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Sunday, November 07, 2004

Disruptions in the software fabric

( Via Zdnet)Companies such as SAP and Oracle must break their software packages into smaller units as their corporate clients want to cherry-pick them to update systems more frequently, says Gartner. With rapidly changing markets, rising competition from emerging economies and ever more demanding customers, companies need to respond swiftly with changes to their organization and approach to customers. But the software that underpins their operations has become more complex, making it harder to change once deployed, so they can find themselves stuck with a product that no longer suits their needs."For years we have responded to change with new technologies and applications, but this has lengthened the IT change cycle at a time when the business change cycle continues to shrink," said Peter Sondergaard, Gartner's global head of research.Gartner believes that makers of software that helps large companies manage tasks from payroll to inventory to customer relations--like SAP, Oracle and Microsoft--must carve smaller pieces out of their large packages to make it possible to adapt them more quickly."The question is, can software makers handle a situation in which their clients want smaller increments of software and at the same time convince them to increase their software spending,". And they must also make sure that those pieces can plug into their rivals' competing products, too, as companies cherry-pick more specialized programs from different vendors but want to stitch them together seamlessly. "This increases the agility of the software because it's now easier to rearrange the process or determine who will actually perform each step in the process," said Yvonne Genovese, a researcher at Gartner.As Bosworth says,simplicity wins. In the long run, software is evolving toward the salesforce.com on-demand, client services model and away from the client/server architecture. But, don t count out the behemoths – a few will survive the disruption and continue to rule in the next generation."In this way, business process is shifting IT projects from large multiyear marathons to rapid deployment gap applications, and reconfiguration of existing systems," she said.Instead of hoping to keep selling comprehensive products, software makers are trying to create what Gartner calls "ecosystems"--realms where they shape the environment and create frameworks and standards within which others operate.The ecosystems "will consist of large and small vendors who need each other to thrive," Genovese said. "Increasingly a company is destined to become part of an ecosystem in order to survive, unless it is an 'ecosystem vendor'." Sondergaard said U.S. software maker PeopleSoft, for which Oracle is conducting an $8.8 billion hostile takeover effort, was a good example of that dilemma.

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