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| Home - Industry Article - Feb 05 Issue |
Invigorate Your Company in 2005 |
By M.R. Rangaswami, Co-founder, Sand Hill Group
I’ve been part of the software industry for more than twenty years. Technologies have come and gone, but one thing hasn’t changed: software vendors’ reputation as unresponsive and inflexible.
In the past, software vendors got caught up trying to capitalize on the “next big thing.” Customers would scramble to be a part of it. Revenues would skyrocket. And capturing a piece of the gigantic pie meant being able to forget about serving customers and managing the business: Customer requests fell on deaf ears. Sales strategies were heavy handed. Products worked only most of the time. Performance benchmarks were nonexistent.
Flash forward to 2005. Four years of recession has drained the coffers of many enterprises – and their vendors. Poorly managed vendors disappeared. The big guys are figuring out their next move. Yet the industry continues to renew: Even during the downturn, hundreds of new software companies have been born to take advantage of new technologies and business models.
With so many changes affecting the market today, Sand Hill Group decided to commission a study: CEO Outlook 2005. This new report examines software company leaders’ opinions of the coming year for the industry as well as their companies.
The exciting part? The study shows many signs that software vendors may be changing their ways – for the better.
Signs of Change
Now, as the industry seems poised for renewed growth after four lean years, it appears vendors may be responding to longtime complaints. Respondents to the study say they are using software as a service pricing. They recognize the impact of services-oriented architecture and open source. They are exploring options offshore – and undoubtedly other means to manage their bottom line more closely.
The participants in the study may be leading-edge vendors. Or they may simply represent younger companies. The vast majority of respondents were private which makes change easier: more able to change business models, adopt new pricing strategies and recreate products using the latest technology.
CEOs surveyed are bullish about their company’s prospects for 2005. Most are predicting double-digit revenue increases. They have budgeted for increases in profit and cash balances – not to mention marketing budgets and headcount. Clearly, executives are optimistic that the industry is on the mend.
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