Software Pulse

Business Strategy for Software Executives

November 21, 2005

Larry Augustin

The Next Wave of Open Source: Applications

Here’s why the application market is ripe for Open Source offerings — and which applications will gain traction the fastest.

By Larry Augustin

Open Source is drawing more attention than ever. Venture capitalists have invested $400 in 50 open source startups in the past 18 months, according to BusinessWeek. Why now?

I’ve been working for years with these startups, as an investor and an executive. Part of the reason for the Open Source explosion is the breakdown of the enterprise software business model. The quest for new customers and revenue growth has driven sales and marketing costs to an unsustainable level (see last week’s Time for a New Software Model).

But the Open Source explosion is also being driven by a movement into applications. For many years, we heard the mantra that Open Source made sense for infrastructure (Linux, MySQL, JBoss, Zend, etc.), but that we’d never see Open Source applications. That’s changed; I see three important developments that have combined to make the market ready for Open Source applications.


Get Ready for Software 2006

Join 2,500 of your fellow software executives at Software 2006, April 4-5 at the Santa Clara Convention Center. An impressive set of industry leaders tops the sponsor list, including Microsoft, Oracle, SAP, Symantec, EMC and TCS. Register now to qualify for the Early Bird discount and bring 2 colleagues at no extra charge. Find out more at

Take Part in Offshoring Leaders Project

Ever wonder how your offshoring efforts stack up against the competition? Sand Hill Group is conducting a study of offshoring strategies at software companies. If you are a CTO, VP of engineering or a product development executive at a software company, click here to take a short survey. Respondents will be the first to receive the executive summary of the report with findings about strategy and best practices. Email for more information or click here to participate.

Microsoft as ERP Vendor?

Missteps in Redmond have been the subject of much press lately. But Bruce Richardson of AMR Research points out how the prevalence of Outlook and Excel could form the basis for an ERP powerhouse if combined with SAP offerings. Read more in this week’s post to the new Blog, Megavendor Watch.

Tales of SaaS Success

Far more than a flash in the pan, software-as-a-service has delivered real benefits to both customers and vendors. That’s the perspective of eMeta’s Chris Miranda who has spent the past six months immersed in dialogue with ISVs transitioning to SaaS. He summarizes his learnings "from the trenches" in this week’s post to the Blog on SaaS.

Share your insight on the software business. Email with your submissions to the Blog.

How to Transform Sales & Service

A new partnership with The McKinsey Quarterly means readers can access premium stories about issues impacting software business strategy via Readers simply complete a one-time, free registration on McKinsey’s site to access the article.

Highly regarded by top executives, The Quarterly compiles the latest, in-depth analysis on a variety of business topics from its global network of consultants. New this week, Transforming Sales & Service — how to not get differentiate your company’s service with by segmenting customers according to their interaction requirements. also features these McKinsey articles on software-related issues: Reducing Risks in Offshoring Projects, Building Stronger Vendor Relationships and Better B2B Selling. Watch for new stories from The Quarterly every week in Software Pulse.

Get on the Radar

Don’t miss M.R. Rangaswami’s take on NetSuite in the new feature, Radar. It’s no secret that the company is doing well — but it’s a bit surprising exactly how well.

Every month, Radar will deliver M.R.’s perspective on the most compelling companies, services, products and executives. If you have a compelling software player to profile, get on’s Radar with an email to

Poll: What’s Q3 Mean?

Software makers have reported a mixed bag of Q3 earnings. What does this mean for year end?
Take our Pulse Poll >>

Last week, visitors speculated about whether Microsoft can come from behind and compete in the services space.
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More at

Security is still the top I.T. spending priority.
Read the most important enterprise software industry news of the week >>

Perfect Commerce receives $30 million.
Monitor the latest software venture capital deals >>

IBM buys Collation.
Size up last week's software M&A deals >>

Richard Kreysar named president and CEO of Sendmail.
See who’s made it to the top in our list of recent software executive appointments >>

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Parting Thought

"Strategy is about stretching limited resources to fit ambitious aspirations."
— C.K. Prahalad

Courtesy of Malcolm Kusher, The Kushner Group