Predicting ‘06: Enterprise is the new legacy David 27 Dec 2005

53 comments Latest by Tim

In the face of the new year, here’s a single 37signals’ prediction for 2006:

Enterprise will follow legacy to become a common insult among software creators and users.

Enterprise software vendors’ costs will continue to rise while the quality of their software continues to drop. There will be a revolt by the people who use the software (they want simple, slim, easy to use tools) against the people who buy the software (they want a fat feature list that’s dressed to impress).

This will cause enterprise vendors to begin hemorrhaging customers to simpler, lower cost solutions that do 80% of what their customers really need (the remaining 20% won’t justify the 10x-100x cost of the higher priced enterprise software “solutions”).

By the end of 2006, it will be written that enterprise means bulky, expensive, dated, and golf.

53 comments so far (Jump to latest)

Jason 27 Dec 05

Who doesn’t like golf?

Tom Mandel 27 Dec 05

Hey, don’t ding golf, ok? And, it’s “Golf 2.0” to you buddy!

(but the rest of what you said is clever and truthful!)

Alex Hutton 27 Dec 05

True Dat.

Just sat through a requirements meeting where we brought in a Fortune 500 PM to help us develop an application aimed at large companies, but with a maximum of 50 simultaneous users. I’m thinking Agile Dev with Rails, he’s all about JEB with a Waterfall. I’m looking at LAM (BSD actually - BAM?) on x86 and that’s countered with Solaris/SPARC with Oracle. My concept of costs are in the tens of thousands and 6 weeks until Beta, his in six figures and “early 3rd quarter”.

Fortunately, I was able to thank him for his time after one hour, and dismiss him, but really, he was highly recommended for his “Enterprise” experience. And I suppose, if I wanted to spend six figures on a “two dozen screen” application, he’d be the guy I’d hire to manage the project.

Also, I don’t like golf. I have a baseball swing.

RichardB 27 Dec 05

This strikes me as an ironic prediction, coming from 37s.

Is Basecamp “enterprise” software?

Isn’t the whole point of apps/services like Basecamp to reduce the friction of people working together, whether that is between enterprises or within a larger single enterprise?

To me, “enterprise” is scale…..and “enterprise”-thinking is good, or at least better than some commonly found alternatives. We need to break down the silos that can develop between smaller sets of people who each go and spend the $20 out of their own pockets on what they thought was cool for them.

And so, to me, apps like Basecamp help to put a good spin on the word “enterprise”, rather than sound its death knell.

But, that won’t stop a community from developing new linguistic ways of dissing others… I’m not betting against David’s prediction.

Chad Fowler 27 Dec 05

Careful. “Legacy” isn’t a bad word. “Legacy” usually means tried, true, and of enough value that it lasted long enough to be old and outdated.

To mock “Legacy” is to look at the successes of the past and to declare that they aren’t to be revered or respected. Most of what runs our economies is “Legacy”.

In the future, I hope that the software I’m creating now was highly regarded enough that it’s still around and being referred to as “Legacy”.

Darrel 27 Dec 05

“There will be a revolt by the people who use the software”

I’d love to believe that, but if the last 5 years are any indication, people will simply put up with crappier and crappier ‘enterprise’ solutions.

Wesley Walser 27 Dec 05

No, Basecamp is not enterprise software.

J�kull S�lberg Au�unsson 27 Dec 05

There’s definately a big piece of the software industry pie still to be snatched from bigger corporations by smaller and leaner firms ready to sacrifice the feature set. I still wonder how large it is and also whether these smaller firms are going to enlarge the pie in 2006 in the same way 37 signals has done with collaboration tools and others otherwise ignored as part of an office suite/monstrosity, buried in a huge feature list.

Mike Rundle 27 Dec 05

And golf…. wtf? Did I miss something? European humor doesn’t translate over to the US or something?

Marek Kowalczyk 27 Dec 05

On the root causes of feature bloat and what to do about it, check out Necessary But Not Sufficient by Goldratt, ISBN 0884271706.

I found it very enlightening.

Sam 27 Dec 05

“Enterprise” software is pretty much meaningless. Best I can tell, it’s primarily a label telling large organizations that they can install and manage the software for a large number of users. And of course it carries the “enterprise” price tag along with the raft of services needed to support it.

If we’re talking about the BEAs and SAPs of the world then I agree - 2006 will be a bad year for them. Just over Xmas I learned that a large oil company is planning to reduce the number of its SAP installations from several hundred to under 20.

Alex Bunardzic 27 Dec 05

If by ‘enterprise’ you mean ‘monolithic’ then you may be onto something. But isn’t ‘monolithic’ already a dirty word?

