The Coming Storm

In answer to my previous posting, as requested, an explanation of the train coming down the tracks. The one that would prevent me from investing in or buying a "best of breed" vendor such as Aderant.

The following diagram lays my beliefs out perfectly:

It appears in "Avoiding Software's Perfect Storm", a must read article if you are interested in the business side of software. In other words: it's one of those articles that lay out my beliefs well, and hence I think it is a masterpiece!

The core defences laid out for a "best of breed" organisation are interesting to work through. Is summary, though:

• Defend your core market
• Reinvent the value chain

Both approaches require investment, happy customers, product and domain knowledge. A "best of breed" company that has been pared to the bone in order to make the financial side of the equation look good will have made big sacrifices in these areas, and thus won't have the ability to do either in a hurry.

Another point is that if lots of partners and third party "components" have been introduced in order to try and compensate for shortcomings in the original product line up these companies in turn are going to have to be part of the strategy going forward. That can make for an interesting herding job. 

Such a "best of breed" company will perhaps make a target by a better run competitor in the same market, but then the competitor surely will evaluate client satisfaction and the knowledge of both the products and the domain. So the risk here is that in doing the takeover research, the target reveals a lot of competitive information that can be used against it. The competitors will probably be doing a great deal of talking, but very little buying.

But the train in the storm is the disruptor challenge from the bottom end. This is where the software as a service (SAAS) or open source companies are going to be making their presence felt. This is where developers have raw opportunity. And of interest is that the SAAS vendors will probably build on top of open source software, as it gives them a large economic advantage in their pricing. So if you look at the picture it paints a future of software where there will be a small number of mega vendors (Microsoft, Oracle, etc), a larger number of vendors who have strong bonds across industry sectors (Sony, IBM, Thomson-Elite, etc), and a panoply of open source products and SAAS vendors. Then the fun will really start!

9:29:14 AM