Forrester's IT Forum 2006: GigaWorld talking about "The Future Of Software"
| John R. RymerVice PresidentForrester Research, Inc. |
Andrew BartelsVice PresidentForrester Research, Inc. |
In the next five years there will be a lot more collaboration this will mainly be due to SOA.
There were times we bought spell check and now it is part of other products. This will continues with less and less companies offering more and more.
“Microsoft zoomed like a rocket to become one of the biggest software companies in the world.”
The largest companies have a lot of IT. They cannot move due to legacy systems and the problems of moving new things into IT.
The Four Horsemen
Open source lowers cost to buys software
SOA lowers cost to deploy and maintain software
SaaS shifts pricing to lease model
Offshore has the potential to create custom development or creating other competitors.
Four Fortresses of Stability
Vendor consolidation reduces choice
Intellectual property rights restrict new competitors for open source
Installed bases limit user ability to change direction (There are many people so deep invested into Oracle that they can’t choose anything else.)
Brand loyalty: Users self-limit their choices
More than a 1/3 already using open source..
We expect to see a bump in Enterprise spending around 2008-2012 around software, as they adapt SOA.
Offshore is the weakest of these factors for now. Right now most people go offshore and develop software because it’s cheaper but only 5% of companies do that.
Right now 80% of software revenue comes to US companies. A lot of leading vendors use offshore to help their development. But what happens when India sets up their own companies to compete with a US vendor. Using Open source, SOA and offshore an offshore competitor will rise and become a factor.
Open source is being pushed very highly by IBM directed to their friends in Seattle J
All the major vendors are embracing SOA and are pushing it into their products and into the market. Microsoft puts a framework approach, Sun uses a Christmas tree approach.
We don’t see the double digit return rate that we saw in the 90s. In terms of software prices, they will continue to fall and event accelerate in some cases.
What it means: a picture of the market
SOA and SaaS (Software as a Service) will help app server revenues in the short term but in the long term will drive down revenue for vendors.
SaaS ecosystems will flower during th next 2 years and converge after that, win an Asian wildcard as a big potential force.
Open Source will become core to non-Microsoft middleware and OS. Shifting revenues to support and services.
The Four horsemen and a huge Chinese market will create at least one new enterprise competitor by 2010.
Four major vendor ecosystems will span the range of software but will not dominate the universe.
Overall growth will remain modest, prices will fall.
Recommendation
For IT buyers:
Ø Choose your ecosystem but retain competitive leverage
Ø Determine how to open your organization to the four horsemen to drive productive change.
For IT Vendors:
Ø The antidote to slow growth is innovation, the four horsemen are competitive weapons
Ø There will be a rising tide of business, but not a flood tide of revenue
Ø Small vendors must align with multiple ecosystems
The future of the software industry will be:
Not so much a Ferrari but more like a Toyota Prius.
I wonder if the SaaS term will catch as fast as the SOA term did. I must say this was the first time I heard about the 4 letter "SaaS".