Business Strategy for Software Executives
October 22, 2007
The Open Source Threat
Most software vendors are unprepared to face the commoditizing threat of open source software. Here's what they need to know to compete.
By Bruce Guptill, Saugatuck Technology
Open source adoption is picking up steam - and software vendors need to pay attention. The findings of Saugatuck Technology's new open source study lead us to believe that the majority of established, traditional software vendors are unprepared for the disruptive impact of open source software on their markets and business models. Open source alternatives threaten to both compete against, and commoditize, much of today's current, core business software portfolios.
As a result, traditional software vendors of everything from enterprise applications to tools, face significant erosion of installed bases and new business. Open source software's presence will increase from approximately 10 percent of key enterprise on-premise software in 2007, to between 15 percent and 20 percent by 2010. Most vendors will face significant declines in profitability as well. Open source alternatives might not yet be eating traditional vendors' lunch, but are gaining their just desserts.
Given the current trends of tightening software vendor operating and profit margins, and a relative lack of new development work by many traditional software vendors, this is going to be a significant problem for them - and for their shareholders. Here's what software vendors need to know about the open source phenomenon and what they can do to counter the threat.
The Benefits of Bottom-Up
Many enterprise software products are aimed at the largest companies and then retrofitted for mid-sized and small companies. Guy Smith of Silicon Strategies Marketing says the opposite, "bottom up" strategy requires more patience, but can be equally rewarding. Read why in this week's post to the SandHill.com Blog on marketing best practices.
How to Invest in India
India is one of the hottest markets for corporate investments. A new report from Evalueserve looks closely at investment trends in the country. Alok Aggarwal presents an excerpt which analyzes private equity investments and provides an outlook for the next five years in this post to the SandHill.com blog on India VC.
Publish Your Perspective!
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.
Making the Most of Web 2.0 Content
The success of online participatory media--video-sharing sites and corporate wikis alike--depends on the quality contributions of a small core of enthusiasts. Read how to make the most of this Web 2.0 content in this article from The McKinsey Quarterly.
News Update: Timing is Everything
Cloud visions, unified communications, SOA plus master data, Google's quarter, SAP's buy and predicting the unpredictable. R ead these stories and more software news of the week in the latest SandHill.com Software News Summary.
Poll: Google's Ceiling?
Will Google hit $700? 800? 1,000? What will the stock do by year's end?
Last week, readers gave their opinions as to how SAP's acquisition of Business Objects would impact its strategy.
More at SandHill.com:
Send us your feedback on this newsletter and the SandHill.com site.
“Good design can't fix broken business models.”
Courtesy of Malcolm Kusher, The Kushner Group
THIS WEEK'S SPONSOR
Cognizant is a global provider of IT, consulting and business process outsourcing services. Cognizant delivers a better Return on Outsourcing via our single-minded passion to making our customers' businesses stronger.
Software Pulse is a publication of SandHill.com, the online resource for software business strategy.
To unsubscribe, see the bottom of this email.
Send us your feedback,
SandHill.com is published by Sand Hill Group, which provides investment and management advice to emerging leaders in the $600 billion enterprise software, services and solutions market. Sand Hill Group produces the Software and the Enterprise series of conferences for industry executives, and authors research reports on cutting-edge technology topics.