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2013: A “Plan B” Year for Software Firms

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What’s the next game-changer that will cause a big shift in the software vendor landscape? Predictions differ among our industry observers, but mobile and the consumerization of IT are clearly at the top of most lists.

Paul Ressler, principal, The Cirrostratus GroupWorkday will drive the view by enterprises that easier-to-use software can substantially help enterprise productivity. This view will migrate from HR software to most other enterprise software segments, especially ERP. This will result in major opportunities for Netsuite and other smaller providers and will put SAP in particular on the defensive with the potential for significant restructuring. Since Oracle has a more visible vision for how applications will evolve, they will be less affected.

Zach NelsonZach Nelson, CEO, NetSuite: The rise of the empowered, connected customer is reshaping everything. Companies in just about every industry need to interact with customers in entirely new ways —  over smartphones, tablets, social media and means yet to be designed. The ability to meet demands of both B2C and B2B customers for a consistent cross-channel experience is now a prerequisite for success, if not survival.

The big game-changer is the shift from inward-facing back-office systems locked behind the firewall to new cloud environments that are accessible to both employees (sales, service, management) and customers. We call it Commerce as a Service and make CaaS possible with our SuiteCommerce platform. The new customer-centric world demands transparency, interactivity, speed and precision that simply aren’t achievable with Stone Age software. The cloud opens the door for any company to market to, service and satisfy its customers as well as Amazon.

Lincoln MurphyLincoln Murphy, founder and managing director, Sixteen VenturesThe biggest game-changer in 2013 will absolutely be the consumer. I think the consumer is the catalyst of change, pushing to get more and more into the cloud — from data to functionality — not just personally but even for those core business processes that just a couple of years ago were considered off limits for cloud offerings.

But the real push isn’t just for everything in the cloud; it is allowing interaction with it from any device, anytime and anywhere. Consumers are getting used to being able to update their Netflix queue in their browser on their computer, look up a movie on their iPhone and add it to their queue, and finally watch the movie on their smart TV. One service, multiple devices, different use cases per device; this is the new normal and consumers will expect — and want — this ability in even the most staid B2B application.

Clearly this push by the consumer will bode well for SaaS vendors across categories, but I think the IT department will want to maintain some level of control — to give access and take it away — as well as visibility into the use of authorized apps. So we’ll see a rise in the presence of enterprise app stores that provide control, visibility, aggregate payments and provide single sign-on.

SaaS and cloud-native software vendors will have to ensure they’re included in those app stores as part of their overall distribution strategy. On the flip side, traditional enterprise software vendors and ISVs with their installed software could be left out of this new distribution paradigm — something they should see as a serious threat to their business in 2013.

Overall, demand for SaaS and cloud-native applications is going to continue to grow across all categories putting massive pressure — where it is recognized — on traditional ISVs and enterprise software vendors to move to the cloud.

I believe we’ll see Oracle Cloud, Microsoft Azure, Amazon Web Services, and Salesforce.com’s various PaaS offerings — and also perhaps some new PaaS/IaaS vendors —  significantly ramping up their efforts to be the provider that gets these companies “to the cloud” in 2013.

Howard DresnerHoward Dresner, president, founder and chief research officer, Dresner Advisory Services, LLC: There are several factors which will cause a “seismic” shift in the market: 1) mobile technology, 2) cloud-based business intelligence (SaaS) and 3) collaboration/social capabilities. Other areas we’re following include embedded BI, data visualization, advanced analytics, CEP/real-time and social media analysis.

Mark MilaniMark Milani, senior vice president of cloud platform, Actian Corporation: Mobile applications in the enterprise are the biggest change facing the next generation of enterprise application development.

 

 

Jeff Kaplan, managing director of THINKstrategies and founder of the Cloud Computing Showplace: The two biggest game-changers are analytics and mobile. Every app will be expected to include an analytic capability and be accessible via mobile devices.

 

Guy Smith, chief consultant, Silicon Strategies Marketing: Mobile is shifting everything. It changes the desktop, the info work app space and wireless networking. Spend will shift from PC hardware and Microsoft apps to slabs, phones and cellular data. Sell MSFT and buy T.

The extension of this is Android. Already dominating phones and growing popularity for slabs outside of the United States, it may well become the de facto OS for consumers and mobile tech. Barring patent victories by Apple, it may be the mobi monster.

Joe CordoJoe Cordo, CMO, Extraprise: Real-time optimization capabilities that allow dynamic personalization and contextualization of campaigns, messages and offers across all channels. The incorporation of unstructured data will be critical.

 

Gary LiuGary Liu, vice president of customer solutions & strategy, ServiceSource: ServiceSource’s Renew OnDemand, a new SaaS recurring revenue management software, will now allow companies take charge of monitoring their own recurring revenue streams. In the last 10 years, the recurring revenue stream has dramatically increased, and we it see making up a bigger and bigger portion of a company’s revenue.  It’s almost 50 percent to 60 percent in some companies. There are several factors that contribute to this: cloud computing, SaaS and the growing popularity of the subscription business model.

Ensuring customers renew those subscriptions can determine a company’s ability to fund the business, grow and innovate. Companies need to consider how to manage a new set of rules that changes the way successful businesses look at new sales versus renewals. But renewals is something few companies focus on because most companies are built to focus on new sales or don’t have the proper resources to manage that area of their business. Some estimates indicate as much as $30 billion each year is left on the table due to the failure to take advantage of renewals.

Chris Lochhead, Al Ramadan, Dave PetersonDave Peterson, Chris Lochhead, Al Ramadan; co-founders and partners at Play Bigger Advisors: Bizumers (business consumers of technology), not IT, will dictate who the leaders in enterprise software are in five years.  IT has lost control of the enterprise and will invest in new technologies that help them improve employee productivity. IT agendas will shift to reward vendors that enable the enterprise to secure and embrace new Bizumer technologies such as mobile devices, computer tablets and cloud services.

Andrew HayAndrew Hay, chief evangelist, CloudPassage: Software vendors have been focusing on getting their applications to cloud environments with little to no concern about securing them. Customers, with rigid security and compliance requirements, will likely lean heavily on their software vendors to better protect their interests in cloud environments. Also, traditional licensing and provisioning of applications will need to shift to a “consumption-as-a-service” model, facilitating utility usage of applications and, more importantly, utility billing.

End users are also tired of endless customization and tuning of software products for their environments. To change the game, software vendors will need to provide applications with less mandatory customization requirements in addition to far more out-of-the-box integration with existing tool suites.

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