Seismic Shifts in the Software Industry

I listened in today on NetSuite’s hosted Enterprise 2.0 and the Software Industry webinar featuring SandHill.com’s M.R. Rangaswami. I was amazed by some of the statistics in the presentation, but remember, I’m new to some of this stuff by five years. For instance, M.R. said Sandhill had done some research and is reporting that 90% of all software firms are now using offshoring for some element of their development. I also was surprised to hear that 80% of a CIO’s IT budget is already committed to maintenance before the year even begins… the point being a mere 20% is left for innovation. He also said Sandhill had counted over 500 Web 2.0 companies, but was quick to point out that, “None of these companies know how to make money.”

NetSuite, a SaaS app, and whose product looked very impressive, btw, said the webinar would be available on their site.

This issue about the IT budget is one where I’m not sure everyone is on the same Enterprise 2.0 page. A few days ago I was pestering poor, old Gary Fernandes (who is really neither) about this point. Gary used to trot out this slide back in the old days while I was covering EDS. It showed how, on average, the IT budget was a mere 10% of the operating budget of most corporations. As Gary was EDS’ Chairman of A.T. Kearney, and the BPO market was just beginning in those days, he was always interested in how EDS could get its hands on the other 90%. Enterprise 2.0 is Gary’s dream come true. The big opportunity here for tech companies is not with the IT budget gestapo, it’s selling directly to the lines of business that can produce real returns on small investments.

I tried to make this point to Vinnie Mirchandani today, who knows better. I know there will be a lot of push back on this issue. And, I’m a lover, not a fighter, but hey– it is a revolution whether you’re the revolutionary type or not.

Enterprise 2.0 and TCO?

I’ve decided to start tracking what I consider to be “Enterprise 2.0” companies. In pursuit of that, I was perusing JackBe‘s blogs and this post by Mike Wagner got my attention about Enterprise Mashups and TCO. The Enterprise 2.0 movement with its disintermediating affect is poised to seriously impact all discussions surrounding TCO, yes?

I’m getting together with Dan Gisolfi from IBM’s Emerging Internet Technology group in the next 10 days. Gisolfi ‘s group, led by Rod Smith, is fully engaged in the business of mashup-making. They’re pulling together data from intranets and local data for clients using their IBM mashup maker technology. He gave me an example using Home Depot’s finance department and provisioning the finance department with widgets, dashboards and mashboards… By his own admission, he sees a lot of what’s going on as new and that his group is a little ahead of the curve– they’re still having conversations internally with IBM, let alone getting to all IBM’s installed base. I’m looking forward to this meeting. I’m going to ask him about the TCO question too.

Interesting web 2.0/enterprise 2.0 trivia tidbit: Did you know Sam Ruby– one of the innovators of ATOM– is part of IBM’s emerging technology group? Not many people think of IBM as a leader in the new new Internet, but maybe they should?

Check out Dan’s blog. And these articles by Heather DalleTezze, Cal Evans, and Martin LaMonica are excellent resources explaining IBM’s Mashup Maker technology announcement last month.

If you are an Enterprise 2.0 firm, please email me. ([email protected])

SaaS-a-fras

All right, admittedly this is a stretch. I actually picked up a physical dictionary today (who doesn’t use dictionary.com?) to see what I could do with SaaS. This is the best I came up with. Thanks to Wikipedia (who doesn’t love Web 2.0?), I discovered that the oil of the Sassafras tree is a key ingredient in the street drug MDMA or “ecstasy.” Now maybe the heat wave here on the East coast has me a little high, but as I have finished the reporting on the SaaS story for GITS and continue to investigate the Enterprise web 2.0 market… I think I might predict a rave party coming on in the knowledge-worker universe.

If what I’m hearing is true, and it’s THAT easy to create these “long tail” micro situational apps, we are headed for a serious reshuffling in the balance of power, once again, in the tech business.

