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Posts Tagged ‘SaaS’

Can IBM Build a Strong Cloud Partner Ecosystem?

May 4, 2011 1 comment

Despite all of the hand wringing surrounding Amazon.com’s service outages last week, it is clear to me that cloud computing is dramatically changing the delivery models of computing forever. We simply will not return to a model where organizations assume that they will consume primarily their own data center resources.  The traditional data center certainly isn’t going away but its role and its underlying technology will change forever.  One of the ramifications of this transition is the role of cloud infrastructure leaders in determining the direction of the partnership models.

Traditionally, System vendors have relied on partners to expand the coverage of their platforms. With the cloud, the requirement to have a strong partner ecosystem will not change. If anything, partners will be even more important in the cloud than they have been in traditional computing delivery models.  This is because with cloud computing, the barriers to leveraging different cloud-based software offerings – platform as a service and Software as a Service are very low. Any employee with a credit card can try out just about anything.  I think that the Amazon.com issues will be seen in the future as a tipping point for cloud computing. It, in fact, will not be the end to cloud but it will change the way companies view the way they select cloud partners.  Service management, scalability, and reliability will become the selection standard – not just for the end customer but for partners as well.

So, I was thinking about the cloud partnership model and how it is evolving. I expect that the major systems vendors will be in a perfect position to begin to reassert their power in the era of the cloud.  So, I decided to take a look at how IBM is approaching its partnership model in light of cloud computing.  Over the past several months, IBM has been revealing a new partnership model for the cloud computing market.  It has been difficult for most platform vendors to get noticed above the noise of cloud pioneers like Amazon and Google.  But this is starting to change.  It is not hard to figure out why.  IBM believes that cloud is a $181 billion business opportunity and it would like to grab a chunk of that opportunity.

Having followed IBM’s partnering initiatives for several decades I was not surprised to see a revamped cloud partnering program emerge this year. The new program is interesting for several different reasons.  First, it is focused on bringing together all of IBM’s cloud offerings across software, developer relations, hardware, and services into a single program.  This is important because it can be intimidating for an ISV, a Value Added Reseller, or a systems integrator to navigate the complexity of IBM’s offerings without some assistance.  In addition, IBM has to contend with a new breed of partners that are focused on public, private, and hybrid cloud offerings.

The new program is called the Cloud Specialty program and targeted to cover the entire cloud ecosystem including cloud builders (hardware and software resellers and systems integrators), Service Solution Providers (software and service resellers), Infrastructure Providers (telecom providers, hosting companies, Managed Service Providers, and distributors), Application Providers (ISVs and systems integrators), and Technology Providers (tools providers, and appliance vendors).

The focus of the cloud specialty program is not different than other partnering programs at IBM. It is focused on issues such as expanding the skills of partners, building revenue for both IBM and partners, and providing go to market programs to support its partners.  IBM is the first to admit that the complexity of the company and its offerings can be intimidating for partners.  Therefore, one of the objectives of the cloud specialty program is to clarify the requirements and benefits for partners. IBM is creating a tiered program based on the different types of cloud partners.  The level of partner investment and benefits differ based on the value of the type of partner and the expectation of those partners.  But there are some common offerings for all partners. All get early access to IBM’s cloud roadmap, use of the Partnerworld Cloud Specialty Mark, confidential updates on IBM’s cloud strategy and roadmap, internal use of LotusLive, networking opportunities. In addition, all these partners are entitled to up to $25,000 in business development funds.   There are some differences.  They include:

