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Tuesday, April 04, 2006

Enterprise Software Market : Foggy & Unclear Trends

McKinsey’s Vanessa Colella in her presentation brought forth the point that software investments share shall raise 5% in an increasing IT budget in the coming years. She also made a point that in developed countries, the more and more IT investments get directed towards what she called as supporting tacit transactions (her view this is around 40% of total transactional volume), the outcomes could be significantly different. If that is the case one will have to see how the industry ecosystem is gearing towards this goal: on this the pundit panel deliberations were useful. The panel consisting of Bruce Richardson, Rick Sherlund, Peter Sobiloff moderated extremely well by Dennis Kneale turned out to be an interesting session. Rick Sherlund & Bruce Richardson made a few insightful observations all the way through.

Key observations from Rick: Rick emphasized the need to create a platform of innovation and how in his judgment the SOA movement is getting stronger. He cited perspectives from system integrators in support of it ( the whole day with various discussions with the theme “unifying the ecosystem” system integrators were mentioned only in very few occasions!!) and made the right observation that the infrastructure stack for SOA is ready and application software companies are busy moving their products into SOA frameworks. In the SaaS segment, Peter brought out the fact that small players will deliver and big players would continue to under perform in newer technologies like on demand. Rick also spoke about SDFC positioning itself as a not a CRM company and as an on demand solution and clearly it will be a big stretch to host other apps say a HR apps and expect it to work – so the conclusion – SFDC needs to do two things: One for verticalising and for new modules and two, it needs to go in for acquisitions and two, it needs to look for a professional COO – Too often the tech industry has been spoiled by promoters steering everything. Another prediction made was Microsoft may make a hosted solution available in the mid market segment centered around Great Plains(I think this may happen, if MSFT is really serious about the packaged apps/SaaS market). BI market may see some mergers, acquisition and consolidation.

Key observations from Bruce Richardson: SOA may take lot more time to become so mainstream a force & was skeptical about Microsoft pulling off the SOA bit.He made the point,trend identification may be easy but adoption may take a long time. In his view, Netsuite may have a better chance for success as things stand and he also predicted that Oracle may be eyeing it for acquisition and expected consolidation to continue and may now affect the BI space as well. Bruce made another important observation – P&G has spent a lot of money on SAP rollouts and they may not risk even an upgrade now, and he sees an important opportunity lying in there – consulting firms may go there and offer business process innovation services in place of spending on risky/costly upgrades. While several other points got discussed, answering a question about when Indian product companies would be seen as a force in the market, Bruce said they may do by backdoor entry as well citing TCS +I2 relationships ( not sure what he meant existing relationships between them are very strong or did Bruce talk about something brewing beyond the current levels of relationship) – also it was felt that while Indian products are available, the US market size makes the US players powerful and so other players are not able to sustain and get sold out – net US product companies continue to dominate. Overall Rick made some insightful observations and Bruce Richardson was doing a reality check. As I see it, even the panel could not converge on emerging trends on most topics – an indication of the state that the enterprise software market is in today. Also read charles coverage of the events. On a personal note, I felt happy to have met with Charles, Jeff, Neil,Vinnie & Zoli this morning.

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