Balance of power shifts to software buyers
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The Story: Look in the mirror, Mr. or Ms. IT buyer. You?ve got more muscle than ever ? and you did it without steroids.[ Slideshow: 2007's top underreported tech stories ]                                                    Despite the wave of consolidation sweeping the industry, buyers have actually gained more leverage than ever when it comes to making deals with their vendors, notes a PricewaterhouseCoopers analysis. ?Software buyers need to realize that the pendulum is beginning to swing in their favor and that there are an increasing number of alternatives in today?s software market,? concurs Gartner analyst William Snyder (no relation to this writer).There are a lot of reasons for the swing, but one certainly stands out: The shift to SaaS (software as a service). The poster child for this phenomenon is Salesforce.com. "Both its development and delivery models are having a disruptive effect on the entire CRM market,? notes Forrester Research analyst Bill Band. But it?s not just Salesforce: By 2011, Snyder says, fully 25 percent of all new business software will be delivered as a service as Salesforce and other vendors push upstream from the small-business market. Already, SaaS providers make up the majority of sales for several segments of human resources applications, and is well-established for supply-chain management.[ InfoClipzflash video primer: Software as a Service ]SaaS is just the first wave of services that are pushing pricing power over to buyers: The more recent move to Web services and the beginnings of SOA (service-oriented architecture) deployment are encouraging the use of modular software, which in turn cuts development costs, makes it harder for vendors to sell expensive suites, and lessens the need for expensive consulting services.And yet another factor is upping buyer?s power, notes Gartner?s Snyder: the emergence of third-party support options that are reducing software?s TCO (total cost of ownership). ?Maintenance services have been a quasi-monopoly for software vendors,? he said. ?For many years, only the software vendor had rights to the source code of the critical components of the system. This made it impossible to go to an open, competitive market to obtain upgrades, services and support, which in turn made it impossible to negotiate maintenance fees.?Interestingly another software trend ? the growth of virtualization ? is beginning to affect pricing for hardware, particularly servers. A report by Infiniti Research suggests that server shipments will start declining in 2008: ?The server market of tomorrow will be a value game and not a volume game.? And that means better pricing for hardware, too.Don?t let your head swell too much, but Gartner vice president Mark McDonald credits ?savvy CIOs? for containing costs that were once out of control. ?They?re saying, ?I want you to implement in a way that gives me the advantage over my competition? ? and they?re not accepting the traditional vendor model, which favors homogeneity and the economics of scale.?The Bottom Line: Chances are that you?re looking at SaaS, Web services, SOA, virtualization, open source, and other technology-delivery methods for a variety of specific reasons, without realizing the cumulative effect is to give you more pricing power. Now that you?ve got the power, use it.Complete list of 2007 underreported tech stories: 1.? Java is becoming the new Cobol 2.? Sun Microsystems is back in the game 3.? Hackers take aim at Mac OS X 4.? There are some threats you can worry less about 5.? Companies may have found a way around H-1B visa limits 6.? Open source?s new commercial strategy 7.? End-to-end Ethernet finally arrives 8.? Blade servers arrive for the masses 9.? BI is dead; long live BI 10. Balance of power shifts to software buyers
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Investor profiles are shifting, regulations are changing and buyouts are starting to heat up.
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SANTA CLARA, Calif.--The business of selling software is due for an extreme makeover, industry executives said at the SoftSummit conference .
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Resistance to Vista was expected among the large companies that have leverage with large PC vendors, but even in the consumer and SMB ranks, the clamor for XP is significant. The beneficiaries? Possibly, "white-box" system builders and direct-sales channels.
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A study on software licensing shows that companies are getting ahead of their customers on subscription-based billing.
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Among the factors sited: the ability to customize the software and avoid vendor lock-in.
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New dual-core processors will make conventional software licensing models obsolete. What's next?
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Amid mixed indications of software industry's health, polled tech execs predict spending rise.
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The next generation of software players prep for public offerings.
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Software maker has its eye on consumers who might be ready to make the switch from Windows.
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Microsoft is set to change the way that organisations handle upgrades. The company has teamed up with Dell and Vintela in an attempt to cut the people-hours that are spent on software support.
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New and old business strategies meet in a clash of titans. Who will make the final cut?
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(InfoWorld) - Separate reports from The 451 Group and Evans Data this week confirm what seems obvious: open-source software is impacting commercial software companies and continues to gain adoption worldwide. In a report entitled, "Going Open -- Software Vendors in Transition," The 451 Group found that open-source software is increasingly placing pressure on business models of proprietary software vendors. These companies now are looking to open source as a way to grow distribution, improve customer participation, and respond to competition. The trend of proprietary vendors going "open" has had companies either shifting away from licensing fees as a basis for customer usage or releasing some code via an open-source license. Open source is changing the relationship between software vendors and customers, The 451 Group said. Smaller vendors and startups can more effectively compete for enterprise customers by providing code and a community for ensured long-term viability. While services are often considered the most likely path for software vendors looking to generate revenues from open source, almost half of 31 vendors interacted with for the study indicated the greatest revenue opportunity was in commercial licensing. Meanwhile, Evans Data, in its just-released 2007 Emerging Markets Development Survey, found that developers worldwide are increasingly using open-source code. In a survey covering developers in regions such as Brazil, Russia, Eastern Europe, India, and China, 69 percent of respondents said they are using open-source software, which is up from 59 percent six months ago. The Eclipse open-source platform has had high adoption in countries like India and Brazil. Linux development has increased in many emerging markets as well. In the area of Web development, 36 percent of developers in emerging markets are using AJAX (Asynchronous JavaScript and XML). The figure was 21 percent six months ago. While open source is growing in popularity in these markets, all is not lost for commercial software. Forty-seven percent of Indian developers expect to be upgrading to Windows Vista as a primary or secondary host operating system next year. In the security area, 87 percent of Chinese respondents experienced at least one security breach at their company in 2006.
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Like it or not, buyers of x86 servers, clients, and workstations face a major platform shift as the 32-bit CPUs, operating systems, and applications slowly fade into history.
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Digital technology changes from workhorse to entertainer.
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In the flat enterprise software market, the message is clear: It's time to hunt or be hunted.
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One company sees a shift in business software habits, right before its eyes.