The Long Tail of a Short Tale

I recently emailed my friend Phil Wainewright that “I’m so excited [about this new sector], I feel like a Pointer Sister.” I’ve been swamped with the research and reporting for this GITS story on how SaaS and Web 2.0 applications could potentially disintermediate the billable consultant. The interviews are facscinating. Kicking off with Dion Hinchcliffe, a brilliant guy, and someone who is clearly blazing the trail in the enterprise 2.0 space, I’ve been trying to absorb the full impact of changes ahead for what Hinchcliffe refers to in his writings as the “inversion of control” coming down the pike as a result of the next evolutionary, and perhaps revolutionary, paradigm shift in our beloved tech sector.

So many story ideas and initiatives are flowing out of this piece, I’m eager to file the story to get onto the next one. Unfortunately, GITS won’t permit me anymore to post the stories online here. You’ll have to subscribe to the newsletter to read it. Other interviews in the piece include: Phil Wainewright, Rod Boothby, Jeff Kaplan, Peter Cervieri of ScribeStudio, Josh Greenbaum, Dan Gisolfi from IBM’s Internet Emerging Technology group, and Amy Wohl, longtime analyst. OH, almost forgot, Joe Kraus, CEO, JotSpot.

My Bad (blog and blogging habits)

I received a nudge from a reader I respect who suggested I need to post more regularly to be taken seriously. 

“To be perceived as a blogger with time sensitive market insights, you need to have more frequent postings .”

Ouch.  The good news and bad news about blogging is unlike old school print magazine column-writing, you can see in real time how many people are reading your blog, where they’re coming from, what they searched to find you, and of course, who’s commenting and the quality of the comments. 

The A-list tech bloggers are doing a phenomenal job beating some of the major media to the punch with major developments.  There’s even a bit of a sea change going on in the analyst world with leading independent bloggers usurping the stranglehold on influence that the leading industry analyst firms have always wielded.  See this story in InformationWeek

When I told a friend I had all but abandonned the blog of late, he recoiled,

“Abandoned the services market– no way!  There’s too much action there!”

Personally, I don’t know how the A-list bloggers do it.  Take one of my favorite bloggers, Rod Boothby, who happens to also be a senior guy at E&Y.  I’m interviewing Boothby for a story I’m doing right now for GITS, and he told me he’ll be wrapped up with a client all next week.  So in addition to some sophisticated management consulting day-job work, he’ll squeeze in my interview (and I’m probably one of many), keep up with everything else going on in the blogosphere, and keep posting terrific content on his blog.  It’s superhuman. 

Until I learn how to manage my time better, I’ve opted to accept an offer to VLOG– a video blog with a large outsourcing community.  Details are coming.  I’ll keep you posted.  In the VLOG, I’ll be reporting on news, trends, adds/moves/changes in the outsourcing market, some rumors and general musings. 

Not just Integrators, now Management Consultants and Big Blue eyeing the Ad Business…

Thanks to my friend Tim at Pixel Bridge, I'm posting what Ad Age published yesterday regarding Accenture, IBM, and McKinsey reshuffling how Advertising dollars are distributed for corporate clients. "Management Consultants Push Further into Ad Business."

I placed a quick call to my friend Tom Rodenhauser, who has covered management consultants for decades. Tom told me he wrote a similar story about ten years ago with help from an Ad Age freelancer. He promised he'd send me something pithy today to post here, so stay tuned.

Here's Tom's quote (9:39 p.m EST): "The debate between ad agencies and management consultants is one-sided. Essentially, the agencies are pulling a Rodney Dangerfield (God rest his soul) by demanding respect for something they don't provide — strategy. The ad folks can be creative geniuses with positioning products. But have they ever helped the client determine whether that product should even be produced? Or where to build it? Or how to distribute it?
No, and the reason is fairly simple. Consultants make money by selling their brainpower; ad agencies make money by selling airtime. When a client plans to invest millions (or billions) into a new product or business line, they don't turn to the ad guys for a business case."