Tuesday, November 3, 2009

It's Holiday Prediction Time Already

When you get your third request to discuss the outlook for 2010 for our industry, it must be "Holiday Prediction" time. With no further ado, and with two months left in the year, here are my predictions for the enterprise software world for 2010. The predictions marked in red with "Wild Card" are not really predictions, just outlandish guesses of what might happen.
  • Oracle releases Fusion Apps (for core functions, plus a few of the composite apps around it). Fusion Apps are missing tons of functionality, but work well with Oracle Apps Unlimited (legacy apps), so customers are comfortable with the upgrade. Oracle also continues to deliver some new functionality for Apps Unlimited, keeping those customers happy. Oracle delivers pre-packaged integration using AIA with Apps Unlimited products and Fusion Apps.
  • Wild Card: At OOW10, Oracle announces low-priced maintenance offering for SAP and pre-packaged integration with AIA to SAP 4.6 and 5.0.
  • SAP cannot convert many Oracle Apps customers to new SAP licenses, as they are happy to stay with what they have or to wait for or upgrade to Fusion Apps.
  • SAP ships Business ByDesign and the Apps are favorably received. SAP finds a nice niche for these apps in divisions of large SAP customers, displacing some legacy apps like Baan and Infor. SAP finds a way to achieve profitability for ByD when it introduces pre-packaged integrations from ByD at the division level to Business Suite at corporate. Customers see real value in ByD and the pre-packaged integration, which SAP sells for tens of thousands of Euro per connected ByD instance (per year).
  • SAP announces that it will incorporate several ByD innovations in Business Suite in enhancement packs starting by the end of 2010 and into early 2011.
  • Wild Card: SAP license revenue plunges, and margins start to suffer. Long term R&D is cut. By the end of the year, SAP agrees with user groups on specific actions to take to reduce TCO, to justify increasing maintenance fees, which come under increasing pressure.
  • Oracle license revenue slides, but margins are maintained as Oracle continues to cut back on Applications Unlimited faster than it grows Fusion Apps. Apps Unlimited staff have to compete with each other for few openings in Fusion Apps.
  • Microsoft stays in the Apps business, but as a distant "also-ran." Internal discussions begin about exiting the business or taking a significant new direction to try to re-energize the business.
  • IBM, which has really been in the Apps business all along, relaunches their Apps business based on project accelerators from Global Business Services, including via Blue Next.
  • Wild Card: IBM works hard to convince customers to go off SAP maintenance, remain on 4.6 or other old versions of SAP, where IBM takes over maintenance and develops custom composite applications around the FI/CO core. SAP bulks up consulting (but doesn't buy any consulting companies), and works hard with IBM's competitors to disadvantage IBM in SAP accounts. In the background, towards the end of the year, SAP and IBM begin merger discussions.
  • Cloud, SaaS, and open source become completely accepted in the enterprise, as companies start to outsource everything that does not deliver competitive advantage, and as integration technology improves. Pre-packaged integrations become common, with go-lives measured in days and weeks instead of months and quarters. Dozens of new Cloud providers enter the market. Substantial new enterprise SaaS solutions come to market in diverse new areas.
  • Many open source applications projects reach maturity for "edge" applications such as talent management and enterprise performance management, promoted by systems integrators like Wipro and IBM, with licenses that prevent commercial deployment by enterprises above a certain number of users without buying support from the integrator. These projects are used to contain Oracle and SAP Applications customers on old versions, buying support and maintenance from the integrator.
  • IT spending grows slightly, but with a focus on "new" things rather than maintenance. Spending on new computers (driven by Windows 7), mobile devices, "edge" applications (e.g., talent management, supplier management, and new analytics) grows substantially. Spending on application maintenance, custom application integration, application upgrades, database upgrades, and server upgrades drops precipitously.
  • Enterprise 2.0 backlash leads to significant cutting back on access to time wasters at work, like ESPN.com, Twitter, Facebook, and certainly LinkedIn. Questions about how you will get 20-something employees to give up their access to these tools go away as there are way too few jobs to go around.
  • Green and sustainability topics grow in importance as legislative/regulatory uncertainty grows worldwide, with some legislation passing and lots of new regulations put in place with no legislative action. Green IT goes mainstream.
  • Oracle completes the Sun acquisition, including mySQL. This turns out to be a non-event, as Oracle continues working with HP, IBM, and Dell.
  • Wild Card: Oracle also acquires Pillar Data. Oracle launches high performance cloud storage, with innovative integration with on-premise Oracle DBMS and content management services.
Basic economic assumption:
  • The jobless economy continues. New graduates are unable to find any work. Business profits soar as productivity soars. Commodity prices remain low, though not in dollar terms as the dollar continues to drop precipitously versus other currencies.
  • Wild Card: Government intervention grows, but grows in unpopularity while failing to deliver benefits to citizens. A change in governments looms in several large countries.
Wow - that turned out a lot more pessimistic and Malthusian than I thought it would! What do you think will happen in 2010?

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