Chris Koch reports on a new study that reveals just how disillusioned CIOs have become with the traditional model of buying and maintaining business software. The research house IDC surveyed 250 IT execs and found, according to Koch, "that they are so frustrated with software licensing that deep discounts on the software - as much as 100 percent! - donít lift their moods. They are convinced that the software companies will rip them off somehow. That somehow is usually via maintenance or subscription fees." The survey reveals, moreover, that "companies believe they use just 16 percent of the software they buy. The rest is just there to pump up the vendorsí fees." The study backs up earlier research by AMR that found software buyers are "furious" about vendors' maintenance and upgrade practices.

Koch concludes, rightly I think, that the breakdown in trust between enterprise software companies and their customers signals the death of the traditional model. He writes: "When youíre paying for software endlessly without knowing whether you can afford to upgrade the software when a new version comes out, or how much you will be charged for new software that the vendor develops, or how much of a say you will have in that development, you are tempted to simply reject the entire model out of hand. I think weíre there."

Not coincidentally, the IDC research reveals an increasing appetite for "software as a service" (SaaS) - applications hosted by outside companies and served up as utility services for a simple fee. "For every major category of enterprise software," Koch writes, "IT executives in small and large companies (we used to think only small companies wanted software as a service, right?) said they wanted software delivered as a service. Twice as many wanted to buy by the drink rather than owning it outright." The way that demand for SaaS is moving up the market, from small companies to big ones, follows the classic pattern of a bottom-up disruptive innovation - and reveals where the enterprise application industry is heading.

But the research also points to one of the roadblocks to the adoption of SaaS: resistance from the CIOs themselves. Koch reports that "when the IT executives were asked whether they wanted CRM as a service or wanted to own it, the numbers [supporting SaaS] reversed. Twice as many wanted to own. That seems to be a direct reaction to Salesforceís success in the market. Business users can go around IT and set up their own Salesforce.com accounts. IT canít justify the investments it has already made in CRM any longer." CIOs are fed up with the traditional model of software supply, in other words, but they still resist the changes necessary in shifting to a new model. Because SaaS calls into question their past investments, they have a natural tendency to see it as a threat. Once again, that follows the disruptive-innovation pattern.

But the resistance will fade as SaaS matures and, in particular, becomes more flexible. Koch notes that difficulties in integrating hosted applications with in-house systems is holding up the shift to SaaS, but companies like Salesforce.com are tearing down that barrier, and it will disappear as new web-services platforms emerge. The death of the old software model will be slow, and it will be painful for many vendors and users, but it will happen.

2:46:35 PM    comment   

Could this be the decade that the U.S. will get satellite media broadcasts to our phones? DMB, which is a method to send audio and video through satellites straight into small devices like phones and PMPs, may be touching us sooner than we think and Samsung is ready. The SCH-B200/SPH-B2000 is a swivel screen phone that turns into a widescreen media device with three hours of DMB playback.

In addition to DMB there is video-on-demand, MP3 playback, and a 2-megapixel camera with flash. Let me repeat this for emphasis: you get a phone that picks up satellite radio and video, a media player/recorder, and a camera. Luscious.

Samsung Launches New Satellite DMB Phone [101Reviews]

1:31:08 PM    comment   

Quoting an unnamed source "close to the company," the Yomiuri said the cuts would figure in the tens of billions of yen (the hundreds of millions of dollars).

The source said that the cuts would likely affect the 210 billion yen ($1.87 billion) allocated to domestic programming expenditures, about one-third of NHK's total operating expenditures. Personnel costs are a likely target, the report said. Already managers have seen their pay cut by 15 percent; that percentage would likely be raised.

NHK obtains more than 96 percent of its revenues in the form of viewer licensing fees, which amount to about 1,400 yen ($13) per month for a household owning a color TV. In the last year, however, a growing number of people have refused to pay the fees in protest over a series of embezzlement scandals at the broadcaster and allegations that it had censored a controversial documentary due to political pressure.

More than one million households were estimated to have stopped payment at the end of June.

In its budget for fiscal year 2005, which began April 1, the broadcaster based its numbers on an estimate that some 450,000 households would not pay their viewer licensing fees. [Japan Media Review]
12:29:05 PM    comment