Enterprise business applications run all phases of a company’s operations such as sales, customer service, accounting, finance, human resources, inventory, and manufacturing. They streamline and coordinate work across the enterprise, supporting corporate goals of revenue, profitability, and cost optimization. As a result, the market for these applications continues to aggressively grow.
Today’s business applications are too rigid, too expensive, and too difficult to deploy and maintain, yet we’re at a tipping point, and this growth won’t be sustained without a reinvention.
There are pressures that are forcing this reinvention:
- Economic and regulatory forces. These include tighter data privacy regulations that create distinct winners in different geographies.
- New competitors. Examples include best-in-class point solutions, vendors entering from adjacent technology spaces, system integrators moving up the value chain, and hyperscalers with their AI power. These competitors offer distinct advantages in pricing, simplicity, and technology innovation.
- Emerging technologies. Tech such as AI, application generation platforms, edge computing, and the internet of things will reshape what enterprises expect from their business apps.
- Rising costs. This is in part to monetize new features and in part because of the cost of AI now embedded in business applications. For example, Microsoft announced price increases for its Dynamics 365 products. This year, other vendors have bundled broader capabilities in singular licenses and at the same time have snuck in price increases.
The value proposition for enterprise business applications is changing. To future-proof your operations, you must invest in apps that embrace four nonnegotiable agreements. Apps should be:
- AI-infused. AI must be embedded at the core of apps. Predictive and generative AI already supercharge experiences, automate workflows, and surface insights that guide users to optimal business outcomes. Vendors today work furiously to embed AI into their solutions, create large language models specific to their domain, and spin up partnerships with AI vendors.
- Composable. Business apps are already being deconstructed into composable elements that foster reuse. Vendors today support open and composable architectures that allow companies to deploy the capabilities they require — and this will only become more important in the future.
- Cloud-native. This fosters extreme scalability, deployment ease, and seamless upgrades with no downtime. Customers will have choices on how to deploy applications — whether through public, private, or hybrid cloud — but this will depend on the vendor, region, and the app category.
- Ecosystem-driven. All vendors today have partners, but they vary widely in how ecosystem-oriented they really are. This must change. Business app vendors must foster marketplaces, provide prebuilt connectors, have robust partner and independent software vendor networks, and offer commercially attractive practices that give customers a true choice.
Read our report, The Four Agreements Of Modern Business Apps, to learn more about our recommendations and predictions for the winners and losers in this market. Join Liz Herbert at Forrester’s 2024 Technology & Innovation Summit as she speaks to this research.
