Software Pulse

Business Strategy for Software Executives

October 22, 2007

Bruce Guptill

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.


Your Chance to be on Startup City TV

InformationWeek is launching Startup City TV – an open forum where up-and-coming companies have the opportunity to present their solutions to be broadcast on  InformationWeek wants your startup company to be a part of it.

Here's your chance to tell InformationWeek's senior technology audience about yourself, what your company offers and why it matters in business.   On Tuesday, Oct. 30, 2007, video taping sessions will be held at the InformationWeek San Francisco, CA and Manhasset, NY studios.  You've got one chance to give your elevator pitch – so be ready!

There are 2 format options:   1) 1 minute elevator pitch, or 2) you can have 2 minutes if you bring a customer with you and we'll wrap-up with: 3 minutes for a Q&A session with one of the InformationWeek editors.

To sign up, contact Ellen Asuncion at to obtain available taping times in San Francisco, CA or Manhasset, NY, and to complete a submission form.

The Benefits of Bottom-Up

Guy SmithMany 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 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 blog on India VC.

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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 Software News Summary.

Poll:  Google's Ceiling?

Will Google hit $700? 800? 1,000? What will the stock do by year's end?
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Last week, readers gave their opinions as to how SAP's acquisition of Business Objects would impact its strategy.
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Parting Thought

“Good design can't fix broken business models.”
–Jeffrey Veen

Courtesy of Malcolm Kusher, The Kushner Group