Consumerization and the Web are two related and highly impactful issues facing users and vendors today. Using the criteria from "Criteria for Evaluating a Vendor's Web and Consumerization Strategy," Gartner evaluates five major vendors' Web and consumerization strategies.

• Consumerization and the Web together represent the largest opportunity and threat for Microsoft.
• Expect Microsoft to become more of a fast follower than a leader in the next few years.
• Oracle, SAP and IBM, as enterprise-only vendors, rely on strategies that directly implement existing, proven consumer and Web technologies into their enterprise products.
• As leading service-oriented business application (SOBA) vendors, SAP and Oracle will have opportunities to leverage SOBAs as potential Web platforms.
• The collaboration focus and developer presence of IBM's Lotus give it more potential to leverage the Web and consumerization than other enterprise-only vendors.

• Push vendors to articulate their Web and consumerization strategies, because few vendors are doing so directly.
• Monitor your strategic vendors' progress toward leveraging the Web and consumerization, and how this progress maps to your strategy.
• Use the criteria in this research to evaluate vendors other than IBM, Microsoft, Oracle and SAP.

Consumerization and the Web are two of the most important trends in IT today. The consumerization of IT and the Web are inextricably linked, and they feed and amplify each other. Consumer-oriented phenomena act as primary drivers of the Web. One major force behind the consumerization of IT is the Internet and enterprises' adoption of Internet technologies. Many phenomena (currently focused primarily on consumer markets) will affect enterprises, because the Internet remains the primary vehicle for consumerization. Demographics and the importance of consumer markets in emerging economies will serve to amplify and speed up this impact.

The strategies of the major IT vendors vary significantly. Most enterprise IT vendors do not sell or market their offerings directly to consumers. This means that these vendors employ strategies that are based on "consumerization of vendors' enterprise products" strategies, whereby they implement proven consumer-originated concepts in products (such as incorporating blogs and wikis and/or Ajax technologies) and services sold to enterprises.

Some vendors (for example, Microsoft and HP) have a significant presence in consumer and enterprise markets, so they have opportunities to leverage their success in one arena into the other. Other vendors, such as Google and Apple, have few direct sales to enterprises and, therefore, rely mostly on consumerization of IT strategies for success. This research focuses on enterprise software vendors.

A high-level analysis of the major enterprise software vendors (Microsoft, IBM, SAP and Oracle) against criteria established in "Criteria for Evaluating a Vendor's Web and Consumerization Strategy" is provided, as well as a more detailed explanation of the dynamics surrounding each vendor's Web and consumerization potential.

Web 2.0 and consumerization simultaneously represent the largest threat and opportunity for Microsoft (see "Web 2.0 Poses a Threat and an Opportunity to Microsoft"). The vendor clearly is moving toward a platform-focused strategy using Windows Live, which is based on the company's "software plus services" strategy. Microsoft has, in recent months, begun to show progress with its Windows Live strategy after having accomplished little in 2006 as it struggled to get Windows Vista and Office 2007 out the door. Marketing and branding issues still exist but are gradually improving. Microsoft's aggressive introduction of Silverlight and its Popfly mashup tool show a newfound degree of seriousness about the Web. The company has begun to focus more on its user interface (UI) as an important issue and has funded UI advocate roles worldwide.

Microsoft's decade-long experiences with Microsoft Network and other online consumer services (such as Xbox Live) give the company knowledge and a customer base to build on in the Web community. Microsoft's Windows Live Messenger instant messaging (IM) program is the most used program of its kind worldwide. In addition, the company's platform ecosystem success is the result of many years of building and nurturing a development community.

Within its business offerings, Microsoft has enhanced its Office SharePoint Server 2007 portal to provide more Web 2.0 functionality and has introduced its (currently) small-business-focused Office Live offering (built on SharePoint) as well. The company has, thus far, not provided its Office products as Web-based offerings. Microsoft also has been developing a community of people to build extensions to SharePoint to make the offering more competitive in the social-computing scene. Ironically, this community of people is building and sharing the code open-source style.