  • Cloud builders gain access to business leads, and access to IBM’s lab resources. In exchange these partners are expected to have IBM Cloud Reference architecture skills as well as cloud solutions provider and technical certification. They must also demonstrate ability to generate revenue. Revenue amounts vary based on the mix of hardware, software, and services that they resell.  They must also have two verified cloud references for the previous calendar year.
  • Service Solution Providers are provided with a named relationship manager and access to networking opportunities. In exchange, partners are expected to use IBM cloud products or services, demonstrate knowledge and skills in use of IBM cloud offerings, and the ability to generate $300,000 in revenue from the partnership.
  • Infrastructure Providers are given access to named IBM alliance manager, and access to business development workshops. In exchange, these partners are expected to use IBM’s cloud infrastructure products or services, demonstrate skills in IBM technology. Like service solution providers they must use and skills in IBM cloud offerings, have at least $300,000 a year in client references based on two cloud client references
  • Application Providers are given access to a named IBM alliance manager, and access to business development workshops. They are expected to use IBM cloud products or services, have skills in these technologies or services, and a minimum of $100,000 a year in revenue plus two cloud client references.
  • Technology Providers get access to networking opportunites, and IBM’s cloud and services assessment tools.  In exchange, these partners are required to demonstrate knowledge of IBM Cloud Reference architecture, have skills related to IBM’s cloud services. Like application providers, these partners must have at least $100,000 in IBM revenue and two client references.

What does IBM want? IBM’s goals with the cloud specialty program is to make it as attractive as possible for prospective partners to chose its platform. It is hoping that by offering financial and technical incentives that it can make inroads with cloud focused companies. For example, it is openings its labs and providing assistance to help partners define their offerings. IBM is also taking the unusual step of allowing partners to white label its products.  On the business development side, IBM is teaming with business partners on calls with prospective customers.  IBM anticipates that the impact on these partners could be significant – potentially generating as much as 30% gross margin growth.

Will the effort work? It is indeed an ambitious program. IBM will have to do a good job in explaining its huge portfolio of offerings to the prospective partners. For example, it has a range of services including CastIron for cloud integration, analytics services, collaboration services (based on LotusLive), middleware services, and Tivoli service management offerings.  In addition, IBM is encouraging partners to leverage its  extensive security services offerings.  It is also trying to encourage partners to leverage its hardware systems. One example of how IBM is trying to be more attractive to cloud-based companies like Software as a Service vendors to to price offerings attractively. Therefore, it is offering a subscription-based model for partners so that they can pay based on usage – the common model for most cloud platform vendors.

IBM is on the right track with this cloud focused partner initiative.  It is a sweeping program that is focused on provides a broad set of benefits for partners. It is pricing its services so that ISVs can rent a service (including IBM’s test and development cloud) by the month — an important issue in this emerging market.  It is also expecting partners to make a major investment in learning IBM’s software, hardware, and services offerings. It is also expecting partners to expand their knowledge of the markets they focus on.

The lock-in risks of Software as a Service

May 3, 2010 3 comments

I started thinking a lot about software as a service environments and what this really means to customers.  I was talking to a CIO of a medium sized company the other day. His company is a customer of a major SaaS vendor (he didn’t want me to name the company). In the beginning things were quite good. The application is relatively easy to navigate and sales people were satisfied with the functionality. However, there was a problem. The use of this SaaS application was actually getting more complicated than the CIO had anticipated.  First, the company had discovered that they were locked into a three-year contract to support 450 sales people.  In addition, over the first several years of use, the company had hired a consultant to customize the workflow within the application.

So, what was the problem?  The CIO was increasingly alarmed about three issues:

  • The lack of elasticity. If the company suddenly had a bad quarter and wanted to reduce the number of licenses supported, they would be out of luck. One of the key promises of cloud computing and SaaS just went out the window.
  • High costs of the services model. It occurred to the CIO that the company was paying a lot more to support the SaaS application than it would have cost to buy an on premise CRM application. While there were many benefits to the reduced hardware and support requirements, the CIO was starting to wonder if the costs were justified.  Did the company really do the analysis to determine the long-term cost/benefit of cloud?  How would he be able to explain the long- term ramifications of budget increases that he expects will come to the CFO? It is not a conversation that he is looking forward to having.
  • No exit strategy. Given the amount of customization that the company has invested in, it is becoming increasingly clear that there is no easy answer – and no free lunch. One of the reasons that the company had decided to implement SaaS was the assumption that it would be possible to migrate from one SaaS application to another.  However, while it might be possible to migrate basic data from a SaaS application, it is almost impossible to migrate the process information. Shouldn’t there be a different approach to integration in clouds than for on premise?

