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August 16, 2006

Enterprise software: The long view is slow and low

Posted by Benjamin J. Romano at 11:31 AM

Forrester Research sent over a very interesting market overview this morning that, judging by the opening summary, could bode ill for big software:

The enterprise software industry of the next five years will feature fewer large suppliers than ever, greater technical adaptability, baby steps toward the pricing flexibility most customers want but can't get today, and only modest rates of growth with declining prices. The magnitude of growth and structural change will be determined by clashes between the four horsemen of software commoditization -- service oriented architecture (SOA), open source, software-as-a-service (SaaS), and offshore development -- and the four fortresses of market inertia -- vendor concentration, intellectual property rights, installed bases, and brand loyalty. The four horsemen are changing how enterprise applications are created, sold, implemented, and supported; the four fortresses slow and limit these changes. The outcome of these clashes will vary by software category, but overall prices will decline and the industry overall will descend to historically low growth rates (emphasis added).

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