Monolithic software can only be envisioned via the waterfall, do-the-right-thing approach. This implies that the top eschelon of know-how elite people sit down and decide what is it they would like to shove down people’s throat. This approach is pretty much criminal, and by now it should be procesutable by the law.

I think we all pretty much agree on that. And it’s been old news for several years already. So, is there something I’ve missed in your prediction?

Deepak 27 Dec 05

Ah .. semantics. One of my favorite discussions. Many of the opinions expressed here make sense. I would agree that Enterprise is a dirty word, especially since to most people, Enterprise = bloatware. The future is in smaller, more niche apps which have the ability to share data and information.

David Heinemeier Hansson 27 Dec 05

Mike: When you read golf, think any executive activity that goes on the expense account of the sales person to lubricate the sale.

Jim Flanagan 27 Dec 05

If you think of enterprise software as software that is deployed and used across an entire enterprise—vertically (from leaf-node to CxO) as well as horizontally (across multiple departments)—where each area/person has views on the data appropriate to their office, then yes, most folk are going to have a poor opionion of the current state of that particular art, and no, by that definition, Basecamp is not enterprise software.

Half of the difficulty is that, by necessity, such software needs to be very flexible/configurable to be able to meet the needs of any given organisation, and that shops don’t appreciate this, and will underspend in the configuration and customization required of such packages. This may result from people believing they are implementing a solution, when what they really need is a framework from which to build their solution.

While that all sounds spiffy and information architect-y and all, it is, from the vendor’s POV, damn difficult to patch, test, and maintain.

(disclaimer(s): 1) I write code for a company that could be said to offer “enterprise software”, and 2) I dig what 37s is up to)

Someone Somewhere 27 Dec 05

I disagree. Customers will not put up with 80% of the features they want.

If something only does 80% of what customers want, customers (esp. big customers where the money flows like water (drug companies, insurance companies)), they will pay the extra to have it solve 100% percent of the problem.

christopher 27 Dec 05


i just got fired a couple of weeks ago from an internet company that wants to grow BIG. they have decided to take their software into an Enterprise class offering. They told me that they needed biz dev guys that understand software more than brand, consumer experience and the like. I hear they hired someone from Siebel.

I am very happy to be out of that world. Now I am going to struggle with my wine and spirits consulting gig. They can have the enterprise! i’ll have another bottle of wine.

christopher 27 Dec 05


why can’t you just admit that you take care of a different niche market. You’re like the catholic church who tries to tell me that sex is only for procreation. Sure for some people that may be true (ie. those crazy catholics), but for many others sex is for pleasure. People look for different things. Sometimes that extra 10% of features are crucial to someones needs.

Less isn’t always more, it’s just less. Sometimes that’s good, sometimes it’s not. I wouldn’t use writeboard to write up my report, it simply doesn’t have the features i need to do that, and that’s why i use microsoft word.

So how about you stop gloating, and rubbing your own back. Admit that what you do has it’s place, is useful to some, but what others do is useful to and has it’s place. Done.

Anonymous Coward 27 Dec 05


Funny. You’re screaming at 37s for saying they’re right and you’re calling them wrong. Who’s taking hardline sides here?

soxiam 27 Dec 05

I agree. To a degree. You’re on the right path when describing everything that’s wrong with enterprise-level apps, particularly the cost overhead —- on cost, requirements, development cycle, etc. But I don’t think 2006 will be the year to usher in the new era of AJAXED IBM or GOOGLE ON RAILS. Remember how entrenched enterprise-level apps are in bigger corporations. This is not just another punch line. There are people at these organizations (very senior level people) who will have to start looking for a new job if their gorillas built with commercial enterprise frameworks were to stop being important. And they’re going to try like hell to stop that from happening. IIS vs. Apache, Commercial vs. Open Source, Oracle vs. MySQL… on every battle front there will be those who will try to put a stop to anything that makes them less irreplaceable. And don’t forget the whole industry of outsourcing and consulting that’s built on supporting enterprise apps. It’s big. And anything that big will take some time before realizing that it’s being crushed by it’s own weight.

dmr 27 Dec 05

… the issue of 80% vs 100%

Be honest, how many companies or products give you 100% of anything? With the web and multi-tasking no one is going to any one source for anything near 100%, so let’s get real on that one.

I’m already getting about 40-60% from most products and companies, why not get 80% and get it quicker, better, with less hassle. I think it’s all about less hassle and faster response and results; that could be customer service or the next word processing app.

