Tuesday, October 25, 2005

DISCUSS:: the changing face of enterprise software

In case people have not noticed, we're in the Middle of a major upheaval in enterprise software. Over the past year we have seen LARGE MERGERS AND ACQUISITIONS. To put this into perspective - JD Edwards, Peoplesoft, Veritas and Macromedia are no longer around. What does this mean for the world of Enterprise software?

It's nothing to worry about. The writing is clear. In the abscence of a disruptive shift enterprise software companies have no other way to grow financial metrics but to consolidate. This would reduce inefficiencies in administration, R&D, channels and global operations; improve individual market shares and most importantly give them access to technology and lucrative maintenance and/or upgrade revenues.

Is this good for the industry at large and how does this change the world as seen from a start-up perspective?

My views are this is to the greater benefit of the universe at large. Lets face it. Innovation today is limited and clearly the larger companies have realized that they have to grow and improve on their metrics without relying on the same. Customers esp. the Fortune 500 are not willing to compromise on essentials such as support, documentation and quality in order to get early access to features as they were willing to in the hey days.

Start-ups who see the writing on the wall will be the ones to make significant amounts for their investors and managements.
Today is the day for start-ups to:-
1. focus on innovation and being ahead of the curve in a niche that just might go mainstream.
2. Focus on the early adopter customers. You are better off crossing the chasm post acquisition by a larger vendor.
3. Focus early on on working closely with the big consolidators - Cisco, IBM, Oracle, MSFT, Symantec, SAP, etc. through strategic relationships.
4. Go global but with a clear target segment - Innovation in the future is going to be seen in prodcuts to tap into new untapped markets.
5. The big 5 - cisco, intel, msft, oracle, symantec will have significant budgets for strategic investments.
6. Forget going public. The capital markets are no longer gonna let companies with sub billion dollar revenue streams go public. The next 2-3 years will see the quick flip investments generate the best returns.

All in all, this is an exciting time for enterprise software. Innovation is sorely needed and the technologies that will drive innovation are all around us. Its like they say: Opportunity knocks on many people's doors; only few recognize her.

No comments:

Post a Comment

Thank you for your comment. It should appear shortly.

If not debt, then equity?

Given that my last post discourages entrepreneurs from raising debt apart from a few specific cases namely:- 1. Very high ROCE low risk bus...