As an almost purely software company, Microsoft has a business model that is susceptible to the impact on the software market as a result of the five major disruptions:

• Software as a service (SaaS)
• Open source
• Web 2.0
• Consumerization
• Global class

Although the company is not diverse in certain dimensions (for example, hardware and services), it has a presence in consumer markets and in the Web, where advertising is a proven and accepted business model. So, in addition to attempting to move its enterprise installed base to a subscription model (via Software Assurance), Microsoft is interested in leveraging its consumer presence and in moving toward a more diversified business model incorporating aspects of SaaS and advertising as revenue sources for some SaaS. Microsoft's current revenue and profit sources (Windows and Office) provide the company with substantial resources and with a powerful inertia force, which, thus far, has limited the company's progress. We expect Microsoft to be more of a "fast follower" than a leader or a laggard (its previous status).

As one of the only software vendors with a presence planted firmly in consumer and business markets, Microsoft is in an excellent position. Although the company certainly has a large potential opportunity, it has been somewhat reluctant to capitalize fully on this prospect. Much of Microsoft's business is from traditional IT, and although the company is enabling IT to help users as part of its People-Ready Business effort, Microsoft exhibits reluctance to do so in many of its actions. Ironically, this type of empowerment helped Microsoft attain its current industry position.

Competing with traditional IT vendors in consumerization is relatively easy for Microsoft, but now that it faces Google, which has little to lose in appealing to end users, Microsoft is facing pressure to return to its roots as an agent of empowerment of individuals and to fulfill its longstanding vision to democratize technology by getting even the most complex technology into the hands of individuals.

As a provider of enterprise and consumer products, Microsoft is well-positioned to assist enterprises in the implementation of consumer-derived technologies. However, the company's limited, direct-sales involvement with enterprise and consumer users means that Microsoft can do only so much on its own and must rely on partners, as well as on a potentially aggressive outreach effort to bring partners on board. Enterprises can and should look to Microsoft to assist in bridging the gap between consumer- and enterprise-oriented offerings from the company.

In recent years, SAP has been promoting its vision for composite applications, based on NetWeaver technologies and the company's portfolio of enterprise services. SAP's emphasis has been on an inward-focused view of technology, but more recently the company has taken steps to begin the important work of adding consumer-derived and community-centric, Web-2.0-type capabilities to its development mix.

SAP's early work with Microsoft in Project Mendocino, which led to the Duet product offering (see "It's a Duet: SAP/Microsoft Formalize Mendocino Project Offering"), promises to integrate office productivity tools with traditional ERP and supply chain management offerings. SAP expanded its portal offerings to incorporate tools for wikis and blogs, and added other social-network functions. SAP also used Adobe technology to extend the use of its portal to offline forms and is improving its traditional interface through the SAP NetWeaver Business Client rich-client project and interaction enhancements using Web DynPro (formerly codenamed Muse). All of these UI-flexibility features are reactions to demands from users that have come to rely on the flexibility and ease of combination found with consumer technologies on the Web.

From an ecosystem perspective, SAP's composition platform enables SAP's customers and software solution providers to build applications by combining SAP-provided business processes with third-party services. This capability extends across SAP's core, large-enterprise (ERP 6.0) and upper-midmarket (All-in-One) products. SAP's new, lower-midmarket solution (to be released in 2008), known as A1S (see "SAP Strategy Changes With A1S"), will be brought to market as a multitenant, on-demand solution through Web delivery of application assets and is likely to require new composition mechanisms from SAP.

SAP is approaching the adoption of consumer-style technologies on a broad front. SAP is beginning to feel the effects of the demands of consumer experiences. However, only when the new A1S product becomes significant and SAP has a much bigger footprint in the small-business segment (where buyers tend to operate more like consumers) will the effect of these initiatives be fully felt. Users should expect a period of experimentation from SAP while the company incorporates new technologies on a trial basis into products and builds out technologies that have meaningful value.

Like Oracle and IBM, SAP is not a consumer-facing company. The company's perspective on community enablement must be viewed as enabling communities of knowledge workers, customers and suppliers for enterprises. One specific SAP implementation is the launch of an enterprise social-networking application called Harmony. Harmony is used to facilitate the discovery and connection of colleagues across geographic and functional boundaries to assist with knowledge worker team building. Harmony shows some promise as a technology, but the fundamental concepts of this application have yet to be validated in the market.

