The Sandhill- Mckinsey state of the software report findings & recommendations make insightful reading. The sandhill customer survey shows 59 percent of respondents expect the greatest level of software innovation to come from small software vendors, while only 19 percent believed larger vendors would deliver this level of innovation. The solution in this wave of innovation, writes Mckinsey's Ken Barryman & Sandhill's M.R.Rangaswami, may lie in the bottom-up nature of the innovation diffusion itself – particularly with innovative easy-to-deploy software-as-a-service models, end users and business leaders may take on the role of the IT experimenter and shift the focus and spend on innovative smaller vendors outside of the IT department and into the budget of the line-of-business departments directly. 
In this scenario, the advise to the vendors: They need to adapt to the bottom-up and center-out diffusion model within this innovation wave. Ensure that your investments in product and technology innovation are well balanced with similar investment and focus on business model and process innovations. Focus on the monetization of recent disruptive technologies from this wave, embracing new business models when and where appropriate. Increase your overall transparency to customers and developers and work hard to operate with greater external leverage across your full business system. Well said.
A recently released Gartner report summarises amongst other things the type of changes that are expected to happen on account of the varying changes in technology and customer expectations. It predicts that in the next two years that at least one of the top five IT professional services providers worldwide will have sufficiently mastered the use of SOA and Web services for service industrialization and will permanently alter the cost structure of traditional outsourcing and system integration (SI) business models.
And the Gartner report goes on to predict that in the same timeframe, SOA and Web services will reduce the demand for packaged application implementation services, resulting in the demise of 15% of existing SI vendors, who will not be able to shift to a component assembly business model.
All this points to one thing -elements of change are happening at varying levels and they are waiting for the right moment to fuse together. Clearly the battle for the enterprise IT dollar is getting more and more interesting – this time faster and smarter people stand a better chance – being plain big alone may not mean much here. The customer is definitely going to demand a lot more – justifiably so in this new era of innovation.
Am there in software 2007 and shall be posting on significant things happening there.
Labels: Emerging Trends, Innovation, Software 2007
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