The bottom line is that Software as a Service has many benefits in terms of more rapid deployment, initial savings in hardware and support services, and ease of access for a highly distributed workforce.  However, there are complications that are important to take into account.  Many SaaS vendors, like their counterparts in the on-premise world, are looking for long-term agreements and lock-in with customers.  These vendors expect and even encourage customers to customize their implication based on their specific business processes.  There is nothing wrong with this – to make applications like CRM and HR productive they need to reflect a company’s own methods of doing business. However, companies need to understand what they are getting into. It is easy to get caught in the hype of the magic land of SaaS.  As more and more SaaS companies are funded by venture capitalists, it is clear that they will not all survive. What happens to your customized processes and data if the company goes out of business?

It is becoming increasingly clear to me that we need a different approach to integration in the cloud than for on premise. It needs to leverage looser coupling, configurations rather than programmatic integration. We have the opportunity to rethink integration altogether – even for on premise applications.

There is no simple answer to the quandary.  Companies looking to deploy a SaaS application need to do their homework before barreling in.  Understand the risks and rewards. Can you separate out the business process from the basic SaaS application? Do you really want to lock yourself into a vendor you don’t know well? It may not be so easy to free your company, your processes, or your data.

Why we about to move from cloud computing to industrial computing?

April 5, 2010 7 comments

I spent the other week at a new conference called Cloud Connect. Being able to spend four days emerged in an industry discussion about cloud computing really allows you to step back and think about where we are with this emerging industry. While it would be possible to write endlessly about all the meeting and conversations I had, you probably wouldn’t have enough time to read all that. So, I’ll spare you and give you the top four things I learned at Cloud Connect. I recommend that you also take a look at Brenda Michelson’s blogs from the event for a lot more detail. I would also refer you to Joe McKendrick’s blog from the event.

1. Customers are still figuring out what Cloud Computing is all about.  For those of us who spend way too many hours on the topic of cloud computing, it is easy to make the assumption that everyone knows what it is all about.  The reality is that most customers do not understand what cloud computing is.  Marcia Kaufman and I conducted a full day workshop called Introduction to Cloud. The more than 60 people who dedicated a full day to a discussion of all aspects of the cloud made it clear to us that they are still figuring out the difference between infrastructure as a service and platform as a service. They are still trying to understand the issues around security and what cloud computing will mean to their jobs.

2. There is a parallel universe out there among people who have been living and breathing cloud computing for the last few years. In their view the questions are very different. The big issues discussed among the well-connected were focused on a few key issues: is there such a thing as a private cloud?; Is Software as a Service really cloud computing? Will we ever have a true segmentation of the cloud computing market?

3. From the vantage point of the market, it is becoming clear that we are about to enter one of those transitional times in this important evolution of computing. Cloud Connect reminded me a lot of the early days of the commercial Unix market. When I attended my first Unix conference in the mid-1980s it was a different experience than going to a conference like Comdex. It was small. I could go and have a conversation with every vendor exhibiting. I had great meetings with true innovators. There was a spirit of change and innovation in the halls. I had the same feeling about the Cloud Connect conference. There were a small number of exhibitors. The key innovators driving the future of the market were there to discuss and debate the future. There was electricity in the air.

4. I also anticipate a change in the direction of cloud computing now that it is about to pass that tipping point. I am a student of history so I look for patterns. When Unix reached the stage where the giants woke up and started seeing huge opportunity, they jumped in with a vengeance. The great but small Unix technology companies were either acquired, got big or went out of business. I think that we are on the cusp of the same situation with cloud computing. IBM, HP, Microsoft, and a vast array of others have seen the future and it is the cloud. This will mean that emerging companies with great technology will have to be both really luck and really smart.