MMI 27 Dec 05

I have to agree with “Someone Somewhere”. I work in a company developing what would probably be considered an “enterprise” app. It sucks, but I’ve seen management cave again and again on the big companies who invest tens of thousands of dollars to get just “one feature we need” You can get away with advertising “less is more” for $99.00 a month, it’s /a lot/ harder when your software is $40,000+ USD per year.

Luckily, I’ve convinced my company of the wisdom in developing a another product - one using the “less is more” philosophy to capture the huge audience that can’t afford tens of thousands of dollars.

I really think we’re going to see an audience for both types of products for the foreseeable future.

(thanks for leaving comments on, btw)

Mark 28 Dec 05

I’m with the first (wine & spirits) christopher. I just got booted from an internet agency that is utterly, utterly blinded by “java java java!!!!”. Recently, the java devs were all whoopin’ & hollerin’ that they got something AJAXy to work. Except that I, in our (smaller ‘traditional’ html&css&js webdev) dept. did some super-simple ajax thing 4 months ago. I told them so, and it was all killer stares from them after that.

I give them another 2 years, after which they’ll have lost all customers. Cos like it or not, customers get wise, and notice that the “solution” (shudder at that word) they bought that cost them god knows how many hundreds of thousands, could’ve been had for MUCH less money, in MUCH shorter a timeframe, oh and then there’s that little thing called “quality”, too.

Cody Foss 28 Dec 05

I just can’t buy into the “less is more” philospohy. I think it has a lot more to do with the features you need and ease of use.

Basecamp may have started as a “simple” solution to the project management problem, but it hardly qualifies as a simple product anymore. (e.g. message boards, timelines, to-dos, writeboards, time-tracking, etc, etc). I think most people bought in because it had the features they needed and the interface is simple and easy to use.

meh 28 Dec 05

uh oh, here comes the bitching from jason fried about how “less is more” is wrong because that implies that “more is better”, blah blah blah, embracing constraints.

i’d never use writeboard in a million years, either - i need everything LaTeX and emacs have to offer.

Enterprise 28 Dec 05

Yeah right. If you think that Sunrise or Campfire is going to get companies like SAP to sweat you are mistaken.

Look 37 is the best in making basic web apps that most people can use. But if you think Toyota is going to drop their current enterprise solution for some basic web apps that can be written within a few days you are crazy. Will SAP copy you? Yes. They will slap some stupid name on it like “Xtend 06” and sell it for a million per customer.

Let’s “get real” for a moment and realize while basecamp, backpack and writeboards are cute they aren’t very difficult to create. I assume these new apps will be good, fun and CRM for everybody.

Except for large companies who have very complex problems to solve. Cute web apps with tagging and AJAX aren’t going to impress them much. I can’t even search my backpack pages yet. Give me a break.

Espen Antonsen 28 Dec 05

I have a lot of respect for 37Signals and the work they have done. But this statement is a joke. Sure “enterprise” software is expensive, bulky and dated and there is a lot of room for improvement in that segment. But why do you guys attack enterprise software? You guys are in the other end of the market. Enterprise software is about scale and about handling every business need that a large corporation has. I work in a company who develop business software for small and medium sized businesses and even here we see in some cases extensive feature lists. Enterprise software is not about having one feature that does one thing. It is about the ‘what if’s of that feature. Also enterprise software is for users who do not talk together. The information must flow to the right decision maker. A nice wiki with tagging capabilities is not going to do that.

37Signals’ CRM & Project management solutions will work fantastic for small teams and others with little need of specific features. If the main thing is to collaborate, work anywhere without the hassle of installing software and paying hefty license fees then 37Signals products are great. This is a big market. Most companies have the need for more functionality. It is a matter of choice between features, bulky and expensive and cheap, easy and featureless. You guys are just taking on another market. If you do not understand that you will fail. Your target market does not care, need or have the money for enterprise software.

Rimantas 28 Dec 05

Except for large companies who have very complex problems to solve.

Should the solutions for very complex problems be very complex themself?
Isn’t a complex solution just another problem, not the solution?
And are those problems THAT complex?

Kyle Posey 28 Dec 05

I think 37s is onto something. There are plenty of project management applications available. Most of them contain too many unnecessary features that a) takes more time to develop and maintain, b) adds extra layers of complexity to the application which makes things harder to develop & maintain, and c) takes extra time for customers to learn & use. If they would focus on 80% of the most important features, and leave out a lot of the fluff, then the software would probably cost more than 20% less and be more than 20% easier to use. Lets face it, the 20% of the features that would be dropped, are most likely rarely used, and provide no real enhancement to the application. All they do is clutter up the interface, and convolute the application design/implementation.

