Software Pulse

Business Strategy for Software Executives

May 29 , 2006

Erik Keller

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.


Big Demand for On-Demand

RightNow Technologies bolsters its saleforce automation offerings with the acquisition of Salesnet, describes its enterprise push, and Microsoft buys Softricity to stream apps on-demand even as most on-demand offerings from major vendors struggle; plus one Oracle acquisition pushes back, one country’s software outsourcing market grows 44 percent (hint - it isn’t India), and one company wants to be the “Switzerland” of high-tech…

Read these stories and more news of the week in the weekly news summary. Visit every Friday when editors deliver this capsule of the most important software news ñ or better yet, sign up for the News Summary RSS feed and donít miss an issue!

Enough with the “Web 2.0” Lipstick!

Erik KellerMatt 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 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 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.’s M.R. Rangaswami recently witnessed the impressive success realized by SKS Microfinance and the Swami Dayananda Educational Trust. Read his observations in the Blog, First Person.

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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?
Take our Pulse Poll >>

Last week, readers gave their opinions on which company would be most likely to buy SAP.
Share your opinion and see the results >>

Is Your Company the “Next Big Thing”?

Enterprise 2006 is just around the corner! The ninth annual invitation-only gathering of software CEOs and investors will take place in Pebble Beach, Calif. on October 8-10, 2006. One of the event’s most popular sessions allows a select-group of fast-growth software CEOs to present why their company will be the next Microsoft, SAP or Oracle. Click here to nominate your company for this prestigious opportunity and visit the Enterprise 2006 site to find out more about the conference.

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Parting Thought

“I suppose leadership at one time meant muscles; but today it means getting along with people."
– Indira Gandhi

Courtesy of Malcolm Kusher, The Kushner Group