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Year-end is a popular time for journalists and bloggers to assemble ‘Best of’ and ‘Top’ lists (i.e. Top Ten Enterprise Trends to Watch; Nine Best Films of ‘09). I had intentionally shied away from adding one of my own since crafting yet another one seem like overkill to me.
But the more I thought about it, the more I realized that there are in fact several significant developments that have occurred over the past decade which should dramatically influence the state of enterprise software as we know it for the decade to come and beyond. Here are five ‘game-changers’ worth pondering:
Y2K: Ah, the acronym that most IT professionals would like most to forget next to SOX. Think back to the countless hours and billions of dollars that were spent revising software code in the run-up to Jan. 1, 2000. And in the end, it seemed to be much ado about nothing.
Or was it? If you were on the board of directors of a Fortune 100 company, you may well have questioned why your organization spent hundreds of millions of dollars to fix a computer bug which seemingly bypassed the world. But one of the chief reasons why Y2K became a non-event was the result of the tireless efforts that IT professionals around the world devoted toward addressing a problem that began to surface in forward-looking insurance software and other systems as early as the late 1980s.
If there is an enduring and positive takeaway from Y2K it’s this: the amount of attention that was paid to quality assurance in software development. On some level, the QA focus continued to carry on through the decade that’s just ending. Hopefully, this trend will continue, regardless of budget pressures faced by IT organizations.
Open Source: Whether it’s high-volume open source systems such as Apache and MySQL or lesser-known applications, adoption of open source software has become pervasive. According to a Gartner survey of 274 enterprise customers in the spring of 2008, 85% of global respondents were using open source software in their organizations and the other 15% expected to within twelve months.
Since then, open source ERP systems such as Compiere and OpenERP have become more widespread. And while they’re not about to put Oracle or SAP out of business, these types of systems are providing user organizations with an assortment of new options that are helping to change the face of enterprise software for customers through greater flexibility and functionality.
Software-as-a-Service: Salesforce.com has become the poster boy for SaaS and for good reason: the company topped $1 billion in sales this year while it ushered in more than 150 new features for its customers. And it’s not just SMBs that are attracted to SaaS perks such as low cost of entry and rapid deployment.
Enterprise CIOs continue to have concerns about the SaaS model – including entrusting proprietary information to third-party providers along with worries about having company data returned to them if a hosted services deal goes south. But many IT leaders are testing the waters and the market will see a growing number of CIOs adopt a hybrid model of utilizing a mix of premise-based and on-demand resources where it makes sense for their organizations.
Licensing/Maintenance: Enterprise customers have complained about exorbitant software licensing costs and maintenance fees for decades (think CA in the ‘80s and ‘90s).
But the open source computing movement – combined with new licensing models being introduced through SaaS and Cloud Computing – are leading a growing number of enterprise customers to push back harder than ever on the terms for traditional premise-based agreements. Case in point: SAP’s decision to hold off on imposing any increases in support costs until early 2010 while it continues to gather feedback from its global customers.
Vendors such as Oracle and SAP are trying desperately to preserve these extremely profitable revenue streams. But the emergence of lower-cost, third-party maintenance providers such as Rimini Street and other software sourcing models will make it increasingly difficult for enterprise software vendors to cling to their outdated and onerous licensing/maintenance models.
Shared Services: Consider this: What is the competitive or financial incentive for Fortune 2000 organizations to indepedently license or develop software for running routine functions like general ledger activities?
A growing number of enterprise CIOs have begun asking themselves the same question. That’s part of the reason why there’s a nascent movement afoot among forward-thinking IT leaders in industries ranging from hospitality to real estate to explore the potential for sharing common applications as a means of further driving down their fixed IT costs and freeing up more capital for discretionary IT/business projects. Sure, there are numerous ownership and legal issues that have to be resolved under these types of shared services models, but the upside potential from lowering software costs and IT footprints is huge, as noted by Technology Economist Howard Rubin.
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