The bottom line is that Cloud Connect represented a seminal moment in cloud computing. There is plenty of fear among customers who are trying to figure out what it will mean to their own data centers. What will the organizational structure of the future look like? They don’t know and they are afraid. The innovative companies are looking at the coming armies of large vendors and are wondering how to keep their differentiation so that they can become the next Google rather than the next company whose name we can’t remember. There was much debate about two important issues: cloud standards and private clouds. Are these issues related? Of course. Standards always become an issue when there is a power grab in a market. If a Google, Microsoft, Amazon, IBM, or an Oracle is able to set the terms for cloud computing, market control can shift over night. Will standard interfaces be able to save the customer? And how about private clouds? Are they real? My observation and contention is that yes, private clouds are real. If you deploy the same automation, provisioning software, and workload management inside a company rather than inside a public cloud it is still a cloud. Ironically, the debate over the private cloud is also about power and position in the market, not about ideology. If a company like Google, Amazon, or name whichever company is your favorite flavor… is able to debunk the private cloud — guess who gets all the money? If you are a large company where IT and the data center is core to how you conduct business — you can and should have a private cloud that you control and manage.

So, after taking a step back I believe that we are witnessing the next generation of computing — the industrialization of computing. It might not be as much fun as the wild west that we are in the midst of right now but it is coming and should be here before we realize that it has happened.

What are the Unanticipated consequences of the cloud – part II

October 29, 2009 9 comments

As I was pointing out yesterday, there are many unintended consequences from any emerging technology platform — the cloud will be no exception. So, here are my next three picks for unintended consequences from the evolution of cloud computing:

4. The cloud will disrupt traditional computing sales models. I think that Larry Ellison is right to rant about Cloud Computing. He is clearly aware that if cloud computing becomes the preferred way for customers to purchase software the traditional model of paying maintenance on applications will change dramatically.  Clearly,  vendors can simply roll in the maintenance stream into the per user per month pricing. However, as I pointed out in Part I, prices will inevitably go down as competition for customers expands. There there will come a time when the vast sums of money collected to maintain software versions will seem a bit old fashioned. old fashioned wagonIn fact, that will be one of the most important unintended consequences and will have a very disruptive effect on the economic models of computing. It has the potential to change the power dynamics of the entire hardware and software industries.The winners will be the customers and smart vendors who figure out how to make money without direct maintenance revenue. Like every other unintended consequence there will be new models emerging that will emerge that will make some really cleaver vendors very successful. But don’t ask me what they are. It is just too early to know.

5. The market for managing cloud services will boom. While service management vendors do pretty well today managing data center based systems, the cloud environment will make these vendors king of the hill.  Think about it like this. You are a company that is moving to the cloud. You have seven different software as a service offerings from seven different vendors. You also have a small private cloud that you use to provision critical customer data. You also use a public cloud for some large scale testing. In addition, any new software development is done with a public cloud and then moved into the private cloud when it is completed. Existing workloads like ERP systems and legacy systems of record remain in the data center. All of these components put together are the enterprise computing environment. So, what is the service level of this composite environment? How do you ensure that you are compliant across these environment? Can you ensure security and performance standards? A new generation of products and maybe a new generation of vendors will rake in a lot of cash solving this one. cash-wad

6. What will processes look like in the cloud. Like data, processes will have to be decoupled from the applications that they are an integral part of the applications of record. Now I don’t expect that we will rip processes out of every system of record. In fact, static systems such as ERP, HR, etc. will have tightly integrated processes. However, the dynamic processes that need to change as the business changes will have to be designed without these constraints. They will become trusted processes — sort of like business services that are codified but can be reconfigured when the business model changes.  This will probably happen anyway with the emergence of Service Oriented Architectures. However, with the flexibility of cloud environment, this trend will accelerate. The need to have independent process and process models may have the potential of creating a brand new market.