SAP has done a good job of facilitating community development around its own technologies. The SAP Developer Network (SDN) has been successful and is a good resource for SAP customers, and SDN's recently launched business process expert community and portal show signs of becoming influential in the group of professionals that is focused on business processes. However, SAP remains a professional product targeted to large organizations. Its movement into new markets (via the A1S initiative) will force SAP to create new community models (or will cause new models to be created), and these will behave more like consumer market models.

Until recently, SAP has not had any external business viewpoint about Web 2.0 or consumer-derived technologies. SAP has a large number of projects under way to incorporate some facilities and capabilities of Web 2.0 into its products. Realistically, these are still in their early stages, as SAP tries to understand how this consumer-oriented trend can be adapted and used to support behavior in SAP's context. Although many of these initiatives will be invested in and expanded during the next few years, some are likely to change significantly as SAP and its customers gain real-world experience in using traditional enterprise applications and consumer-derived technologies in concert. This is arguably true of every company facing the changes brought by the Web and consumerization.

As with Oracle and IBM, SAP's consumerization strategy must be viewed as enabling an organization's knowledge workers, customers and suppliers as the ultimate consumers of product information and process. As such, SAP's consumerization strategy can best be described as leveraging consumer-derived technologies into its offerings for enterprises. An example is the delivery of business content and applications to consumer devices that employees use, including important business mobile devices (BlackBerrys and PDAs).

SAP is extending SAP process and information into mobile devices and is opening them up to voice accessibility. This enables employees to potentially determine which devices they prefer to own as a consumer and access critical business processes. Lighter-weight access to business applications through mobile devices and consumer-friendly UIs can be seen as beneficial to enterprises, but these are unlikely to produce dramatic shifts in market share. Users should expect additional integration of consumer-friendly technologies as part of the natural evolution of SAP.

SAP's vision involves working with other partners to enhance customers' entire operations, internal and external. This extends beyond the Web 2.0 community and consumerization emphasis. SAP's Business Network Transformation is the current focus of these efforts; however, it is a still-evolving strategy that has not been fully realized. The integration of Web-centric processes and technologies in the SAP application base is not receiving as much emphasis as the current internally focused service-oriented architecture (SOA) and composite application construction technologies.

SAP has yet to realize the potential for its business applications as SOBAs to be used as Web platforms. SAP has an opportunity because future applications will be mashed up from multiple sources, including an enterprise's SOBAs. SAP's offerings eventually will include becoming Web-platform-based, but the company likely will retain many licensing and business attributes that align it with more-traditional enterprise software companies.

Oracle's Web focus is primarily on building developer tools and platforms and, secondarily, using these tools to build a next-generation set of applications (Fusion applications) that natively use the developer tools. None of Oracle's current applications exclusively use Fusion middleware (which is the direction for the underlying technologies of Oracle's next-generation enterprise applications) technology. Oracle is emphasizing Web 2.0-style services in addition to SOA-style Web services in its development and integration environments.

Oracle Application Server and Oracle JDeveloper currently support SOAP-based Web services and REST-based Web services. These Oracle offerings also support the rapid and declarative development of rich Internet applications (RIAs), Web 2.0 and Ajax applications in Oracle JDeveloper and Oracle Application Development Framework (ADF). Oracle's Ajax support is focused on enabling its Java-oriented developer community to build Ajax interfaces, for example, with 80-plus Ajax-enabled JavaServer Faces (JSF) 1.2 components available to developers as part of ADF Faces. Oracle also is emphasizing Adobe's Flash rendering kit for data visualization components, such as charts, thus providing developers with choices when building RIAs and Web 2.0-style applications. In addition, mashup functionality will be enabled by WebClipping capabilities in Oracle's WebCenter Suite.

