Business Strategy for Software Executives
May 29 , 2006
The Death of Packaged Apps?
Most enterprise software vendors are ignoring their biggest competitive threat: the trend toward “building” rather than “buying” applications. Itís time to re-tool product and marketing strategies in order to be ready to compete with this invisible “enemy.”
By Erik Keller, Wapiti LLC
Build vs. buy. Itís a tug-of-war that has gone on in IT executivesí minds throughout the history of enterprise software. While over the past 10 to 15 years, ìbuyingî packaged applications has been the prevailing preference, a significant shift is occurring today: IT buyers are increasingly deciding to build - rather than buy - enterprise software.
Build is back.
Many factors are contributing to this shift. Foremost on the list are the adoption of service-oriented architectures (SOA), the availability of open source and the ability to offshore development with high-quality, lower-cost results. Add these technological and economic benefits to the typical level of customer dissatisfaction with software vendors and the case against ìbuyingî becomes pretty compelling.
And the trend towards ìbuildingî is only poised to accelerate. This shift in philosophy has major ramifications for enterprise software vendors and threatens any type of broad-based licensed application recovery in the foreseeable future.
As a competitor, ìBuildî is missing from the radar screens of most analysts, vendors and service providers today. Yet as the case for building enterprise applications becomes increasingly compelling, software vendors must understand the benefits of ìbuildingî ñ and develop product and marketing strategies for an IT environment where ìbuildingî is an attractive option.
Enough with the “Web 2.0” Lipstick!
Matt Miller of Walden VC firmly believes in Web 1.0’s vision of an Internet-driven business revolution. What he doesn’t believe in is the need for hundreds of companies to decorate themselves with a “Web 2.0” banner. Read what emerging companies really need to do to set themselves apart in this week’s post to Matt’s SandHill.com Blog, The Picky VC.
SaaS Booming in Asia
Software as a Service (SaaS) is showing significant signs of growth in the Asia Pacific market. Springboard Research VP Chris Perrine shares findings from a new study that pegs SaaS enterprise application sales in the region at $80 million in 2005 and annual growth of 84 percent through 2008. Get the study’s most important findings and implications for vendors in this week’s post to the SandHill.com Blog on SaaS.
Business in the “Other” India
As international executives continue to make pilgrimages to worship the success of India’s booming technology centers, it can be easy to miss the progress that is being made in rural areas. SandHill.com’s M.R. Rangaswami recently witnessed the impressive success realized by SKS Microfinance and the Swami Dayananda Educational Trust. Read his observations in the SandHill.com Blog, First Person.
Publish Your Perspectives!
The SandHill.com Blog wants your opinions. Send your thoughts on the enterprise software industry to firstname.lastname@example.org and we’ll publish them in our blog.
Growing 300% a Year – One Micro-loan at a Time
Meet the SHG Foundation Social Entrepreneur of the Month: Vikram Akula, CEO and founder of SKS Microfinance. Recently profiled in the Wall Street Journal and in Time Magazine’s list of the Top 100 Most Influential People, Akula merged his knowledge of business with his compassion for the world’s poor. The result has been improved housing, food, health and education for 221,000 microfinance clients via $52 million in loans, a 98 percent payback rate and annual growth of 300 percent. Read what software vendors can learn from Vikram’s success in this month’s profile.
Poll: Growth for the Database Market?
Despite a common perception that the database market has plateaued, new reports from IDC and Dataquest agree that 2005 global revenue grew a respectable 8 or 9 percent to $14 billion. While Oracle remains king, Linux-based products are the fastest growing segment of the market. Analysts estimate that database market revenue will continue to grow in the high single-digits through 2010. But will growth of open source and other low-cost options support that forecast?
Last week, SandHill.com readers gave their opinions on which company would be most likely to buy SAP.
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