After a period of frenetic activity readers are probably relieved that 2008 was the year in which mergers and acquisition activity virtually ground to a halt. The mega mergers of 2006/07 in the ERP, Business Intelligence and Performance Management markets had created anxiety for many companies seeking re-assurance that the technology platforms in which they had invested and on which they had built their information systems strategies were in safe hands. The software industry had gone through a period of dramatic consolidation and for many the chain of events was strategically debilitating as they grappled with the consequences of a shrinking market.
Doubts were raised about continuing product development, popular applications being discontinued and customers being forced in a new and unplanned direction. The timing could hardly have been worse, since the rapidly deteriorating global economy presented huge challenges on its own – without taking into account the added instability of not knowing whether a key software supplier or product would still be around.
But has the pause in proceedings been used wisely? For the most part the market has been eerily silent. Software houses have been uncharacteristically circumspect, apparently reluctant to set out publicly their product road maps and strategies for fear of alerting competitors or upsetting customers. On the few occasions when road maps have been presented they have been mired in convoluted product names as brand managers seek to combine the heritage product names with branding from their new organisations.
Apart from confusing customers, such clumsy branding gives the impression of strategy made ‘on the hoof’ and newly merged organisations that are factionalised and lack confidence. It has also allowed smaller, more nimble and innovative organisations to re-assert themselves, taking advantage of the larger competitors’ inertia. In the performance management, financial reporting and compliance space, suppliers such as Clarity Systems and Trintech are carving out important niches unopposed in the areas of group financial reporting, the fast close and controls whilst larger vendors are reduced to repackaging what they already own and make sense of overlapping product portfolios.
Amongst the big players, Oracle stands out this year for innovative thinking and new product, especially around budgeting, planning and forecasting. The organisation has been responsible for bringing new tools to market, such as Crystal Ball for Monte Carlo simulation in an attempt to assist companies to forecast more accurately. Strategically, Oracle has also been laying the foundation for new thinking around core financial processes in financial management, sparking a debate about the optimum way to manage from “strategy to success”.
In the Business Intelligence space, Business Objects, now part of SAP has produced new data visualisation tools such as Xcelsius Present, a data-visualization tool to transform ordinary, static Microsoft Office Excel spreadsheets into captivating visuals and embed them in Microsoft PowerPoint or Adobe PDF files.
However, “BI for the masses” still eludes most organisations. Microsoft has made an extensive play for this market with serial releases of BI tools and performance management applications designed to leverage the existing technology stack and simplify the design and deployment of critical applications. Yet there is little sign that the mid-market is ready to take the next step. In this segment of the marketplace the solutions have to be extremely simple to use and be guaranteed to work out of the box. Pegasus a bright spot in the mid-market chose to develop its own Executive dash board on its popular ERP systems and showed what could be achieved with a proprietary approach.
Configuring ERP systems has always been challenging and SAP’s innovative “Configurator” unveiled this year is worthy of mention. Aimed at the mid-market this innovative tool helps companies and SAP’s partners identify business needs, develop a realistic specification, supported by reasonable estimates of effort.
Infor finished the year on a ‘high’. The organisation which had previously been viewed by some as an industry consolidator in the ERP market unveiled a more compelling and coherent strategy and looked like it was finally ready to play a part on the global stage.
The big news this year has been the changes taking place in financial reporting, particularly states-side. More than ever before, IFRS looked like making its mark in the United States and replacing US-GAAP in the foreseeable future. Nothing is certain but the signs are that the US will make the transition from a rules-based approach to a principles based accounting standard. XBRL has also received another push from the SEC and looks likely to become the standard of choice for digital reporting across the globe. In Europe IFRS for small companies is under consideration.
Perhaps the biggest shift in 2008 is a recognition that businesses need to operate differently if they are to compete effectively. A common theme, in both the ERP (transaction world) and Enterprise Performance Management, EPM, space (Information World) has been the growing importance of cross-functional working, i.e. working across the organisation rather than in rigid functional silos. It is a message that is taking a while to sink in, but could herald a profound shake up in the way that applications are designed, viewed and implemented. As before, Microsoft has been leading the charge, reflecting the new paradigm in its mid-range ERP products and Oracle has been evangelically preaching the virtues of this modern approach in EPM. Although it is ground-breaking thinking it doesn’t mean necessarily that existing investments need to be jettisoned. Rather it is existing management practice that needs to be challenged – something that governments seem increasingly willing to do in the wake of this year’s financial crisis.
Relatively speaking, the software industry seems to have been better managed than other sectors. Mass redundancies prevalent in other sectors do not appear to have happened to anything like that extent in technology companies. The widespread consolidation endured by the industry and its customers may have been unpalatable at the time but perhaps it was a bitter pill worth taking.