As with IBM and SAP, Oracle does not participate directly in consumer markets. Oracle's community-building attempts are focused on enabling workplace communication among knowledge workers. Oracle's WebCenter Suite 11g is introducing a community concept called Oracle WebCenter Spaces that combines application, process and human context across organizational and enterprise boundaries. Users will be able to create, subscribe to and participate in communities. Communities can be created from pre-built templates, or templates delivered from business users, using a Web 2.0 UI. These communities can include combinations of Web 2.0 services, including discussions, wikis, presence, chat/IM, tags, relationships, mashups, calendar, tasks, content, notes and portlets. However, Oracle's senior executives aren't focused primarily on the community/collaboration space, and the company has a mixed track record in the execution of related marketing efforts.

The Web offers an opportunity for the expansion of Oracle's business through SaaS, but, other than Siebel CRM On Demand, Oracle does not yet have a SaaS solution. Oracle is not selling Oracle Fusion Middleware as a service, but is readying its next generation of enterprise applications to leverage the SaaS capabilities now being built into Oracle Fusion Middleware. Oracle is emphasizing Web 2.0 and Web-centric process models through the SaaS capabilities of Oracle Fusion Middleware (which are part of the basis and core license for Oracle Application Server Enterprise Edition and the Oracle SOA Suite). In addition, the Web 2.0 services in WebCenter Suite can be exposed as Web services, making it easy for partners and customers to embed these services within external applications. These Web 2.0 services also can be exposed as Java Specification Request-227 data controls, which makes it easier for developers to leverage the controls with enterprise applications. Oracle has a dedicated partner development and marketing program focused on SaaS, as well as a dedicated direct-sales team and programs focused on SaaS providers

As with IBM and SAP, Oracle does not manufacture products or offer services directly to consumers. Oracle's consumerization strategies should be viewed as geared toward the perspective that knowledge workers within organizations are the primary consumers of Oracle's product offerings. Oracle's view is that business applications must provide services that enable these users to easily customize applications and information to match the way knowledge workers work.

Oracle's WebCenter Suite 11g is extending its mashup capabilities with additional components and resources that can be configured specifically for use in an "enterprise mashup," which is what Oracle calls the pairing of Internet-based services and enterprise application information. For example, a business user will be able to leverage Oracle's WebCenter Composer to create a mashup of the customer/contact list coming out of the LinkedIn social network and to connect customers on the list to pipeline deals coming out of Siebel CRM or salesforce.com.

Oracle provides enterprise-class capabilities in its offerings. The WebCenter architecture includes a rich Ajax-based JSF UI framework and provides access to Web 2.0 services (wikis, blogs discussions and tags), group collaboration via on-the-fly communities, and self-service content management and publishing. Oracle WebCenter Suite is the user development environment that Oracle is employing to build Fusion applications. In addition, Oracle Applications Unlimited is leveraging Oracle's WebCenter Suite to provide new RIAs.

Along with Microsoft, IBM has been a leader in promoting the Web services family of standards. However, there is increasing market interest in simpler Web 2.0 approaches, such as REST and Really Simple Syndication (RSS)/Atom to access Web-based services. IBM is embracing these approaches with Project Zero (a technology initiative) and emerging mashup tools, such as QEDWiki (QED stands for quick and easily done, and QEDWiki may not become a product).

IBM's Lotus Connections offerings provide a variety of social software technologies, including blogs and social bookmarks, to create and facilitate communities, as well as a composite application/business mashup framework. In addition, an initiative IBM calls "Information 2.0" is aimed at providing information access, aggregation and management services for mashups. IBM Lotus Notes/Domino 8, built atop Eclipse, incorporates REST and RSS/Atom support.

Furthermore, IBM WebSphere Portal Server and Lotus Expeditor provide for a composite application/business mashup framework. IBM's strategy is to engage in a comprehensive, portfoliowide initiative of enhancements and new products that enables business consumers to collaborate in a rich environment, assembling entities in a timely way from a wide variety of sources with simple methods of accessing enterprise content and processes.

Of the vendors evaluated, IBM arguably has the most complete social software suite to support (some) community activities and has a significant developer community to leverage. Its community development efforts are in two major areas: communities of developers (in enterprises and independent software vendors [ISVs]) and knowledge worker professionals within organizations.

