Software Pulse

Business Strategy for Software Executives

July 17, 2006

Phillippe B. Vincent

Avoiding Software's Perfect Storm

In order to avoid being hit by megavendors or disruptive startups, established software vendors must act now to strengthen their positioning and reinvent their value chain.

By Phillippe B. Vincent, Accenture

The current competitive environment in the enterprise software industry can be particularly tough on best-of-breed vendors, especially mid-sized companies with traditional business models.

These companies must assess a potential double threat: at the top, vigorous challenges by the mega-vendors bent on further consolidating the market; and at the bottom, disruptive challenges by software-as-a-service (SaaS) providers or open source vendors introducing innovative new business models. For traditional best-of-breed vendors, the most destructive scenario, or the "perfect storm," is one in which both challenges materialize simultaneously.

As the enterprise software sector grapples with an era of slower growth, the "perfect storm" appears to be brewing for an increasing number of vendors — especially those in the business application arena. What should these companies do to prepare for the tempest?

Accenture believes several options are available to them, including a reinvention of the value chain, diversification into complementary markets, and a move into services provision. Which avenue is best largely depends on each company's specific competitive, economic and market position.


Hot News of the Week: Show and Tell

You could practically hear Oracle CEO Larry Ellison snickering from halfway around the world as SAP’s Q2 revenues fail to measure up; plus, vendors on the SMB battlefield pile up and a powerful endorsement for open source pops up. Read these stories and more software news of the week in the weekly news summary.

When Did Forrester Become Boring?

During the dot-com bubble, Forrester tended to be the analyst group which released reports that amounted to the equivalent of yelling “Fire!” in a crowded theatre. After reading the firm’s latest research, Erik Keller of Wapiti longs for the good old days of sensationalist proclamations in this week’s post to his Blog, The Software Critic.

Is Open Source Really Cheaper?

Despite all the talk of community and source code, the real reason enterprises are interested in adopting open source software is its reputation for being less expensive. But is it? Tony Baer of OnStrategies takes a look at the model and uncovers the real driver of adoption is the need to achieve a competitive edge. Read Tony’s analysis in this week’s post to the Blog on the future of open source.

Silicon Valley: Powered by Silicon India

If the epicenter of technology development sends its work offshore, can it rightly hold onto its title? The next decade will likely deliver the answer to that question for the Silicon Valley. A new report by offshoring research and consulting firm, Zinnov, says the majority of Silicon Valley hardware and software companies surveyed are offshoring work in India. Access the report and find out more about offshoring practices of the 50 leading Silicon Valley companies in this post to the Blog on offshoring.

Publish Your Perspective!

The Blog wants your opinions. Send your thoughts on the enterprise software industry to and we’ll publish them in our blog.

Hear C.K. Prahalad on Emerging Ecosystems

This week, the keynote address by legendary business thinker, Dr. C.K. Prahalad, joins the list of Software 2006 speaker podcasts. Visit the Software 2006 podcast page and hear from the likes of Ray Lane, David DeWalt of EMC and Thomas Kurian of Oracle.

Answers on China: From Entry to Execution

Multinational companies are shifting gears in China, turning away from entry strategies and focusing instead on execution. A new article from The McKinsey Quarterly interviews the head of McKinsey's offices in China answers the questions that senior managers of multinational companies are asking.

Poll: SAP’s Rocky Quarter

After missing its second quarter sales numbers by a wide margin, SAP reaffirmed its commitment to full-year revenue growth of 15 percent. Can SAP get back on track?   
Take our Pulse Poll >>

Last week, readers gave their opinions on if and when commoditization will take hold in the enterprise software market.
Share your opinion and see the results >>

More at

Microsoft's CRM catch-up plan, IBM accused of hacking, Oracle hiring again...
Read the most important enterprise software industry news of the week >>

9 software companies receive $10M+, including CacheLogic and Surgient.
Monitor the latest software venture capital deals >>

Acquirers include CA, EFJ, Opsware, Kronos and more...
Size up last week's software M&A deals >>

New execs at Knowledge Networks, Visible Path, Cast Iron Systems and more...
See who's made it to the top in our list of recent software executive appointments >>

Send us your feedback on this newsletter and the site.

Parting Thought

“Youth and skill are no match for experience and treachery.”
– Anonymous

Courtesy of Malcolm Kusher, The Kushner Group