Software Pulse

Business Strategy for Software Executives

May 7, 2007

Ken Berryman

The State of the
Software Industry – 2007

The success of next-generation software vendors may be determined by their innovation strategies today.

By Ken Berryman, McKinsey & Co. and M.R. Rangaswami, Sand Hill Group

The software industry is in the midst of a wave of innovation that is defining the foundation for customer and vendor value in the next era.

McKinsey & Company, in collaboration with the Sand Hill Group, has analyzed this new era of innovation and its impact on vendors and customers. Our results are presented in
a new report to be released at Software 2007, the State of the Software Industry 2007.

This excerpt from the report looks at key insights on innovation, the connection between innovation and vendor success, the latest data on innovation funding and the implications for both software vendors and their customers.


Software 2007 Starts Tomorrow!

The industry’s most exciting software business event starts tomorrow: Software 2007. Be there tomorrow when nearly 2,000 software CEOs, VPs, investors and professionals will gather in Santa Clara, Calif. to receive the latest strategic business insight from an all-star lineup of speakers and panels.

Don’t miss it! Register now for $1,695 and bring along 3 colleagues at no extra charge. Be a part of this industry-shaping event!

The Innovation-Consolidation Tradeoff

Tony Baer Is consolidation in the software industry stifling innovation? The debate rages on as Tony Baer of onStrategies explores the issue in the Blog on Innovation Strategies, noting that innovations such as SaaS, SOA and open source have thrived over the past few years, even as M&A activity reached a fever pitch.

Multi – Tenant Architecture: Marketing or Material?

As Oracle begins to market its hosted CRM products, the debate over the benefits of multi-tenant architecture and the traditional hosted model will begin anew. Peter Goldmacher of Cowen and Company takes a closer look at the viewpoints on each side in this week’s post to the Blog on SaaS.


Will Microsoft and Yahoo team up to compete with Google? The companies are denying the rumors but read S. Sadagopan’s perspective on what the potential merger could represent in this week’s post to his Blog, The Deep End.

What Beijing Wants YOU to Know

In last week’s column, David Scott Lewis explained how the Chinese really think about IP rights. In this week’s post to his “Letter from China” blog, Lewis spells out what the Chinese want the international community to know about IP rights in China.

How to Mitigate Offshoring Risks

The best way to improve the success of offshoring initatives is to understand the potential risks involved. Akshay Upadhye of Source Paradigm explores the risks and the potential opportunities in this week’s post to the Blog on offshoring best practices.

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.

New Reports: State of the Industry and Customer Survey

McKinsey & Co. in partnership with Sand Hill Group has compiled two new reports to be released Tuesday, May 8 at Software 2007. The first report, “The State of the Software Industry 2007” examines the latest industry performance and market statistics. The second, “2007 Enterprise Software Customer Survey” reveals the findings from a study of software purchase decision makers. Visit to download the reports on Tuesday.

Q1 Software Finance Update

The first quarter figures on software venture capital and M&A activity are in. See the latest charts in the Blog on Software Finance, and also on the pages on M&A and VC.

News Update: An IPO Poster Child

VMware fits the bill and files for a $100 million offering; plus, tech giants Microsoft, IBM, Oracle, SAP, TCS sound off – often at each other. Read these stories and more software news of the week in the latest Software News Summary.

Poll: Software’s Top Innovator?

Software 2007’s Innovation Showcase features 25 of the industry’s most compelling, fast-growth companies. Take a look at the list and give us your choice for the software industry’s best innovator.
Take our Pulse Poll >>

Last week, readers gave their opinions as to whether the DOJ’s recent lawsuit against HP, Sun and Accenture would impact marketing practices in the industry.
Give us your opinion and see the results >>


Sometimes information technology is so crucial to the success of a company that the CEO oversees IT strategy. One such company is India's top private bank, ICICI. Meet CEO K. V. Kamath and hear why in this article from The McKinsey Quarterly.

More at

IT departments will set less of the business tech agenda according to a new survey.
Read the most important enterprise software industry news of the week >>

Conformia Software receives $12 million
Monitor the latest software venture capital deals >>

Microsoft buys ScreenTonic.
Size up last week's software M&A deals >>

Skybox Security names Tom Doyle president and CEO.
See whoís 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

"Mindless habitual behavior is the enemy of innovation.”
–Rosabeth Moss Kanter

Courtesy of Malcolm Kusher, The Kushner Group