Where’s the Money: Quantifying Software’s 2012 Outlook

  • author image

2011 was the year when the power of enterprise mobility and Big Data solutions began changing the software landscape. Analysts, users and vendors are all fired up about the possibilities. But as we consider where the enterprise software business is headed in 2012, I believe the question we need to answer is: where’s the money?

The “dollars and sense” in enterprise mobility

The spread of mobile applications to the enterprise took off this past year as major corporations were forced to adopt Bring Your Own Device (BYOD) policies. Although most of the business to date has been in the B2C segment, 2012 will see a proliferation of B2B applications. CIOs have three options: write custom applications internally, use third-parties to do so or use off-the-shelf applications that can leverage corporate data. Today the bulk of the money corporations spend on mobile apps is in internal and third-party custom development, but they will begin migrating to off-the-shelf apps.

The money will also flow to solutions for managing mobile information as the demand continues to grow for corporate information to be accessible on mobile devices. Over the next two years companies will make significant investments in Mobile Device Management (MDM) solutions and Mobile Enterprise Application Platforms (MEAPs).

But mobility is still a very, very small percentage of corporate budgets. So the question is how much money is there in mobility? How big is the market in terms of the enterprise? I think the enterprise mobility space will feed off the opportunities created by the cloud market.

When it comes to devices, where’s the money? There is a lot of hype about tablets taking over the world. But they may well end up a niche product. The tablet is a nice-to-have, whereas a laptop or desktop will remain a must-have and standard in enterprises for the foreseeable future. The form factor of a tablet does not lend itself to many corporate apps, like creating documents, creating and editing videos and other rich content. Unless major changes are made, tablets will be used mainly as a display device rather than for data entry.

The laptop and desktop environment will take on more of the look and feel of tablets, likely using a touch-screen interface for a lot of activities. What if the next generation of laptops or desktops do not require clicking on a mouse to open a document – when you see the document on your desktop you just touch it to open it!

Connecting the dots in Big Data

In 2011 companies found critical-use cases for Big Data solutions. 2012 will bring a lot more focus on return on investment (ROI) in Big Data solutions and all the data that companies continue to collect.

Customers are not quite there yet, but they are starting to connect the dots on the vast amount of corporate data not only in ERP transaction systems but also in websites and social media platforms. In 2012 the IT visionaries will start using the information in more focused ways and find many more interesting use cases where they can extract a lot more ROI.

The cloud is mainstream

The cloud is everywhere and is now mainstream. Large companies are not as hesitant to move to the cloud now. I believe we’ll continue to see media focus headlines on outages and data theft. Nevertheless, more and more companies will move to the cloud.

The area that could leverage and utilize cloud more is the IT outsourcing market. In my annual predictions article two years ago, “2010: The Year to Crystalize Cloud Strategy,” I described the cloud opportunities path for the outsourcing industry. To date, most outsourcing providers have not used the cloud to develop new service capabilities nor leveraged it to the fullest extent that the software industry has done. This will happen sooner than later.

India’s software transformation

This year will see India continue on a path to becoming a software products-centric economy rather than a services-centric economy, as witnessed by the 1,500 startups who attended the NASSCOM Product Conclave 2011. There is a tremendous amount of interest in startups and market opportunities available in India and we will see this bear fruit.

Possible “gotchas” – the unknowns

While I believe 2012 promises to be an exciting year in the software ecosystem, I anchor my expectations in terms of current unknowns. For example, what will happen regarding Europe’s economy and a potential downturn? Will it be contagious? Will it make a material impact on revenues in the tech industry?

Another unknown is the impact of the changing vendor landscape. Currently the top 10 tech companies are sitting on $300 billion of cash. Will they use it to buy other mega-companies?

A third unknown is the number of tech IPOs in 2012. There was a flurry of IPOs at the end of 2011; in fact several companies including Jive and Zynga went public in December. Will we see continued IPOs this year?

These unknown factors, as well as other “black swans,” could bring big surprises for 2012 from a macro point of view. There is a lot more uncertainty going into 2012 than we experienced when going into 2011.

Where’s the money for IT buyers?

2012 will be a very good year from a buyer point of view. Because they’re buying into cloud and SaaS solutions, their costs will go down and they will be able to use those cost savings for innovative new products in the mobility and Big Data spaces. In addition, if an economic downturn occurs, there will be more competition among vendors to close deals, which will result in pricing benefits for buyers.

I would love to hear your comments and feedback.

M.R. Rangaswami publishes


By Kevin Pereau

Great assessments and spot on. Its difficult to predict the future, unless of course, you are creating it. I can see first hand the dynamics referenced in this mail at play in the conversations I have with partners as well as customers.

By Bill Binch

MR, let me first say I love your Sandhill issue format; it’s very well organized & relevant. And I agree on your observations for SaaS companies around retention. It is a prime metric for my companies. In fact, I was always somewhat baffled by the very high valuation at Salesforce recognizing that their history showed attrition in the teens. Regarding the 2012 article, I don’t believe tablets are an either/or in enterprises as there are obvious roles for both. I do believe that tablets will become the de facto standard for sales and customer touch employees. We already see it & not just because of form factor, though that’s important. It’s more about mobility & the convenience of presenting all marketing/sales literature in a sensible fashion, or arming executives with all appropriate back office data approaching real time. Examples at Saama are where we enabled over 4000 of Genentech’s field group w/ tablets, or at Cisco where the top 50 exec’s have this new capability. And correct, in 2012 in addition to mobility, big data focus and cloud solutions will be in the top three for every IT organization. You have observed where IBM is acquiring nearly two SaaS companies/month, though they never use the terms SaaS or recurring revenue in their marketing literature. They refer strictly to cloud-based solutions. They also realized that over 80% of their revenues had IT touch, and to capture the remaining 20% they needed solutions in the critical industries, like retail/CPG, financial, health care, supply chain, etc. And last, on India, again I agree. At Saama, we have re-focused the company on this over the past years and will expect to realize 25% of revenues form IP, much of hitch is developed off shore.

By MR Rangaswami

Thanks Kevin and Bill. You certainly echo the theme for 2012 ” Show me the money”!

Post Your Comment

Leave another comment.

In order to post a comment, you must complete the fields indicated above.

Post Your Comment Close

Thank you for your comment.

Thank you for submitting your comment, your opinion is an important part of

Your comment has been submitted for review and will be posted to this article as soon as it is approved.

Back to Article

Topics Related to this Article