I am happy to add more unintended consequences to my top six. Send me your comments and we can start a part III reflecting your ideas.

Public versus private clouds: why one size does not fit all

September 15, 2009 5 comments

There has been a lot of discussions these days about private and public cloud. More discussion has been generated because  both Amazon.com and Salesforce.com have added a Virtual Private Network (VPN) option to their public cloud services.  What does this mean in the context of how customers will move to cloud computing? It is clear from the research that I have been doing that the private cloud and the hybrid cloud are real and will be part of the computing landscape for a long time.  The emergence of the virtual private cloud is an early indication that customers some customers want a better guarantee of their data. The combination of a public cloud with the privacy offered by a VPN is only going to grow over the coming year.

So, is a Virtual Private Cloud still a public cloud? I particularly found the blog published by Amazon’s CTO,Werner Vogel’s  announcing the virtual private cloud fascinating. On one hand, the private virtual cloud announcement is a proclamation that customers want to be able to have secure access to services on the Amazon EC2 Cloud. On the other hand, he is quite clear that this there is no such thing as a private cloud.  Clearly, it is in Amazon’s best interest for customers to focus on public clouds. Vogel states in his blog that “What is called private clouds have little of these benefits (he means characteristics of the cloud) and as such I don’t think of them as true clouds” The four characteristics of the cloud he points to include:

  • eliminating costs – lowering both capital expenses and operating costs
  • elasticity – avoiding complex procurement cycles and improving time to market
  • and removing undifferentiated heavy lifting by off loading data center operations

While I agree that there are many situations where this is an ideal approach for many businesses, I don’t think the situation is black and white. There are indeed shades of gray. In my view, a private cloud has to be architected to be different than a traditional data center. But like a traditional data center, it is protected by a firewall and sophisticated security.  A private cloud will almost always be combined with some public cloud services (either capacity, software as a service, or platform as a service). So, I’ll take each of the three characteristics mentioned in Vogel’s blog and explain my view based on the fact that customers will make both economic and technical choices.

  • eliminating costs – In reality there are data centers that work pretty well and are core to the business. The company has made an investment and therefore would not necessarily be able to lower costs. However, I expect that even if a company decided to go with a private cloud, there will be good reasons to use capacity on demand to fill gaps and expand for projects. In addition, a very large company will have the financial means to establish its own cloud that will be much more cost effective. A cost/benefit analysis of using a public cloud versus a private cloud is not straight forward. It requires a deep assessment of lots of different factors.
  • elasticity – It is quite clear that many data centers do not have an efficient way to procure resources to users. However, if a data center is rearchitected to enable self-service provisioning, it can be transformed to better support users. Again, I expect that customers will take advantage of additional capacity or platform services even if they have private cloud services. This is especially true for companies where their computing infrastructure is the foundation of their business.
  • removing undifferentiated services – This will really depend on whether the data center helps a company differentiate itself. There are definitely services that offer no value to the bottom line that should be placed in a public cloud (with a VPN for security, in some cases) such as electronic mail. However,  where these services are at the core of the business and probably need to be in a private cloud. Many companies will select which services are not differentiated and which ones are and create a hybrid environment. Companies will have to do their homework both in terms of focus and costs. It might initially cost more to move a service such as email to a public cloud but will have huge resources in the long run. In other situations, paying per hour, etc. may be a lot more costly than you might imagine.

My bottom line is this. The cloud will continue to evolve over the coming decade and there is no one approach that will become the standard. The cloud is primarily an economic proposition that will require careful evaluation. Companies need to understand what their business is, what the value and role of the data center is and what is the best set of services available. The good news is that with the evolution of the cloud companies will have lots of good options.

The end of maintenance?

