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CW@50 - Celebrating 50 years of British technology innovation

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CW@50: Spreadsheets and ERP – 50 years of software coding business

Business software has been a rich field for IT professionals over the past five decades, and we are on the cusp of a new era of customers rolling their own for competitive advantage

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There was business before software. Even today, MBA courses will start with the fundamental functions of any business – finance, human resources, operations and marketing – with scant reference to IT.

And yet, over the past five decades, software has changed the business world and become an industry space within the IT industry itself.

There were computers before Computer Weekly, now celebrating its quinquagenary anniversary. But one of the underlying reasons for its launch in 1966 was the greater salience of software at that time. Indeed, on the first page of the first issue, on 22 September 1966, there was a statement encapsulating this:

“Software men…because they speak a language of their own, tend to form an exclusive group. A newspaper that gives software the importance that is due to it is, therefore, welcome on two counts. First because it will be of real interest to those engaged in the development of software and will help them feel that more people are beginning to understand. Secondly, the world of the non-specialist will have an opportunity to read in an intelligible form about a field of activity which will have a profound effect on the society in which we live”

Grand words from BZ de Ferranti, managing director of International Computers and Tabulators. And the first issue’s Letter of Intent from the Editor (Jim Bonnett, who sadly died in May 2016) defined one of the aims of Computer Weekly as the integration of hardware and software.

The creation of business value – plainly speaking, increasing revenue and reducing costs – has been at the heart of Computer Weekly’s coverage: more so from the 1990s until today than in the 1960s, 1970s and 1980s, when the newspaper was more about the IT industry than the use of IT by companies and the public sector, outside of the industry.

But even in those earlier decades, the publication was as much about the application of IT in business as about the business of software, hardware and services firms.

Case study of change

In 1986 – when the publication emblazoned a logo stating “20 years on, still setting standards” – Jonathan Green-Armytage wrote a case study on 20 years of computing at the Halifax Building Society, which neatly encapsulates how IT had changed business processes over two decades:

“In the basement levels of the Halifax Building Society’s head office is a dark and cavernous room. It is big enough to hold more than 15 double-decker buses.

“The room is empty.

“Five years ago, it was a wonder of information technology. It held over a million business documents in an automated filing system. A computer knew where all the documents were and, when they were wanted, sent cranes clanking up and down the towering aisles to fetch files on to conveyors and lifts.

“Now the paper has gone.

“A massive investment in the latest and cleverest technology, installed in 1972, became obsolete in 1981.” (Computer Weekly, 31 July 1986)

The computer orchestrating this impressive document storage and retrieval had been replaced with an entirely electronic system: software replaced a mechanical solution to managing paperwork.

On the business software side, in 1986 Computer Weekly registered some developments that are still with us, albeit mutated. One was the rise of the spreadsheet, still the mainstay – some would say the curse – of the working lives of most business professionals, especially financial. Lotus, we learned in the issue of 21 August, “goes direct to largest customers”, bypassing resellers. And adverts abounded for the spreadsheet program Lotus 1-2-3 and Symphony, the supplier’s applications suite, which lives on as IBM’s now open sourced alternative to Microsoft Office.

The rise of the spreadsheet

Nicholas Enticknap, in a 30th anniversary feature in 1996, noted how the 1980s marked the rise of the spreadsheet, Unix, the C programming language and the personal computer, launched with the IBM PC in 1981 and fortified by the Microsoft operating system. One could add the launch of the Macintosh in 1984 and, as Enticknap mentioned, the TCP-IP protocol that would prove so fundamental to the spread of the internet in the next decade.   

Reviewing the 1996 Computer Weekly issues more generally, the main story of that year was how the network computer, combined with the Java programming language, was gearing up to become the brave new Sun and Oracle-led paradigm that would push Microsoft off its perch.

A front page story in the 31 October issue told how Tesco was the first UK supermarket to sell on the internet, using Microsoft’s Merchant Server technology. The rise of the web was indeed being registered, but, at least from an enterprise software point of view, Oracle’s ambition to spread beyond the database was the big story.

