Where Will Software Come From?

Monday Feb 5th 2007 by Steve Andriole
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The coming changes in the software industry will “confuse the hell out of everyone,” argues an industry observer.

Our technology solutions are comprised of three parts: hardware, software and services. It seems to me that we have a pretty good read on where hardware and services will come from over the next ten years or so, but a lot of alternatives when it comes to software.

Hardware will be produced by a small number of vendors that will fight over increasingly shrinking profit margins. Services will be provided by the same silver-tongued devils that provide them now. Software will confuse the hell out of everyone.

In the old days we wrote code. Then we installed it. Then we rented it. Eventually we’ll assemble it. But code still doesn’t like other code, in spite of all of the progress we’ve made with interoperability and integration. While we’ve made progress with standards, there’s still a lot left to do.

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But let’s assume that we’ll get it right, that software will work together reasonably well. How will we acquire and deploy it?

Over the past few months I’ve asked a number of CIOs and CTOs a question: if they had a technology do-over, would they still install their enterprise application?

Not one of them said they would. Why not? Because it took them all years to get the software to work and – in some cases – the projects cost hundreds of millions of dollars. Some of these CIOs got fired when they exceeded budgets and schedules; others struggled to realize the benefits everyone promised when they signed the contracts.

Some of the same CIOs and CTOs told me that they weren’t interested in open source software because it was too flaky and they didn’t want to be associated with the open source crowd. What?

Some of them don’t trust Web Services and think that service oriented architectures (SOAs) are still ideas, not reliable software architectures.

Some don’t trust Mark Benioff or IBM’s on-demand guys.

All of that said, here’s how it will go:

• Big time CIOs will not launch multi-year, multi-million dollar software implementations. There’s too much time, money and politics involved, and many of the biggest projects haven’t delivered the goods. Only CIOs in the last year of their employment contracts will attempt multi-year software projects.

• If at all possible, CIOs will rent versus buy-and-install major software applications. They’re all secretly hoping that ASP 2.0 is successful. They really don’t want to get back into the enterprise software acquisition, deployment or support business. Most of them are really bad at it and they just don’t have the stomach for technology marathons anymore.

• CIOs will pilot as many SOA implementations as possible to determine where the price/pain/performance ratios lie. They really want all this stuff to work – they need software-as-a- service (SaaS) to become a reality (but they’ll be happy to sit on hosted applications for as long as they can – as long as someone else is hosting them).

• Software-as-a-service will take much longer to evolve than anyone thinks, but eventually will it will mature to the ultimate mix-and-match software architecture.

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• The major software vendors will have to decide when they’re willing to cannibalize their own business models. Now they make tons of cash through enterprise licensing and generous maintenance fees, but as more and more vendors offer alternative software acquisition models the big proprietary ones will have to completely change their fee structures to accommodate the move away from installed software. Hell, even Microsoft is hosting software these days. Within just a few years, everyone will be hosting their own software and encouraging third-party providers to host and re-sell the very same applications. What a world.

• Open source software will penetrate the most inner sanctums of the enterprise because it will meld increasingly easily with proprietary software and the new SOA architectures. In fact, the gap between open and proprietary software will dramatically narrow over time.

• No one will expect software to be “free,” but, like hardware, it will definitely commoditize.

• Innovation will come from small entrepreneurs running small companies, just as it always has.

So when someone asks “where does software come from?” you can tell them from big vendors with creative partners who have finally figured out that their customers would rather pay by the drink at someone else’s bar and grille.

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