April 29, 2009 2 comments

I admit that I didn’t read the whole article but then I really didn’t have to. I knew what Marc Benioff, CEO of Salesforce.com was trying to start. I remember many years ago seeing Marc at an industry conference where he proudly announced the end of software.  A nice marketing approach that definitely got everyone’s attention. Of course, at that time Marc was working on a little software as a service enviornment that became Salesforce.com. The rest is history, as we like to say.  Now, Marc is on a new mission to attack maintenance fees. While it is clear that Marc is trying to tweak the traditional software market I think that he is bringing up an interesting subject.

Software maintenance is not a simple topic to cover and I am sure that I could spend hundreds of pages discussing the topic because there are so many angles. Maintenance fees began as a way of ensuring that software companies had the revenue to fund development of new functionality in their software products. It is, of course, possible to buy software, pay once, and never pay the vendor anything else. Those situations exist of course. Ironically, the better designed the software, the less likely it is that customers will need upgrades. But, clearly that circumstance is rare.

There are major changes taking place in the economics of software. Customers are increasingly unhappy with paying huge yearly maintenance fees to software providers. Some of these fees are clearly justified. Software is complex and vendors are often required to continue to upgrade, add new features, and the like. There are other situations where customers are perfectly happy with software as is and only want to fix critical problems and don’t want to pay what they see as exorbitant maintenance fees.

Now, getting back to Marc Benioff’s comments about the end of maintenance. Here is a link from Vinnie Mirchandani’s recent blog on the topic.Marc is making a very important observation. As the world slowly moves to cloud computing for economic reasons there will be a major impact on how companies pay for software. Salesforce.com has indeed proven that companies are willing to trust their sales and customer data to a Software as a Service vendor. These customers are also willing to pay per user or per company yearly fees to rent software. Does this mean that they are no longer paying maintance fees? My answer would be no. It is all about accounting and economics. Clearly, Salesforce.com spends a lot of money adding functionality to its application and someone pays for that. So, what part of that monthly or yearly per user fee is allocated to maintaining the application? Who knows? And I am sure that it is not one of those statistics that Salesforce.com or any other Software as a Service or any Platform as a Service vendor is going to publish. Why? Because these companies don’t think of themselves as traditional software companies. They don’t expect that anyone will ever own a copy of their code.

The bottom line is that software will never be good enough to never need maintenance. Software vendors — whether they sell perpetual licenses or Software as a Service– will continue to charge for maintance. The reality is that the concrete idea of the maintenance fee will evolve over time. Customers will pay it but they probably won’t see it on their bills.  Nevertheless, the impact on traditional software companies will be dramatic over time and a lot of these companies will have to rethink their strategies. Many software companies have become increasingly dependent on maintenance revenue to keep revenue growing.  I think that Marc Benioff has started a conversation that will spark a debate that could have wide ranging implications for the future of not only maintenance but of what we think of as software.

My Top Eleven Predictions for 2009 (I bet you thought there would be only ten)