In most cases, less is more. Enterprise solutions will always be huge ‘monolithic’ applications, but they have a lot to learn from the ‘less is more’ mantra.

tiago vaz 28 Dec 05


You�re saing that software will be a commodity in the near future?

I don�t think so.

I believe that price and design are great competitive advantages, but everything isnt all about price and design!

I believe in relevant non functional aspects in software, and Enterprise … is all about this. Performance, safety, trust… not about number of screens or functions…

I my point of view … Basecamp is suggesting a new model for what we call enterprise … otherwise, in a few weeks they wiil have 100s of conpetitors trying to acquire their clients offering best prices….

Mark 28 Dec 05

“…hemorrhaging customers to simpler, lower cost solutions…”

To think that will happen by the end of 2006 is wishful thinking at best.

Organizations which use enterprise software (for argument sake, we’ll take Fortune 500 companies) have way too much invested in their current enterprise solution. In addition to tons of data, they also have training, trust, experience, systems, employees with working knowledge and understanding, suppliers, supply chains…invested in this “legacy” system.

I’m sure everyone here is already aware of the hidden costs of replacing a legacy system with an updated one. I would argue the real reason why corporate buyers stick with bloatware is not because its “fat feature list is dressed to impress”, but rather because the cost of giving the customer “80% of what they really need in a simple, slim and easy to use tool” is more than 100x more expensive when considering all the aspects of a corporate change over to this new system.

Simple can be complex.

JF 28 Dec 05

Mark, you conveniently left out “to begin” before hemorrhaging. We think 2006 will be the start of a long term trend towards simpler software.

Mark 28 Dec 05

With all due respect Jason, “hemorrhaging” is the operative word here, not “begin”.

Sharaf 28 Dec 05

I think that in 2006 software industry will be getting more complicated and make more bloated software; and consumers will continue to buy them…the software companies will put out 12 different flavors of the same product and expect customers to pick the right one based on their need…it’s crazy….I envision that 2006 will be a year were Google & Yahoo will square off and will show what they are really made of….we will see who will still be in business next year.

Anon Reader 28 Dec 05

It’s always good to plant the seed in the big corps mind and get them thinking about it. Too many of the decision-makers have a lot riding on “their” decisions for investing boatloads of money in enterprise apps and influencing people to buy into it.

Remember the Apple Newton? Even though it was ahead of its time, the best ideas don’t always win out. Then others came along and co-opted the idea later. Don’t let that happen to you.

I’ll do my part to spread the word in the smaller companies (which hopefully become bigger later on).

Btw, I always tell people (jokingly of course) that SAP was Germany’s revenge on the US for WWII.

Deepak 28 Dec 05

“Less is more” sounds nice, but what does it really mean. Certainly less does not mean less than the feature set required for a particular task. The problem I see is that no two people or organizations have the same needs (which is why IBM makes all that money) and scale and customization are relevant issues. “Less is more” should ideally be the software design equivalent of Occam’s Razor, i.e. given the choice of two feature sets that do the task, the simpler one is the better choice. The same would apply to usability as well.

Paul 28 Dec 05

Wow! Go DHH!

I now know how 37s works. Be as contentionious as possible and suck up the free pubicity!

Don’t get me wrong here. This is much needed with all the noise out there. The big boys need to hear the ‘less is more’ story. And all of you who argue about complex feature lists requiring ‘complex large scale enterprise solutions’ are only refeeding the design by committee paradyne. These feature lists designed in the abstract by the many corporate stakeholders are the problem. Every fiefdom want’s it’s say in the land grab for functionality.

So 37s, fire that shot across the Enterprise bow. Keep the issue at the forefront. Cause them to question. Don’t let up! It’s only through long hard fought wars that the status quo changes.

Josh Petersen 28 Dec 05

Could you guys turn the comments back off?

Geof Harries 28 Dec 05

I agree with Josh. Many of these comments are cuts at 37s and less at the actual post. Grow up people.

Anonymous 29 Dec 05

Having made a living designing UIs for enterprise software for the last 6 years or so and seeing it from the inside, I’ve arrived at this definition of “Enterprise:”

- Several orders of magnitude more expensive than non-enterprise software
- Requirements bear little resemblance to what end users want because the developers/designers are kept away from customers.
- Tools/languages used are those that have “good reputation” among business types, not nec. appropriate for the job
- Fixes and crucial features arrive very late (because developers are busy working on all the features that people don’t need)
- Lots of bugs—the type that people wouldn’t put up with in shareware.

