The Future of Software

Information Week has a special report.

In the next few years, software, the way it’s developed and supported, and the vendors that deliver it are in for more changes, driven by emerging business needs, new customer demands, and market forces. “There’s an argument that almost every company is in the software business in one way or another,” says Charles Fitzgerald, Microsoft’s platform strategy general manager. People may not think of eBay or American Express as being in the software business, he says, but they are. “If you participate in the information economy, you will be a software company. If you’re in a customer-facing business, software is the way you’re going to differentiate yourself.”

But will the industry that provides much of that software look the same three, five, or even 10 years down the road? Probably not. It’s an industry that goes through periodic waves of consolidation and expansion, and the consensus is that it will be in consolidation mode for the next few years. Oracle CEO Larry Ellison has famously predicted that, within a few years, the software market will be dominated by a few companies, including Microsoft, SAP, and–of course–Oracle.

Some software buyers agree. “The number of software vendors will definitely get smaller and smaller,” says Mani Shabrang, head of technology deployment and research and development in Dow Chemical Co.’s business-intelligence center. But as vendors of mature software categories such as enterprise resource planning consolidate, he says, vendors of new types of software will spring up. Shabrang foresees a new generation of tools for visualizing data and intelligent software that doesn’t just mine text but recognizes the tone and meaning of written prose.

There’s no consensus on what the next killer application will be, but emerging service-oriented architecture technology is likely to provide the foundation for a new generation of software applications. In contrast to today’s model of vendors developing ever-larger applications that can take months to install, the software of the future will be made up of components, many of them developed in-house by the businesses that need them.

One direction software may take is to move from integrating business processes within a company to integrating these processes between companies, Sabbah says. For instance, such applications might link ordering, invoicing, and inventory-management tasks up and down a supply chain within an industry.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.