Recently writing about the enterprise software mid-life crisis,I wrote that it will be harder than ever for small companies to win a share of the new technology spending pie.The software companies have a huge untapped source of credit that they could use to fund future growth & the software companies will steadily increase their use of debt to fund growth as the industry continues to mature – This could keep fanning the wave of innovation in enterprise software.
Ray Lane writes in this week’s sandhill op-ed,“many software companies will be busy trying to convert their offerings from products into services & software-as-a-service (SaaS) was the number one item on the agenda of 70 percent of software executives. This he says may be a MISTAKE - a service offering is not going to mask a vendor's inability to create innovative products and gain market share”. He prescribes that the industry needs to look and innovate –dominate paradigm as a way to grow. His prescription for growth makes a lot of sense:
The non big four software vendors need to aspire to become he Microsoft of a specific sector, or the Google of an entirely new sector and he recommends :
- Technology acquisitions to increment platforms and points out that acquisition remains a relatively inexpensive way to adopt new technology and business models - and it can result in securing domination.
- "Verticalizing" their offerings - The ability to serve an industry's needs better than any other supplier will require continuous domain innovation and will likely result in growth.
- Embracing openness – while building a new software product or reengineer an old one, build it on open source software. As customers are moving in this direction open source products will deliver an exponential advantage in future competitiveness.
I fully agree with his view that technology investors are excited about consumer opportunities now( In fact I recently wrote briefly questioning the rationale behind this excitement – but no doubt excitement remains), but enterprises want innovation. And enterprises continue to spend billions on IT products year after and there are still many unsolved problems in business computing & notes that there is a lot of innovation to come in this industry & predicts that the enterprise software companies that move to innovate and dominate today will be the most successful companies five years from now. A refreshing piece and a must read for all interested in enterprise software.
Category :Enterprise Software, Emerging Trends