Menu
Could the recession be good for enterprise software?

Could the recession be good for enterprise software?

Once the recession ends, the IT industry will have changed in multiple ways, industry observers say.

Large corporations "have all the ERP they can consume or even digest. The era of the big suite really is all over for those companies," he said.

Customers are instead trying to invest more in SaaS (software as a service) and BPO (business process outsourcing), "looking for a constant stream of innovation" versus a periodic, big-bang upgrade, he said.

Overall, the recession has prompted many more companies to buy into SaaS products, and once the economy turns around, SaaS will be a significant part of the IT landscape, Wang said.

Changes could also be coming to the way software is maintained.

Vendors derive a large and strategic piece of their revenue from annual maintenance fees, but the recession has more companies investigating lower-cost third-party maintenance options.

Rimini Street, which supports some SAP and Oracle product lines, recently announced that business quadrupled last year, with some $86 million in sales bookings.

Those numbers may have been helped in part by SAP's high-profile decision last year to shift customers onto a richer-featured but more expensive maintenance service.

Observers like Scavo say third-party maintenance options ought to be a given.

"If I have a Lexus I don't need to go through the dealer [for service]," Scavo said. "Vendors shouldn't be allowed to have that power."

It is unclear whether a large crop of additional third-party companies like Rimini Street will surface, said Wang. For one thing, some vendors attempt to restrict access to training on their products, he said.

But Wang did predict that customers will be much more selective in the future about which software lines they choose to keep on a maintenance plan at all.

And the rise of SaaS, with its subscription-based model, will also alter how much companies are paying in traditional maintenance fees.

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags enterprise softwareglobal recession

More about BillCSC AustraliaForrester ResearchLexusOracleSAP AustraliaSASSAS Institute AustraliaWang

Show Comments
[]