now like "consumerization of enterprise software" and the all-glorious implications of doing business in the cloud. I wrote about how the superior business model would mean more grass roots sales, and less of a need for those old school elephant hunting salesmen.

And I wrote about how these companies would disrupt the old guard because they were so much more customer friendly. Customers-- to a company-- hate most of their installed enterprise software vendors. Hate them with a passion the rest of us reserve for congressmen.

How could this wave not be huge?

The power of industry inertia, that's how. Installing enterprise systems was so painful and traumatic the first time that replacing them with anything new, no matter how amazing, was a hard sell. It will happen, but it will take time. Only a handful of those SAAS companies became $1 billion-plus winners and only one of the open source ones did: MySQL. And now, that's owned by database incumbent Oracle.

It was a classic case of over-promising on a trend in the short term and -- very likely-- under-promising in the long term. But has that "long-term" period begun yet?

It's similar to where reporters were with consumer Web companies back in 2005 and 2006. People were so burned from all those big dot com promises that they lost their minds at the idea that a Web company could be worth even a couple hundred million dollars, let alone $100 billion.

Only with consumer products, the resurgence was easier to predict, because we can all use them, our friends use them, and we can get the idea of whether something big is really happening. With enterprise products, you have to take analysts' and customers' word for it.

I know that change is coming. The world won't continue to use 1990s apps forever. But I'm still not convinced it's here yet. Sure most large companies use some cloud-based software. But few run their whole businesses on them. There are an astounding number of stodgy CIOs who still fear the cloud. Dalgaard told the story of literally hiding from the CIO of one company, lest he be kicked out of the building for corrupting the youth.

But there's at least one big reason this time different from the SAAS mania of the early 2000s: The iPad. IDG reported today that 91% of business and IT professionals use iPads for work, and iPad adoption in IT resistant verticals like healthcare has been staggering as well.

The iPad may change the game in enterprise more than it did on the consumer Web, and do it quickly. You can use the same old clunky enterprise software on a jazzier laptop, but an iPad is a total hardware shift that begs for a redesigned touch-based app. And workers are more likely to adopt business software designed for an iPad, because it's the shiny new toy that they want more reasons to use.