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Monday, October 10, 2005

Enterprise Software Industry : Structural Changes Ahead

I wrote a note for Sandhill.com on the impending structural changes in the enterprise software industry. While bruteforce consolidation is happening in the enterprise software industry, many raise the issue of lack of pointers to the next big thing happening in the industry. Skepticism abounds in terms of the dire need to make use of substantial unused capabilities of existing systems & solutions. The next big thing that could engulf the enterprise software industry could be the change in the industry structure - one that could keep all in the industry quite engaged for years to come. The consolidation frenzy and the uncertainty and slow evolution of the enterprise software market towards a stable model is causing so much attention and concern across the board. A careful examination shows that well evolved industries move towards a decentralized/tiered model – currently the enterprise software industry is highly integrated vertically and its ecosystem is not well set today. In this changing world, going beyond the packaged solutions, extend the idea a bit – enter the idea of SOA & Composite applications - the applications can be mashed up in multiple ways to create new frameworks that can be assembled as & when needed to make business in an always ready-to-respond mode towards changing external conditions. The composite applications address more complex business scenarios by combining discrete functional applications or service modules and encompass business processes that typically cross departmental silos synchronizing in the process varied information for effective functioning of the enterprise. BPM, Portal applications – early entrants of such frameworks inside enterprises and these core technologies will continue to act as the forerunners for adoption of composite applications. Application as a concept neatly disapperas with SOA.I also see that Composites can bring about a huge change in the setup of the ecosystem – we can see leading edge applications coming in from mega vendors & startups alike. Product engineering too shall also see a positive influence - facilitating development of software in modular pieces, enabling rapid delivery of new functionalities. One or two of the well established software vendors may fail in the adoption to this new model – its not a continuation of the current engineering efforts. Several independent developers could start writing specialized programs that plug into the composite apps framework. Professional services, sales network can begin to take a different shape far different from the vertically integrated model that we see today. The partnership between the product vendors and system integrators shall also change – the emerging equation may put more demands on the integrators and force product vendors to spend more on developing vertical solutions. Composites will potentially change the landscape –of enterprise market and the dominant business model (form & structure included) of the enterprise software industry will change as well. Please read the full note here.

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