the emerging landscape of the software industry presentation (june)
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Software Industry at a Crossroad.
What’s next for the Software Industry?
Anand Deshpande and Ashok Korwar
Persistent Systems
June 2009Work in progress.
We welcome
comments.
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In these difficult and uncertain times the CEO is focused on ways to reduce costs.
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IT budgets will also be cut.Potentially 20% to 35%.
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Do More For Less
Is the mantra across the
organization
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Squeeze vendors …
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… and will handover
the entire IT to a vendor with a pay-per-use model to reduce the total cost of ITownership.
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Welcome to
This is not about technology but a business imperative.
Buyers will force the adoption of Software as a Service even before the infrastructure is ready.
Software As A Service
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… and at the right price they will get it.
To provide Software As a Service, vendors will demand:
-- long-term commitments
-- more control over how the environment will be managed.
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To provide this service at the price point being demanded, vendors must build Virtual Private Clouds that span legacy applications and new technology and are deployed on premise and in the cloud.
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Private, secure and firewalledSome components on premise and
others will be distributed across the cloud.
Centrally managedOne fine-grained pay-per-use bill
Enterprise Virtual Private Cloud will be
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Infrastructure for Virtual Private Clouds must be super efficient.Must support:Multi-tenancyVirtualizationSecurityRemote MonitoringHandle Legacy Applications
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To bid
Vendors
must
own, create and manage high
performance cloud environments.
manage relationships with enterprises and ensure continuity of business processes including legacy systems.
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Vendors
must
own, create and manage high performance cloud environments.
manage relationships with enterprises and ensure continuity of business processes including legacy systems.
This is a
tough
balancing
act!
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own, create and manage high
performance cloud environments.
manage relationships with enterprises and ensure continuity of business processes including legacy systems.
Virtual Private
Cloud Operator
Cloud Operator
Since it is not
possible for one
vendor to provide
both.
The eco-system will
evolve to two kinds
of players.
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System Integrators who understand enterprise processes with significant wallet share and good relationships with CIOs are candidate Virtual Private Cloud Operators
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Who could be a Cloud Operator?
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Cloud Operators
Virtual Private Cloud Operators
CIO – the ultimate buyer of IT.
Three Level Eco-System
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Enterprise Data will be an integral part of the Virtual Private Cloud*
* And not part of the application.
Data Integration challenges will force CIOs to accept standardization of data, processes and the application stack.
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The Cloud Operator and the Virtual Private Cloud Operator are not ready to provide the service at the price that the Enterprises are demanding today.
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How do we get there?
Who pays for it?
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What’s the future for software product vendors?
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Software Vendors can be classified as
• Infrastructure software providers. They provide software that is part of the cloud infrastructure.
• Application software providers. They provide software that runs on the cloud.
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Infrastructure Software Vendors have a very small number of cloud operators to sell their products to.
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Since data is part of the cloud infrastructure and a not part of the application, replacement of software components will be easier.
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Who will buy Application Software?
CIO: Directly for the Enterprise
Virtual Private Cloud Operator
or
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In both scenarios the Application Software Vendors have limited lock-in for their products.
Application Software must be built
• Quickly • Upgraded continuously• Have new features otherwise be replaced• Componentization and Service Oriented
Architectures will be standard design philosophies.
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This spells the death of the custom Application Development Business.
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The economics of the new software industry will be very different.
Vendors will provide software with regular (monthly) payments being made depending on how the product is used.
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With this model, we may expect the following changes to the life of the software vendors:
The need to deploy faster
The need to upgrade frequently – if you cannot, you run the risk of getting replaced
Operate at a lower cost base
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The market will change very fast. CEOs want to cut cost now!
Once the change begins, it will become a landslide.
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Software vendors must invest now to be ready for this new world or become extinct.
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Persistent: your trusted partner to help you get
there now!
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We welcome your comments:
Anand Deshpande (anand@persistent.co.in)Ashok Korwar (ashok_korwar@persistent.co.in)
Persistent SystemsApril 2009
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