2009 Retrospective

December 26, 2009
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200912260921.jpg It’s that time of year again, you know, the time to look back at the year and think about all that’s happened (and hopefully what we’ve learned that might help look forward into next year). It was a tough year from many different fronts; the economy spawned hardships that ranged from slower business to loss of jobs and houses on unprecedented scale. No industry was immune from the downturn and high tech certainly has seen its share of troubles. In spite of all the negatives, there were some bright spots. Several tech trends that were emerging only last year moved mainstream with the help of the economic crisis.

Every year at IDC in Dec / Jan we do a series of predictions that start with high-level predictions developed by a team of senior analysts that support IDC Chief Analyst Frank Gens and then move on through each major research group. Last year my group published the following predictions:

  1. The 2008 financial crisis will drive accelerated growth of software-as-a-service–based solutions
  2. Several large software vendors will restructure their partner program tiers in 2009.
  3. Open source software gets the boost to the “mainstream” by the effect of the



200912260921.jpg It’s that time of year again, you know, the time to look back at the year and think about all that’s happened (and hopefully what we’ve learned that might help look forward into next year). It was a tough year from many different fronts; the economy spawned hardships that ranged from slower business to loss of jobs and houses on unprecedented scale. No industry was immune from the downturn and high tech certainly has seen its share of troubles. In spite of all the negatives, there were some bright spots. Several tech trends that were emerging only last year moved mainstream with the help of the economic crisis.

Every year at IDC in Dec / Jan we do a series of predictions that start with high-level predictions developed by a team of senior analysts that support IDC Chief Analyst Frank Gens and then move on through each major research group. Last year my group published the following predictions:

  1. The 2008 financial crisis will drive accelerated growth of software-as-a-service–based solutions
  2. Several large software vendors will restructure their partner program tiers in 2009.
  3. Open source software gets the boost to the “mainstream” by the effect of the economy and the subsequent change in buying behaviors.
  4. Partner analytics will come of age in 2009 as vendors seek partner quality over partner quantity.
  5. Compliance, litigation preparedness, and business process efficiency will continue to drive content management budgets.
  6. Partners will create several new “partner run” partner-to-partner communities in 2009.
  7. Consumer-born Web 2.0 and social networking tools will permeate new customer and partner initiatives.
  8. An economic and technological perfect storm will raise the Enterprise 2.0 ship higher than others.
  9. Platform as a service will create a “custom” alternative for vertical-specific solutions, putting pressure on the major enterprise software vendors to develop or acquire a platform-as-a-service offering.
  10. Next-generation enterprise applications vendors will win the trifecta of business models.

Looking at the predictions, the first thing that strikes me is that we need to make these more measurable, and in fact that is our plan for this year. That said, how did we do in calling this year? #1 is pretty easy, SaaS (or cloud apps) did see very strong growth, well over 30%, in an enterprise software market that was just about flat overall. Most of the SaaS vendors saw good to very good growth as was evidenced by the strong quarterly reports from the public pure-play SaaS vendors. I’d say we get an A+ on this one and I feel confident that SaaS / cloud apps are now an accepted deployment option in both the SMB and enterprise markets that will continue to see rapid growth for the next several years.

For #2 we also did fine, several large SW vendors make changes to their partners programs that ranged from redefining criteria for program levels to adding things like specialization certification as a new differentiator (Oracle Specialized). I’d say this one gets an A.

Open Source SW, much like SaaS, did see a boost from the economy and we put the overall growth this year at ~34%. The rest of the story though is that in talking with CIO’s in companies that ranged from mid-sized all the way to large enterprise it is now very common for IT organizations to have an OSS strategy and to have incorporated some use of OSS in the stack. Often now the use of OSS has grown out of just system infrastructure software and is moving up into the middleware and apps layers. I’d give us an A on this one as well.

Partner analytics is an area of partner program development that IDC has supported for quite some time. Using deep analytics to support partner program decisions and policies is a best practice. Sometimes selecting and collecting the “right” metrics on partners is difficult and while many programs do use them, the use of deeper analytics could still be improved. I’d say some progress was made last year but I don’t feel like the inroads were as good as we had hoped. I’d give #4 a C.

Compliance, litigation preparedness and business process efficiency are still key factors in enterprise software deployments and their impact continued to drive some spending in content management in spite of the economy, although growth dropped to flat or slightly negative as the economy stayed weak and companies delayed SW spend decisions. We do see a good bounce-back next year though, with growth jumping up above 5% as budget controls start to relax a little. I’d have to call #5 a B-.

Partner-to-partner (P2P) networking has been a hot topic for the last few years. The major vendors have tried to build programs and offer assistance that encourages go-to-market relationships among its partner ecosystems. A few independent organizations have grown up among partners as well (IAMCP for Microsoft partners, for example). We expected to see more of these independent organizations this last year but in reality, it seems like the severity of the economy took the attention off any of these new initiatives for the most part. Grade on this one, D.

#’s 7 & 8 were probably the biggest home runs this year. We’ve watched as social networking and social media turned into social software solutions and social business initiatives. There’s tremendous momentum across internal and external business processes and operations to look to the social web for the next generation of tools to facilitate relationships and collaboration. We’re now talking about things like social CRM, social product design, social marketing and social supply chain management. Internally we are starting to see the convergence of collaboration, search, content management, and communications into social software as well. We also saw most of the major SW vendors use social tools in their partner programs. We’re seeing widespread use of social software to change the way vendors interact with partners including blogs, wiki’s, and even customer facing initiatives like SAP’s Ecohub. Overall I’d give both 7 & 8 and A+.

Platform as a service (PaaS) has increased in importance and is getting much more attention from ISV’s and SI’s. Much of the progress this year was driven by Salesforce.com’s Force.com PaaS and its efforts to recruit new partners. Netsuite also rolled out its PaaS offering, Suitecloud and hired a new ISV partner executive to build a community. While both of these initiatives are gaining momentum its still slow going on both the ISV and the prospect sides. The vendors are gaining traction though and some very strong hybrid partners are emerging (for example Appirio, who is a partner with salesforce.com, Google and Amazon). There’s also movement from the major SW vendors with Microsoft launching Azure and SAP announcing the intent to have a PaaS offering next year. Overall, I’d have to rate this prediction a solid B+, good progress but maybe not as much traction yet.

The hybrid business model, or vendors that offer on premise, SaaS and outsourced processes is gaining among larger SW vendors. Particularly the blending of, or offering customer flexibility through both on prem and SaaS seems to be the prevailing model moving forward for Oracle, Microsoft and even SAP (although most of their offerings are slated to launch next year). The third option is getting renewed attention as software in a service or cloud sourcing, although non of the major vendors have moved in that direction directly. It now seems that cloud sourcing will be a fertile ground for a new generation of process outsourcing partners that are emerging and taking advantage of the SaaS model with a services wrapper. Overall on this prediction I’d say we hit a solid B, with a new model emerging around outsourcing that wasn’t really on the radar last year.

So there you have the report card from 2009. Look for our new set of predictions mid January and if you’d like to discuss them in person join Henry Morris, Steve Hendricks and me for a complimentary breakfast briefing, Envisioning the New Normal: IDC Software Predictions 2010 on Jan 26th in Burlingame, CA.