2020 Vision: Software

In today’s “2020 Vision”, Philip Carnelley takes a look at the major changes ahead for the software market, and how this will lead to a fundamental restructuring of the global software industry.

The next decade will see even more radical change in the software landscape than the previous ten years. The last decade has sown the seeds of change, yet many aspects of computing have stayed unchanged. In many ways the Internet has already had a profound effect on enterprise computing – in employee and partner communication, universal access to hitherto undreamed-of amounts of information and the funding of software product development by advertising.  But other areas have remained relatively untouched, particularly the enterprise software used by for large businesses. By the next decade, the innovations we have seen in consumer and personal computing will work through to mainstream business and government computing, changing the software landscape profoundly.

The Cloud will change everything

Following the disruption caused by the Internet’s takeoff, and the subsequent dotcom boom and bust, the software landscape has in many ways been pretty stable over recent years, the rise of Google being the main exception. The switch to mobile devices as a functional user interface for a wide variety of applications and the internet-based model instead of client-server computing, have taken a decade to gestate but are now really starting to take off: Netbooks and the iPhone as an application platform, and Google’s Chrome project supplying a new dedicated software layer. Google’s expansion and Apple’s resurgence in the last ten years have been quite remarkable, but will have even more impact in the decade to come.

The ‘desktop’ – for so long dominated by one paradigm, the Wintel hegemony – will over the next decade fragment into a series of devices and operating systems, all linked by the Internet and primarily aimed at service orchestration. Portability of applications across platforms will no longer be seen as important, whereas universal access (location and device) will be critical. The industry started talking about ASP – application service providers – about a dozen years ago and shortly afterwards, Salesforce.com, Netsuite and others were born. While the use of the software-as-a-service (SaaS) model is still relatively small (despite the hype) it is growing rapidly and will be dominant within ten years.

Software leadership will fragment

The software vendors who ruled at the start of the decade still rule today, and if anything their reach – bolstered by acquisitions such as Oracle’s purchase of PeopleSoft and SAP’s of Business Objects – is even stronger. But the decade 2010-20 will come to be seen as the decade when SAP lost its hold on big business and Microsoft lost its stranglehold on the desktop.

While Microsoft will remain a force to be reckoned with, it will have retreated into its strongholds of business software provider for the data centre and the desktop. It just doesn’t have the DNA to succeed in the new consumer orientated software world.  Maybe it has a last chance to make a major acquisition such as Facebook to re-orientate itself, but we don’t expect it to happen.

Many companies will switch away from reliance on Microsoft-based software architectures towards Cloud-based alternatives from SaaS players like Salesforce.com, Google (Docs) or their successors. The consumer market will be at least equally owned by Google (running Chrome on netbooks and/or Android on smartphones) and by Apple. This will leave the Wintel alliance as just one amongst several options for users at home and work accessing cloud-based services for personal (social) interaction, for government services interaction and commercial transactions. So while the M&A we’ve seen in the past decade will undoubtedly continue, overall the software industry will become more diverse.

The software company as we know it will fade away

More profoundly still, the pure-play software provider will be a dying species. Software as we know it will only be sold by legacy systems providers to large businesses, or by niche providers catering for specialist requirements such as R&D, mathematical modelling or technical analysis;

For consumers and small-medium sized businesses, software development companies will be superseded by service development companies offering business functionality over the Web for a vast array of purposes, ranging from consumer banking (eg Barclays) through e-commerce, games and entertainment to collaboration and content creation (Google). Only large corporates and governments will continue to buy and run their own core business applications.

The integration of social computing

We have already written about the rise of social computing – consumer email has now been followed, even superseded, by Friends Reunited, Facebook, Twitter and so on. But in the next decade the new social software models will influence mainstream software applications, which will increasingly support collaborative working across business units and companies. Business applications companies like Oracle, Microsoft and SAP will scramble to include social software functions in their suites – either created by themselves or linking to popular applications (such as Facebook) through a new class of ‘social middleware.’

Return of the total systems provider: changing the role of IT

In the data centre, following its purchase of Sun, Oracle will lead a move back to provision of integrated infrastructure appliances with hardware, middleware and database all tightly coupled and therefore barely interoperable at the database or operating systems level. Oracle will have three key competitors offering similar stacks: Cisco, IBM and HP. The market they serve will consist of two distinct groupings: service companies providing external clouds (platform-as-a-service) to companies of all sizes; and those end-user companies (and government) large enough to create their own ‘private clouds’ with economies of scale to match the service companies.

Meantime, businesses will provide mix-and-match software solutions to their (internal) users, linking their core mission-critical in-house systems to services sourced over the Internet. The primary role of the IT department will be to enable service access by users. As such, the CIO will become the Chief Infrastructure Officer, primarily tasked with ensuring service access is possible cheaply, securely and reliably.

Posted by: Philip Carnelley at 08:50

Tags: saas   cloud   software  

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