IBM's developerWorks is used by more than 6 million developers' communities, including the use of Web 2.0-style social networking and collaborative filtering. IBM is introducing Web 2.0 technologies in developerWorks to enable users to create more tightly targeted communities of interest that it calls "Spaces" through user-owned groups and topics and user-generated content, allowing the exporting of user-defined content to other sites using RSS, Atom and Gizmos. IBM claims that its users are taking advantage of this ability to remix content for their communities. IBM also is using this community to develop new and refine existing products and initiatives, such as Project Zero.

The new Lotus Notes 8.0 client was designed in public view with engagement from the developer community through blogs. In addition, new releases of software from IBM's Lotus division are increasingly incorporating Web 2.0 approaches, and new offerings, such as Quickr, have been introduced.

IBM has aggressively embraced the idea of the "virtual enterprise," which was behind its On Demand Business theme. But, the company does not carry out the virtual enterprise concept in a heavily Web-centric way; rather, it is more of a traditional business process outsourcing/IT outsourcing model.

IBM has no advertising-based business model and nothing that directly supports or ties to clients using an advertising-based model. We do not see IBM innovating in Web-based pricing models. The company is very focused on building an ecosystem of partners that provides a variety of software/services. We expect IBM to become more aggressive in 2008 in providing ISVs with the ability to deliver SaaS via this ecosystem.

IBM's embracing of mashups (QEDWiki, Info 2.0 and so on) is creating an environment that enables more-flexible mashup assembly and syndication of processes. In addition, IBM's acquisition of Webify Solutions, which is centered on expanding the SOBA model for next-generation, domain-specific applications delivered as correlated services on top of the WebSphere platform, shows potential leadership in this direction. IBM's WebSphere Portal Server and Lotus Expeditor both provide for a composite application/business mashup framework and leverage the IBM WebSphere Portal solutions catalog, which has an extensive library of portlets from IBM and IBM partners for faster assembly of dashboards and other mashup solutions.

IBM clearly has chosen to focus on the business market and does not deliver product or services directly to consumers. IBM does provide technology that its customers may use to create consumer-facing offerings. This lack of a consumer focus has a number of implications:

• The audience for collaboration and social software capabilities is limited — in social software, in particular, the most activity is on the consumer/Web.
• IBM's technologies are not geared to the global-class requirements that are needed in the Web space — targeting a business context vs. the Web creates a different set of requirements.
• Because IBM does not target the consumer space, its offerings have less appeal to the small-to-midsize business marketplace, which behaves more like consumer markets.
• IBM does not get consumer feedback.
• IBM does not benefit from consumer-driven demand as do other companies targeting consumers. Thus, much of IBM's angle on consumerization is from the view of the knowledge worker as the consumer of information and services within the enterprise. With its Lotus brand and experience, IBM has potential in this regard.

Unlike Oracle and SAP, direct-to-consumer strategies are a rich part of IBM's past. IBM does have the ability — should the company choose to use it — to more aggressively focus on consumers. First, from a marketing standpoint, IBM can target individual users. Second, the company has the ability, via its consulting arm and research group, to work with clients to exploit consumer-facing technologies (general Web site capabilities and new applications, such as Second Life).

IBM also has the opportunity to assist enterprises in dealing with the impact of consumerization. Enterprises must be able to rapidly build mashups for use beyond just consumers. Issues related to security and governance and enabling the rapid creation of situational applications and reusing elements are areas in which IBM has invested and with which it can assist.

Few companies have the enterprise presence of IBM. It has been aggressive in implementing Web 2.0 types of technologies and approaches throughout its product lines, especially Lotus. Although IBM has a substantial number of Web 2.0-style offerings for line-of-business adoption, the primary emphasis has been more traditional, within the four walls of the enterprise. IBM does realize that future service and product sales growth will come from environments where external partners are more of a factor and that assuming an increasingly heterogeneous base will increasingly either acquire, build or support third-party developers that leverage Web-centric technologies (such as Webify) for an expanding portfolio of Web-centric capabilities. IBM is planning to expand its host of Web 2.0-driven solutions for enterprise adoption through the end of 2008.

This research is part of a set of related research pieces. See "Evaluating IBM, Microsoft, Oracle and SAP Strategies in Software Megatrends" for an overview.