The premise for the presentation was the realization that software revenue was going down, unlikely to recover for a long time. Henry Morris actually said “we don’t expect software revenue to recover to pre-2008 growth rates for the foreseeable future”. IDC believes that the growth rate will likely stabilize around 5%, way under the double digit growth rate we used to enjoy.
So now what?
Cultural, Business and Technology shifts are disrupting the marketplace.
- Mobile is the new computing platform
- Cloud is the new delivery platform
- Social is the new business process platform
- New apps are now disposable and reconfigurable
Let’s Start with Cloud
Trends towards Cloud adoption have a significant impact on revenue model since they increase the proportion of subscriptions and decrease traditional license. Software-as-a-Service (SaaS) is actually growing 5 times faster than all applications but most of those subscriptions (68% to be exact) are still on-premise rather than on the public Cloud. The interesting observation made here is that Cloud is not emerging any longer, it is becoming mainstream.
As I expected and mentioned in a previous post, Cloud computing still seems more widely adopted in the apps space than in the tools. Steve raised some issues with the current toolset though. Configuration-based Cloud applications, a la Saleforce.com AppExchange, are not as easy to build as they should be but nevertheless the Return on Investment (ROI) is there already. Steve quoted $3M per year in his research.
On the Tools side, the main issue, way ahead of any other concern, remains security. This is interesting though because, as Mike rightfully highlighted, this is not any longer a concern for Applications.
Impact on Competitive Landscape
Traditional platform vendors become more prevalent. They offer bigger compound infrastructures that embed lost of technologies for an attractive price point. Focus is now on “good-enough” capabilities at the expense of “best-of-breed”. In a follow up conversation with Steve, he agreed that innovation would not stop, it would come from smaller vendors that would eventually be acquired by those platform vendors.
I wonder if that landscape will change though. Now with Microsoft, IBM, Oracle and SAP being the major platform vendors… Will any of those become obsolete with the Cloud evolution? Will be the list see more players like Salesforce.com, Amazon and Google in the future? Fascinating. I wish I had asked them that question…
Steve also talked about Open Source passing at the tipping point. He sees large corporation embracing these technologies. Again an interesting development to follow…
The Social Transformation
With the slow pace of innovation on the traditional platform vendors, the biggest mismatch I perceived is on the Social side. How to integrate new elements like socialytics (I am not sure if Mike invented that term or not but regardless, it is brilliant), context-aware information, etc. that augment today’s reality.
Mike also focused on the BYO Workspace… Interesting idea. This is about employees coming with their set of tools, preferring a Mac laptop to the corporate PC. This may expand over time to software tools and complete ecosystems. This is actually somewhat contradictory to the better integrated and connected systems of the new decade, but nevertheless a reality we will have to accommodate.
Evolution towards Decision Management Platforms
Decision Management is close to my heart of course. I was quite delighted to see it making its way into the IDC predictions. Steve and Henry spent a fair amount of time describing how it fits in the modern enterprise, both from a technical and business standpoint. As always, a new acronym was created: DMP for Decision Management Platforms.
The concept presented was alike the Universal Decision Engine many corporations have started implementing. IDC used a nice diagram to separate the Operation Decisions made at the point of sale for example, Tactical Decision in a shared decision engine exposed as a service, and Strategic Decisions that were different in nature (lower in number and automation, higher in degree of collaboration and scope).
Technically the DMP presented by Steve included the technologies we traditionally see: Business rules Management Systems (BRMS), Complex Event Processing (CEP), Business Process Management (BPM), Predictive Analytics and Optimization. He insisted on the always-on nature of the Cloud service (or not Cloud actually).
The unification of those decisioning technologies in DMPs may have also a significant impact on the competitive landscape. IBM has made some acquisitions along those lines. Tibco is bullish about promoting CEP as the center of this picture. This may yet again change the marketplace in 2010 and beyond. Ability to execute may become more critical than ever on this vision.