Software Pulse

Business Strategy for Software Executives

April 3, 2006

M.R. Rangaswami

Software’s Dramatic Revolution

New technologies, models and a thriving ecosystem will be critical to future industry success.

By M.R. Rangaswami, Sand Hill Group

Let’s stop talking about the maturation of the software industry.

Every time I hear the press compare software to a mature industry like autos, I cringe. Sure, there are similarities. Both have experienced consolidation and slower revenue growth rates. But the similarities end there.

Software is driven by innovation. New technologies, new models, new companies -  all enable the software industry to reinvent itself with stunning regularity.

Before angry auto industry experts email me, I recognize that innovation exists in the auto industry. But the fact remains that it is far harder for a truly “mature” industry to reinvent itself. When was the last time you saw an automaker experiment with a new sales model? Where are those alternative energy-powered vehicles we’ve been hearing about for 30 years?

The software industry is undergoing a quiet but dramatic revolution. The implications of this revolution will may be even more profound than in previous transitions. As Software 2006 opens today, software executives, investors, professionals and customers will gather to discuss and debate the current state of the industry and its future.

One thing is certain: It is time to start thinking differently about the software business.


Read the Software 2006 Industry Report

McKinsey & Co. and Sand Hill Group partnered to create a landmark report on the state of the software business. Released today at Software 2006, the report shows that the software business transitioned out of the post-Bubble era and is looking towards a future of innovation and growth. The analysis includes highlights on investment, consolidation, business model transitions and new technology adoption.  Visit to download a free copy of the report.

Dispatches from Software 2006

Are you at the conference this week? Send us your views – the best speakers, the most interesting conversations, the subjects overlooked – and we’ll post them in our Software 2006 topic of the Blog.
To submit a post, email

Offshoring Around the World

S. Sadagopan of Satyam provides an excellent overview of Offshoring’s “Invisible Wave” in this week’s post to Offshoring Best Practices. And David Scott Lewis walks readers through the FAQs on sourcing and contracting options in China in this week’s post to the Blog on Doing Business in BRIC.

Beware of “Hamster-ware”

First there was hardware and software. Then firmware, vaporware, shelfware… Now David Taber of David Taber & Associates coins the term, “hamster-ware.” The term refers to software that is only a prop. Behind the scenes, people and manual transactions perform the real work. Taber explains the risks of hamster-ware in this week’s post to Sales & Marketing Best Practices.

Get Inside the Minds of Today’s CIOs

The first CIO Insight Survey shows IT buyers are planning to increase the budget for software in the next two years. A joint McKinsey & Co. and Sand Hill Group project, the study report looks closer at how CIOs view software providers and examines their spending plans. Visit to download a free copy of CIO Insight.

The Week in Review: Congress Contemplates

From H-1B to "Net Neutrality," political leaders considered tech bills this week. Also McAfee wants to buy, BMC did buy and Checkpoint backed out of a buy.  Read the latest News Summary – a new feature appearing online every Friday in which editors bring together the most important software news of the week.

Poll: 2006 Software Story of the Year?

Open source? SaaS? More mergers? What has been the software news story of the year so far in 2006.
Take our Pulse Poll >>

Last week, readers gave their opinions about whether Microsoft’s delay of the release of Office and Vista was a good move.
Give us your opinion and see the results >>

More at

Governments go online – without Windows.
Read the most important enterprise software industry news of the week >>

I4 Commerce receives $27 million.
Monitor the latest software venture capital deals >>

Vocollect buys Adherence Technologies.
Size up last week's software M&A deals >>

M-Factor names Jeff McFadden as CEO.
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

"If you always think what you always thought, you'll always get what you always got." -- Gerald Haman

Courtesy of Malcolm Kusher, The Kushner Group