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Count on change

Count on change

The software world is evolving faster than ever and most of the latest trends will deliver improvements.

If you've ever sat through one of those irritating meetings with a software company where they promise to understand your needs and provide you with the tools to transform your business, be thankful for the economic downturn. This is because there are big changes coming down the line in the way technology is supplied to enterprises and their customers and, for the most part, they'll be for the better.

To begin with, the dominance of software companies that bind corporate users to a suite of applications that are difficult to move away from, and that require big capital outlays, has finally started to crumble, thanks to the pervasiveness of the internet.

It used to be a necessary evil that to get big corporate systems like accounts, payroll or customer management and billing to work at all, let alone together, you needed to sign up with established players such as IBM, Oracle or SAP.

An adventurous alternative was to try one of the myriad smaller and more specialised software suppliers that carved out a niche for themselves with a better crafted, less expensive product that was made more appealing by offering service that was more responsive to customers' needs.

But if you did, the threat that the small (or just not huge) supplier could be swallowed up by one of the software's mega vendors hung like an anvil over your company's balance sheet.

Any organisation that endured the fallout from the unflattering ménage a trois whereby JD Edwards was acquired by a hostile PeopleSoft, which was then acquired by Oracle, will not forget the experience in a hurry.

Siebel customers were roped in, too.

The same fate greeted customers of specialised business intelligence and reporting tools vendors including Crystal Decisions, Business Objects, Cognos and Hyperion.

What's really different

For starters, the idea that a company needs enterprise applications sitting on its own servers - for which the customer pays an upfront fee followed by annual maintenance payments - is on the way out.

Instead, an increasing number of software vendors are offering subscription-style licensing that allows their customers to book this sort of spending as an operational cost rather than capital expenditure.

For smaller companies, it can be highly appealing not to have to worry about software licensing, and simply pay for such products in the same way as a power bill or phone bill is paid.

Companies selling applications that don't need to sit on a customers' back-end hardware, like SalesForce.com, led the charge on this.

However, they are now being followed by more established peers that need to compete for convenience.

The key for software buyers negotiating either a new deal, or the rollover of an existing one, is to weigh-up the relative value of changing the payment mechanism.

Don't forget that software as a service (SaaS) vendors take on the risk of providing the hosting infrastructure for the products they supply.

That's something that isn't always reflected in the more traditional client-server licences (based on user or processor numbers) that are moved to subscription licensing.

Remember that just because a vendor doesn't offer you a cheaper and more flexible licensing deal upfront, it doesn't mean it's not available.

A good place to find out what's happening is in the increasing number of independent online communities and user groups that grow around software products. These are often ahead of the news sold by larger information technology analyst companies.

Another perception-based bubble worth busting is that it's only smaller companies that can afford to take seemingly radical decisions on hosted applications.

A case in point is the NSW Department of Education and Training, which has switched to Google's Gmail to provide it with both email and the primary storage needs for 1.5 million students.

The department did so because Google's Gmail provides value, scale and a popular, pretested user interface.

Cloud of smoke

When software companies spew out rhetoric on cloud computing, it's vital to remember they still want your money; they just have trouble expressing themselves at times, especially when hip marketing types pretend they're engineers and concoct meaningless buzzwords.

The cloud - whether virtual, private or public - is really just a marketing tool for newer applications that can work with parts of the internet rather than declaring war on it.

Online (cloud) applications aren't that new at all given that the ability to book a plane, buy a book or pay bills online has been around for at least a decade.

But what has changed is that the once-prosperous hardware vendors, who made trillions of dollars several times over by shifting boxes, have started to expand into each other's territory to maintain growth.

The latest joust rutting among IT mega-fauna is between Cisco and Hewlett-Packard. Cisco used to make routers but now it makes routers and servers. HP used to make servers but now it's also getting into routers.

The two used to be friends but now there's a turf war that makes Microsoft's problems with Linux look like an episode from Mattel's Barbie Fairytopia.

The bottom line for software buyers is that there's a lot of value here for companies that are prepared to wear the risk of their applications and data sitting in someone else's shed (data centre) rather than their own.

The caveat - and it's a big one - is that you have to know that whatever you use to run your business is able to work in this arm's length environment.

A lot of applications will start to switch to this model, and much faster than many companies anticipate, because of the ability to generate new web applications very quickly with new coding and software design tools.

The show-and-tell presentations that are now all the rage at some of the less stuffy software developer conferences are an example of how fast this newer coding can be done.

In the case of JAOO (a longstanding web developer's festival that is about good engineering rather than bad marketing), that translates to someone coding up a new iPhone or Google application live on stage in just 45 minutes.

For enterprise software buyers, this translates into a capability that will allow companies to churn out and customise their own web applications much faster than ever before. It also allows software customers to break away from proprietary upgrade paths determined by their suppliers.

Don't be put off by scare stories from lawyers, risk management mongers and compliance and governance freaks looking to impose their processes on top of a rapidly evolving capability because, for all of the mistakes that can be made along the way, they will be far more affordable to fix.

Keep up with your customers

If there's one nettle that enterprise software houses have almost universally failed to grasp over the past five years, it has been the influence that so-called recreational consumer web applications and gadgets have had on the expectations of customers.

While more conservative enterprises are still trying to purge or heavily restrict immensely popular products like iTunes, Facebook or Twitter, on the grounds that they sap productivity, more progressive companies are looking at ways to replace traditional desktop computers with mobile devices.

The difficulties human resources managers and network administrators face in justifying such products in the workplace are well documented, but that hasn't stopped customers or staff finding ways to use them nonetheless. It's just what people do.

One way of approaching the issue is to ask what employee and customer use of these applications can add to your business, rather than focusing on what it might subtract.

Social networking and new media websites like YouTube may seem like employee time wasters but they take on a very different complexion when your customers use them to refer their peers to your business or take a stab at your deficiencies.

RailCorp in NSW found that out the hard way this year after it sought to rein in the distribution of a new application that displayed train timetable information on an iPhone. The product even mimicked the look and feel of platform indicator boards.

Despite a courageous stand by RailCorp over legitimate concerns that some timetable information may not be as accurate as commuters expected, the groundswell of public support for the convenience of the iPhone application caused NSW Premier Nathan Rees to intervene swiftly. He ordered the state-owned enterprise into compromise talks with the developers.

It's the sort of customer-driven situation that Massachusetts Institute of Technology's innovation expert, Michael Schrage, has previously cautioned that companies need to be aware of when dealing with new technology. "Innovation isn't what innovators do," Schrage argues in his blog. "It's what customers and clients adopt."

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Tags change managementsoftware developmentSoftware as a servicecustomer focusnew technologies

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