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Tuesday, January 24, 2006

2006: Ominous Signals For Enterprise Software

The year that past by was an eventful year for enterprise software vendors - small vendors finding difficult to expand and began to get acquired, the acquiring entities after spending so much on acquisition found their stocks wailing at several year lows. New technologies keep getting mindshare. 2006 appears to be another testing year for software vendors. Courtesy of Paul Kedrosky. saw this collection of perspectives on Enterprise Software. Greg Gianforte sees 2006 as the horrible year for software vendors. As he sees it,2006 will be a horrible year for software vendors who don't understand the technical and business implications of SaaS, as well as for those that remain slaves of Oracle and Microsoft. Pointing out that the issue as usual isn't just the technology itself It's whether the vendor can package and deliver the technology in a way that solves the customer's business problem and is relatively painless to assimilate into an IT environment that's already quite complex and tough to manage. He predicts that the hosted SaaS model will continue to grow, while the conventional high-TCO model will become increasingly unappetizing to corporate IT buyers who now have a great alternative. Open source will also continue its ascent as buyers realize there is no reason to pay outrageous licensing fees for proprietary operating systems, databases and web servers when the open source alternatives are just as good or better. Companies will also spend on technologies that enable them to create a superlative customer experience across all channels, since competitive success in a "flat earth" economy will depend more and more on differentiated service - rather than price and/or features. In a globalized economy, it is tough to compete on price. And with technology proliferating so quickly around the globe, it's also tough to compete on technological innovation alone. So a great customer experience has become a critical competitive differentiator.
Radha Basu, CEO, President and Chairman, SupportSoft, Inc sees transition happening for enterprise software vendors. She sees the rising trend of convergence of the consumer world and the enterprise. In 2005 there has been an increased convergence in consumer-facing technologies that is forcing enterprises to re-inspect their internal software needs. Fast adoption of wireless, VoIP, high speed data access and other forms of IP-based service delivery when combined with an increasingly mobile workforce, is causing enterprises to re-evaluate how they use technology to serve themselves and their customers. Mass adoption of technology is now helping drive enterprise adoption of new solutions. For, David Gould, CEO and Chairman, Witness Systems 2006 looks favourable.

Past success may not ensure greater business this year onwards, market consolidating or not. Clearly we shall see a different landscape of enteprise software vendors when 2006 closes.

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