I’m always astounded that people pay for this stuff.

Also be wary of the term “solutions” — it generally signals that the software is unfinished or ill-suited to the job.

To those that say “small software” won’t cut it for “big” jobs, I think you’re right for the time being. What needs to happen is that those small applications need to become vastly more interoperable. Then they have a shot at solving big business problems. When an end user can just do the job without having to have some consultants glue together all the pieces first, THAT will be when companies like SAP start to sweat.

Tim Almond 29 Dec 05

The phrase “no-one got fired for buying IBM” springs to mind.

Corporations will generally go with a big company solution over something like Basecamp because they will get big presentations, lots of upfront consultancy and plenty of support, whether on-site or from a dedicated team. They assume that a big company isn’t going to disappear tomorrow.

Purchasing is often done at “corporate” level, so the package for say project management is decided to be something like MS Project. And why would a manager use something else? Firstly, he’ll have to jump through hoops of paperwork and commitees, and secondly, the finger will point at him for the non-standard solution. Even if he gets a working alternative, he won’t get a bonus for saving the company money in this way.

Small companies are different because the owner is so close to the staff. Saving money can be looked on favourably in purchasing, and implemented quickly. There’s no list of rules. There’s also no middle manager getting his “golf” from suppliers. The guy making the decision is the owner. He knows that any tickets to cricket matches, frequent flyer miles and gourmet meals are going to come out of his profits.

JF 29 Dec 05

One of the interesting trends we’ve seen is grassroots adoption of Basecamp inside very large companies. Departments frustrated with the “required software” are spending their own money to sign up for Basecamp. For them the benefit of actually being productive far outweighs the nominal $24 or $49/month cost.

Darrel 29 Dec 05

One of the interesting trends we�ve seen is grassroots adoption of Basecamp inside very large companies.

An excellent reason to go the subscription web-based route. Nice!

Geof Harries 29 Dec 05

Being forced to use Microsoft Project with its archaic gantt charts and desktop-only access, instead of Basecamp - my PM tool of choice for over a year now - is terrifying. I spend much of my day planning, organizing and tracking, all in Basecamp. Superb piece of work.

Once you’ve used a good application for a while, it’s painful to return the old school. Perhaps 37s should include some type of software comparison matrix at the Basecamp website? It would sure help folks like me sell the product to upper management.

RegularPoster_NameHidden 29 Dec 05

I tried the grassroots approach with my megacorp web development team. I set up a free Basecamp account, user accounts for everyone who would be using it, and then gave a demo. Everyone thought it was great, and it really met our needs (we are a geographically diverse group of 30+ devs and project managers). I wanted us to try it for one project to see how we liked it.

Nobody used it.

There a several possible reasons why:

* It wasn’t dictated by management
* My group is full of dunderheads. They are working in technology, but none of them use RSS, or read or post in blogs. Tech is just a day job for them.
* We already have to use lots of required applications for documentation, employee time tracking, and project management. Of course all this stuff we have to use is horrible and painful, but as long as it’s required, adding yet another layer like Basecamp just wasn’t going to fly.

I can’t wait for the kids raised on myspace, flickr, and gmail to hit the job market.

The words “nobody ever got fired for using IBM and Microsoft” escaped my boss’ lips the other day. I immediately started looking for a new job.

Platte 30 Dec 05

By the end of 2006, it will be written that enterprise means bulky, expensive, dated, and golf.

But I read that on some popular blog back at the end of 2005!

Tim 30 Dec 05

Will Basecamp always be a small product? Will you continue to add features over time or will you cap it off at some point to keep it small? I ask because it seems like the scale of the app isn’t really the issue, but rather the interface. It doesn’t matter how many or few features an app has, as long as they are presented in a simple interface.

The problem with most enterprise software is a disproportionate amount of time spent on the feature list compared to the architecture and design. In addition, all the complexity is presented on the top level I’m guessing because that’s what sells the enterprise package. Hide them and the boss will say “That’s it?” and move on.

Phil Gilbert 04 Jan 06

Good post… couldn’t locate your trackback link… thought you’d like to know I used your predictions as a jumping off point to talk about enterprise software…

Martin 04 Jan 06

You’re so wrong, unfortunately.

Christopher (number 2), you nailed it.

Tim 09 Jan 06

I’ve thought for several years that “enterprise” is a term to mean “big, clunky and expensive”, and it describes the mentality where Manglement “play it safe” by never even testing anything yourself but expect the rest of the world to do it for you. It’s just big money bullying, plain and simple. Then again, I’ve been an honest linux consultant in my time, what would I know? ;)