What are software providers doing to prepare for the upturn, and what can businesses learn from this, asks Lesley Meall, FSN contributing editor?
The global downturn has been something of a mixed blessing. It didn’t stop China overtaking Germany to become the world's third-largest economy. China’s exports have been hit by falling demand, and GDP growth has slowed to an expected 8.5% in 2009 (after a couple of years in double-digits), but retail sales and industrial production have remained healthy in the People’s Republic, and foreign exchange reserves recently hit an all-time high of $2.3 trillion.
Other emerging markets, such as India and Indonesia, have also continued growing, while in most parts of the developed world, the picture has been significantly less rosy. Although there are now signs of recovery, and some other G20 countries (including Brazil, France, Germany and the United States) have ‘technically’ emerged from recession, the political powers that be seem, understandably, to be cautiously optimistic.
The downturn has also been a mixed blessing for the world of business software and systems: some companies have thrived, others have not; some technology trends have grown in popularity; others have not. But the industry seems to be displaying more caution than optimism. “Positive economic indicators are not a sign that we are back to business as usual,” says Craig Sullivan, VP international products, NetSuite, adding: “Business will never be the same again.”
In part, this is because the recession has helped to make cloud computing an increasingly compelling delivery model, which is good news for NetSuite and other providers of internet-based software and services (of which more, later). But as Sullivan observes: “Whilst there are some indications that the economy is recovering, we are not going back into the same business environment that existed at the start of this downturn,” for a host of macro and micro-economic reasons, which have played to the strengths of some companies and exacerbated the weaknesses of others.
“Most successful companies will now be leaner and more efficient than they were before,” suggests Alistair O’Reilly, CEO for Access, yet he sees no room for complacency. “In my opinion, they must take care to preserve this discipline for some considerable time yet,” he says, regardless of whether the hoped for upturn materialises. “Companies that have managed their affairs with a view to the long term future will simply do more of what they are doing now and start to cautiously invest in future growth,” he adds, “but if companies have to prepare for the upturn they can’t have prepared very well for the downturn.”
Sullivan echoes this perspective: “Businesses that have taken this opportunity to get their house in order by reviewing their systems, processes and how they do business in the 21st century will now be well-positioned for the recovery,” he suggests, though not every organisation has had either the will or the wherewithal to do this. “Others will need to move quickly or risk being left behind as we come into a new economic reality,” he says, adding: “It’s undoubtedly going to remain a tough environment, so companies need to be looking now at how they can maintain their competitive edge.”
Needs must
For many developers of business software and systems this means providing the customer with the support they need today and developing the tools that they will need tomorrow – whilst exploiting the latest technological developments to do this as effectively and efficiently as possible. More enterprises are striving “to continually optimise departmental and enterprise processes, to be ready for changes in market conditions, legislation, acquisitions and corporate policy,” says Phil Hagan, sales director for Oceanus, the content and business process management specialist.
So Oceanus’ past focus on the development of features, functionality, and rapid delivery, has been supplemented with a focus on flexibility and agility. “Extending Service Oriented Architecture principles to functional UI components [widgets] will enable us to match the sophistication or simplicity required by every stakeholder within an organisation,” he explains, “so power users will still have sophisticated capabilities, but the overhead of a sophisticated solution will not need to be deployed for casual or management users.”
Access has also expended “extra effort” on listening to its customers to ensure it knows “what they need and want”, and according to O’Reilly, this has led to the delivery of software such as workflow forms and document management, which can offer customers potential benefits across every department in their business. “They’ve all been deployed in a browser that delivers a very fast return on investment,” he explains, “and we are helping our customers to manage their KPIs with dashboard solutions that provide faster decision-making and improved corporate governance.”
In common with Access and Oceanus, the document management specialist Version One is also putting some of its development behind products and services that will be delivered over the internet. “We’re launching a cost-effective hosting service to allow Version One’s solutions to be used as an on-demand service,” reveals general manager Julian Buck, “and another planned launch is DbBackUp, which enables the secure back-up and recovery of an organisation’s electronic documents in the event of a disaster.”
Stormy weather
Developers’ use and businesses acceptance of the on-demand delivery model was growing before the downturn, but the economic conditions seem to have accelerated this. “The take-up of cloud services, has moved swiftly over the past year,” comments Keith Tilley, managing director UK and executive VP Europe for SunGard Availability Services. In addition to increasingly underpinning the product and service developments of numerous traditional software providers, it has established itself as the “latest model for outsourcing” and made managed services one of the success stories of the downturn.
During the past year or so the SPI model that is Software as a Service, Platform as a Service and Infrastructure as a Service, has gone from obscurity to pervasiveness. “Managed services firms have experienced solid growth from organisations that have been forced to minimise power and hardware costs and maximise staff productivity,” reports Tilley. “We’ve witnessed outsourcing become a popular way for businesses to wipe unnecessary costs of the balance sheet,” he adds, as the on-demand model gains traction by allowing companies to pick and choose from an ever-increasing range of options.
“The unstable economic environment has led to a growing demand for more scalable, flexible offerings, as businesses require the agility to respond and adapt to the surrounding market,” adds Tilley. But while business software and services companies are clearly working to bring these offerings to market now and in the near future, many businesses are in cost-reduction mode, and getting them to actually spend money on anything new is proving difficult. So, as well as investing in product development, Version One has a cunning plan.
“To assist companies that may be reluctant to make IT investments during times of economic uncertainty, Version One is launching a ‘try before you buy’ incentive and return-on-investment guarantee,” says Buck, to provide companies with “greater confidence” in their software purchases. The former is increasingly commonplace, and only time will tell if, when and how many other software developers feel forced to follow-suit on the latter. But one thing seems certain, as NetSuite’s Sullivan has already observed: “Business will never be the same again.”