Cath Everett quoted Larry Ellison at Oracle Open World that year: “We will become the world’s first comprehensive solutions company. This will be the largest part of Oracle’s business and the services component will be very important.” (Computer Weekly, 14 November 1996).

The same author also reported that Andersen (now Accenture) was backing Tom Siebel’s customer relationship management software house to be “the next SAP”. (Computer Weekly, 7 November 1996).

SAP: a German exception

What of SAP? There can be little doubt that the IT industry has been an overwhelmingly US phenomenon, but here is one partial exception (there are others). Germany’s SAP dominated enterprise software in the 1990s, although it has never been the only ERP supplier on the block.

Vinnie Mirchandani, a long-time enterprise software watcher, and author of SAP Nation, is an astringent critic of the supplier, but attests to the revolutionary nature of its ERP (enterprise resource planning) software in that period. His book and its successor, SAP Nation 2.0, also contain accounts of competitors such as Infor, Unit4, Workday, Netsuite and Salesforce.

“SAP changed the world in the early to mid-1990s,” he writes. “It replaced a bunch of departmental solutions – small systems on small servers, AS400s, PCs. It helped companies consolidate their enterprise apps. It was revolutionary.

“But they ignored signals from the [SAP] R/3 [ERP] implementations in the 1990s, where you could see the failures by the systems integrators. They should have been alert to the fact that they could not just let their partners take their software and do what they wanted. And they could have seen the inefficiencies of the hosting providers, too”

In recent years, the applications behemoth has wagered its future on a high-performance, in-memory, columnar database, Hana. Mirchandani’s view is that the company, especially with S/4 Hana – the full ERP on Hana – is thereby moving away from the two things that made it successful in the 1990s.

He writes: “R/3 was totally integrated across processes, it was one wall-to-wall system and it had very little code in the database, so you could swap Oracle for Sybase or DB2 or [Microsoft] SQL Server, and the application would run just fine. I am still shocked that they are going with stored procedures only running on Hana. That is a dramatic philosophical shift.”

Read more about the history of business software

As regards the future of business software more widely, he says: “It is an interesting time. From a CEO’s perspective, he or she wants smarter products and services. So business software that can support the next generation of a smarter vehicle, or telematics-driven insurance, or a new infusion pump will be welcome if it is cheaper than what a company could do itself.

“I don’t see enough of that happening, though. And some customers tell me they don’t trust an SAP or an IBM with something that confers competitive advantage.”

He cites the example of General Electric’s Predix platform: “They couldn’t find anything on the market to allow them to support their industrial products, so they developed their own platform [of components from software suppliers] and they are now selling that.

“Now, the back office is never going to go away. No one is going to write an accountancy or HR system. That will continue to be bought as business software. Otherwise, I don’t see packages having a big role 20 years from now.

“And nor do the cloud vendors, much as I like them, have any industry functionality. Try to find utility billing or retail merchandising. They [Salesforce, Netsuite, et al] have not been very creative there.

Total enterprise portfolio

“When I was at Gartner [as an analyst] in the 1990s, ERP defined for many companies their total enterprise portfolio. In the 20 years since then, ERP has become 30 to 40% of that. A lot of companies are now investing in making products smarter with their own software development.

“If you look at the customer-facing, digital commerce efforts, the ERP vendors have not provided that. If you look at banking, you see how little is provided by legacy applications. The host of fintech start-ups in London is testimony to that.

“But every industry has grown its applications portfolio by itself, so that the packaged applications world is down from a peak of 70 to 80% in the past. The customer has become a developer, and their supply chain has, too.”

If he is right, there should be a rich future for IT professionals working for user organisations, developing the applications that bring strategic advantage to their firms. Happily, those are Computer Weekly’s readers – the modern generation of those “software men [and women]” that ICT’s de Ferranti identified as requiring their own newspaper in 1966.

This was last published in June 2016

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