Dennis Howlett published a provocative post yesterday: The End of Software… In it, he makes the case that there’s a looming battle between the traditional software acquisition model followed by enterprise IT departments and the lightweight, enterprise 2.0 tools being brought in under the radar by business units:

While the two solution sets may look the same from the outside, they are being bought in fundamentally different ways and are setting up a tension that today is barely felt but which will have a disruptive effect on the software buying patterns of the future.

The Incumbents: ‘Enterprise Software’, BlackBerry

Here’s how Dennis describes traditional enterprise software systems:

they are transaction based. They are not people based. I’d go further and say they are departmentally constrained, reflecting the internal power structures they were designed to support.

These systems have dominated the IT spending and strategic technology priorities of many companies for what feels like as long as anyone can remember. They’ve done so because they were designed to appeal to what IT departments perceived as the needs of the workforce.

BlackBerry is the ultimate example of this. RIM, Blackberry’s maker, has sold millions of the devices to corporations by making the value proposition to IT departments that a mobile email device is the solution to ever-fuller email inboxes. If the inbox is full, give every employee a tool that increases the amount of time they can spend answering messages.

It’s an obvious solution, but not a deep one. But obvious solutions are just that – obvious – which is why people go for them.

The Contenders: Wikis, Blogs, Twitter, iPhone

Wikis, blogs, microblogging tools like Twitter, social networks – tools that started out largely in the consumer (read=people) sphere are gaining recognition and use inside the same organizations that have an “official” suite of enterprise software provided by the IT department.

Why?

Because when the average person inside an organization can:

1. Wait who knows how long for the IT department to consider supporting a wiki.
2. Go sign up for a free hosted wiki or download software they can set up on their own in a few minutes or a couple hours at most.

Which do you think they’re going to choose? #2

Now the typical IT response is that #2 is less secure, violates IT policy, might disappear if the company providing it goes away…

But the average person just doesn’t care about those things. They want a tool that helps them get their work done, and people choose the path of least resistance. That’s why these supposedly unsecure, transient, risky tools are taking hold in a big way.

And it’s also why the iPhone is the next big thing in the enterprise.

Don’t believe me?

March 18, 2008: Gartner Changes Its Enterprise iPhone Recommendations:

Gartner recommends “appliance-level” support status once firmware 2.0 and improvements are released. iPhone will become a popular tool alongside BlackBerry and Microsoft devices.

Many industry observers said the iPhone wouldn’t be embraced by enterprises. That’s because they don’t understand this new approach that both the providers of the new generation of social media/Web 2.0/collaboration tools – and Apple – are taking.

IT Department or Users: Who should you court?

The big incumbent enterprise software providers have been selling to the IT Department – a department that exists to both anticipate and support the needs of users, but has historically had more expertise than the users. That expertise is shifting in a big way – and it’s rocking many IT departments to the core.

That doesn’t mean IT departments don’t have valuable expertise – it means they have a different kind of expertise – assembling and connecting the tools that users say they want to use. Instead of fighting against what users want, IT departments need to:

…become part of the decision-making culture of the business. The entire notion of IT as being somehow separate, or having independent goals from, the non-technical parts of an enterprise is absolutely ridiculous.

The New Reality

So what should the software providers do?

Dennis gives SAP as an example:

Last week, I spoke with Doug Merritt, who runs SAP Labs who said that: “Taking a FriendFeed approach will tell me much more about potential employees in the due diligence phase of hiring than I can get from HR.” Did I hear a light bulb go on? Apparently so.

I’m thinking that SAP is realizing that it could get much closer to the millions of people who use its software rather than the IT shops that buy their stuff. The challenge, which Merritt thinks doesn’t get solved for another 2-5 years, is how companies like SAP adapt their software design strategies to accommodate this new reality. Enter the startups.

All software providers need to take a two-fold approach:

1. Appeal to the needs of the everyday user = that’s the key to getting your tool adopted.
2. Provide the tools (LDAP integration, APIs, plugin architectures) that IT needs to glue the right set of tools together.