November 14, 2008 11 comments

What a difference a year makes. The past year was filled with a lot of interesting innovations and market shifts. For example, Software as a Service went from being something for small companies or departments within large ones to a mainstream option.  Real customers are beginning to solve real business problems with service oriented architecture.  The latest hype is around Cloud Computing – afterall, the software industry seems to need hype to survive. As we look forward into 2009, it is going to be a very different and difficult year but one that will be full of some surprising twists and turns.  Here are my top predictions for the coming year.
One. Software as a Service (SaaS) goes mainstream. It isn’t just for small companies anymore. While this has been happening slowly and steadily, it is rapidly becoming mainstream because with the dramatic cuts in capital budgets companies are going to fulfill their needs with SaaS.  While companies like SalesForce.com have been the successful pioneers, the big guys (like IBM, Oracle, Microsoft, and HP) are going to make a major push for dominance and strong partner ecosystems.
Two. Tough economic times favor the big and stable technology companies. Yes, these companies will trim expenses and cut back like everyone else. However, customers will be less willing to bet the farm on emerging startups with cool technology. The only way emerging companies will survive is to do what I call “follow the pain”. In other words, come up with compelling technology that solves really tough problems that others can’t do. They need to fill the white space that the big vendors have not filled yet. The best option for emerging companies is to use this time when people will be hiding under their beds to get aggressive and show value to customers and prospects. It is best to shout when everyone else is quiet. You will be heard!
Three.  The Service Oriented Architecture market enters the post hype phase. This is actually good news. We have had in-depth discussions with almost 30 companies for the second edition of SOA for Dummies (coming out December 19th). They are all finding business benefit from the transition. They are all view SOA as a journey – not a project.  So, there will be less noise in the market but more good work getting done.
Four. Service Management gets hot. This has long been an important area whether companies were looking at automating data centers or managing process tied to business metrics.  So, what is different? Companies are starting to seriously plan a service management strategy tied both to customer experience and satisfaction. They are tying this objective to their physical assets, their IT environment, and their business process across the company. There will be vendor consolidation and a lot of innovation in this area.
Five. The desktop takes a beating in a tough economy. When times get tough companies look for ways to cut back and I expect that the desktop will be an area where companies will delay replacement of existing PCs. They will make do with what they have or they will expand their virtualization implementation.
Six. The Cloud grows more serious. Cloud computing has actually been around since early time sharing days if we are to be honest with each other.  However, there is a difference is the emerging technologies like multi-tenancy that make this approach to shared resources different. Just as companies are moving to SaaS because of economic reasons, companies will move to Clouds with the same goal – decreasing capital expenditures.  Companies will start to have to gain an understanding of the impact of trusting a third party provider. Performance, scalability, predictability, and security are not guaranteed just because some company offers a cloud. Service management of the cloud will become a key success factors. And there will be plenty of problems to go around next year.
Seven. There will be tech companies that fail in 2009. Not all companies will make it through this financial crisis.  Even large companies with cash will be potentially on the failure list.  I predict that Sun Microsystems, for example, will fail to remain intact.  I expect that company will be broken apart.  It could be that the hardware assets could be sold to its partner Fujitsu while pieces of software could be sold off as well.  It is hard to see how a company without a well-crafted software strategy and execution model can remain financially viable. Similarly, companies without a focus on the consumer market will have a tough time in the coming year.
Eight. Open Source will soar in this tight market. Open Source companies are in a good position in this type of market—with a caveat.  There is a danger for customers to simply adopt an open source solution unless there is a strong commercial support structure behind it. Companies that offer commercial open source will emerge as strong players.
Nine.  Software goes vertical. I am not talking about packaged software. I anticipate that more and more companies will begin to package everything based on a solutions focus. Even middleware, data management, security, and process management will be packaged so that customers will spend less time building and more time configuring. This will have an impact in the next decade on the way systems integrators will make (or not make) money.
Ten. Appliances become a software platform of choice for customers. Hardware appliances have been around for a number of years and are growing in acceptance and capability.  This trend will accelerate in the coming year.  The most common solutions used with appliances include security, storage, and data warehousing. The appliance platform will expand dramatically this coming year.  More software solutions will be sold with prepackaged solutions to make the acceptance rate for complex enterprise software easier.

Eleven. Companies will spend money on anticipation management. Companies must be able to use their information resources to understand where things are going. Being able to anticipate trends and customer needs is critical.  Therefore, one of the bright spots this coming year will be the need to spend money getting a handle on data.  Companies will need to understand not just what happened last year but where they should invest for the future. They cannot do this without understanding their data.

The bottom line is that 2009 will be a complicated year for software.  There will be many companies without a compelling solution to customer pain will and should fail. The market favors safe companies. As in any down market, some companies will focus on avoiding any risk and waiting. The smart companies – both providers and users of software will take advantage of the rough market to plan for innovation and success when things improve – and they always do.