Simon Wardley writes an interesting post claiming that Microsoft’s biggest enemy is not Google, Facebook, Apple – it’s Microsoft. Wardley’s research suggests that inertia makes it easy for Microsoft to continue doing what they’ve done in the past with great success. Inertia is also an important force within IT departments. IT decision makers seeking to help their businesses differentiate from competition should guard against technology inertia.

Bill Gates: Success is a lousy teacher
Wardley spoke at OSCON 2010 about how open source vendors could disrupt market incumbents by taking advantage of the incumbent’s existing business model.

Wardley quotes Bill Gates, who once noted “Success is a lousy teacher”. Wardley explains:

That’s one of those basic lessons which often gets forgotten in business. In this world of competition, there are two fronts to fight on. The external front includes those competitors who attempt to either gain a creative leadership position or to disrupt your existing model. The other front is internal and against your own past success.

Vendors often focus on external competition, but the ability to compete effectively externally is directly impacted by how the degree a vendor’s corporate culture can allow it to look beyond past success.

Historical success in a given product area creates sacred products which must be protected and definitely not commoditized when considering new opportunities or new competitors.

Wardley claims that Microsoft’s recent cloud moves, while admirable, aren’t enough to compete in a services-based marketplace built around open source:

Whilst MSFT has made much of a fanfare about its recent moves into the cloud, it was a probably a significant internal battle for MSFT just to make the change from products to services. However, this new world is likely to be rapidly commoditized to marketplaces based around open source and hence the real question becomes whether MSFT will be able to make the further change necessary to survive in that world?

Microsoft’s future business should be intertwined with open source in the domain of utility services. Unfortunately, the last group of people who are usually willing to accept such a change are those who have built careers in the previous domain e.g. products.

I’ve seen the scenario Wardley lays out play out in my product areas and across IBM. However, most of the time, we’ve been able to look beyond sacred products and try new business models that on the surface could commoditize our most important products. These actions have typically helped grow the overall IBM revenue base, and in many cases, further grow the penetration of those sacred products. Looking beyond past success isn’t easy for vendors, but it’s critical for long term viability.

IT departments must also fight inertia
There’s another angle to consider before concluding that vendors simply follow their inertia – they do. However, customers also follow their own corporate IT inertia. This in turn makes it possible for vendors to continue viewing the market as they have in the past.

Whether it’s past success or “just the way we do it here”, many IT departments I’ve interacted with put a premium on existing process, technologies, skills and buying preferences.

One can hardly blame IT decision makers considering the financial, and more importantly, skills investments that their companies have made with a given technology.

However, as is evident when considering the fate of vendors that cling too closely to sacred products and inertia, IT decision makers are cautioned to look beyond inertia when delivering value to the business in five years.

One approach to doing so is to allocate a portion the IT budget for projects and technologies that run counter to the IT department’s technology and process inertia. Start with a less critical project initially, and learn from unforeseen challenges before apply these new technology choices throughout the IT department.

Developers, startups and perennial early adopters don’t let IT inertia get in the way. Companies that tend to fall into the early or late majority should build plans to innovate outside of their comfort zones also.

I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies, or opinions.”