A Brief History of Enterprise Software - Part 1, Making the World a Better Place

• “Our society is a collaborative society, and we keep losing sight of that fact. [The beauty of open source] is that we’re finally deploying technology the way we run the rest of our society.” — Bob Young, Co-Founder of Red Hat at All Things Open 2016

As a person who has worked in enterprise software and technology for almost 20 years, I always marvel at how different this industry looks from twenty, ten, or even just five years ago. Over the last two years, the landscape has shifted for classic enterprise vendors like IBM, Oracle and Microsoft in dramatic ways, but the massive tectonic shifts we now see have only been due to the incremental changes deep below the surface for decades.

Ten years ago, the enterprise software space was a land grab for only a few players. Large technology companies moved quickly to create new products and buy threatening unicorns to bolster their existing stack. Being best-of-breed meant the freedom to sell softly and carry a big pricing stick.

The Almighty CIO

While I won’t paint this grim a picture, it was bad. Large software companies with no competition charged what they could and enterprises ponied up. Overly familiar relationships between the CIO’s office and software vendors was common. As a software seller, we would wait with bated breath to hear if a new CIO at a given account was a devotee of our company or our biggest competition. Imperial order over technology was more universal, and policies were unassailable. Perfectly functional technology was thrown out the window because it was not a CIO’s preference. The CIO’s enterprise architecture groups advised and carried out the CIO’s direction, telling the lines of business which applications were, and weren’t, approved. Technology choices were sparse, but even cluttered organizations had cleaner chains of command and were generally tidy by current standards.

Power Decentralized

Walk the halls of any thriving enterprise business today, and you will be bombarded by the bazaar of available technologies for consumption often used for the same task. It is an enterprise architect’s nightmare come true.

Today, the focus of power around technology has moved from the CIO’s office to the line of businesses. When I asked a senior vice president of a line of business at an international bank this week what the procurement process of technology looked like now, versus five or ten years ago, he answered politely, “I would say [today it is] much more of a partnership.”

Why is it more of a partnership? I think the CIO and the enterprise architecture groups lacked the agility and flexibility to reduce time to market for lines of business. I think it is partly because a larger supply of products (some free) and delivery models (like cloud) which obviated the chivalric “best of breed” jousts of yore. Those reasons allowed for line heads to work beneath the capital expenditure radar of the CIO in the viability stage of a new product or service, and when the CIO’s office noticed, it was too late. Nowadays, architecture and the CIO’s office are coming to grips with the modern reality: the line of business barbarians have stormed the gates, and the former nobility are finding ways to bring their vision and values forward in the new normal.

I have often wondered how we got here. The pace at which everything decentralized seemed to happen overnight. Finishing this puzzle has vexed me.

Contributing Factors to Decentralization

Little did I know that packing into a breakout room in the Raleigh Convention Center last week would provide the final piece. I was listening to the man whose vision and upbeat disposition helped Red Hat go from his wife’s sewing closet in 1993 to a company worth over $13 billion in 2016. With his back to an internal window overlooking a vacant convention floor hall, Bob Young spoke extemporaneously and apologized for having no slides. “I’m not really very technical,” Young cheerfully explained.

Young’s stated topic as part of the All Things Open 2016 Startup track was titled “Creating Value for Your Customers vs Monetizing the Value You Create.” Young’s topic hadn’t really caught my eye, but when the speaker who preceded Young, Corilla CEO David Ryan, gave a hearty endorsement to stick around, I obliged.

While I was familiar with Young’s name and his serial entrepreneurship, I was not familiar with his philosophy on business. And although his positive demeanor might have seemed like a put-on, the origins and challenges Red Hat faced proved that his attitude was real.

At least part of Young’s optimism can be grounded in his frequent public references to 18th Century political economist Adam Smith. Smith theorized that individual self-interest in the marketplace would have unintended social benefits. From Young’s perspective, the reverse logic was just as powerful and has proven an underpinning axiom of the monetization of software: if one sought to benefit society, self-interest would be rewarded.

“I’m a big fan of Adam Smith’s free market,” Young told ZDNet in 2014. “In Linux, we solve problems in the free market.” And in solving the constraints of the market, Young made some money along the way.

The biggest modern criticism of Smith’s free market and The Invisible Hand comes from the notion that it only applied in Smith’s era because of the nascent fields of large-scale industry and finance.

Sound familiar to the explosion of value that computing and software has unlocked in the last 50 years? It should. Smith’s sentiments echo on through time in current academy in the study of collective intelligence. Collective intelligence is shared intelligence that emerges from collaboration and which benefits the whole. Sociobiology, political science, peer review and crowdsourcing are all examples of collective intelligence. Open source is just such an example in computer science.

Beyond the Stereotype

While the cliché idea of “making the world a better place” is often spoofed outside The Valley, it was an inherent part of Young’s plan with Red Hat. In an era where tech behemoths reigned supreme and could set the market as they saw fit, Young’s self-interest in building his own company, which literally sold software they already gave away for free, set itself against Microsoft’s unchecked dominance and was a new way forward.

So how is the world a better place?

To answer that, we need to take a deeper look at how open-source software and cloud computing gave birth to software-as-a-service, which has irreparably impacted the traditional enterprise service model. Which I will do, in my next blog post.