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Monday, July 24, 2006

Enterprise Software & Smaller Players

I wrote a brief note on Enterprise Software & The Future Of Smaller Players. I began writing this note as I arrived in the Valley for a brief visit and concluded the note as I was about to fly out. I passed through several buildings which hosted a number of enterprise software players, I met up with some of them as well - while I work with a number of them across the various continents. As I see it, there is a crying need now for a new structure for the enterprise software ecosystem wherein the smaller members can participate and benefit in a fair manner from the opportunities that are arising in this space. Brutal waves of consolidation, investor reluctance to fund enterprise software startups, the not so firmed up patterns on corporate buying of enterprise software – all have gone to directly affect the prospects of a number of small software companies. The distinctive factors between the aspirants, contenders and pretenders of the enterprise software industry trying to work in this segment are quite interesting to watch. The landscape of the enterprise solutions is still dotted by the all–rolled–in-one type of solution players to niche focused players with well defined solutions. The irony is that such players are running the risk of being marginalized – not just by the natural law of economic forces alone – but by the inelegant, self hurting greedy designs of the mega vendors/their stakeholders. While the top-tier vendors boast of wide ranging integrated functionalities with deep pockets, specialized solutions like PLM, SRM, MDM, Content management, BPM, Document management, Compliance solutions, Vertical solutions coming from best - of - breed players continue to remain attractive to buyers of different spectrum. The mega vendors are trying to counter this competition with promises of rapid deployment methods and attractive packages of fixed time, fixed price based accelerated rollouts with templatised approaches. Again for reasons centered around concerns of integration and cohesion, even these options are proving to be seen less attractive by prospective buyers. Prefabricated/Cookie-cutter/fixed term/price – all look attractive on paper, in real sense these do not satisfy the prospects, despite these being medium/small business. This forces onerous responsibility on the mega vendors to offer solutions that are not only cost effective, less complex and faster to implement but offer open solutions that can be extended over time and be amenable for efficient version and technology upgrades

Owing to continual pressures of consolidation, newer trends are emerging: the trend that these consolidation are effecting more than reducing the number of players in the enterprise applications field, it is contributing to the widening the gap between application/infrastructure mega vendors and pure-play application providers. What can this lead to : This way, in the medium to long term, the leadership status that the mega vendors want to hold on to may slip away – faster than it took for them to build. After all being in touch with the application ecosystem, matching customer expectations are a basic requisite for enduring success and fostering innovations. Clearly, the enterprise software market will have to reflect and embark on an important restructuring and transformation to become more vibrant, broad based, innovative and bounce back as a serious contributor to the growth of the industry ecosystem and the business at large. Read the full note here.



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Sadagopan's Weblog on Emerging Technologies, Trends,Thoughts, Ideas & Cyberworld
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