1848 was a pivotal year in European history. A similar year of change can be expected to take place this year in the enterprise software business. In European history the stage was set for the events of 1848 by the economic effects of severe crop failures merged with the discontent caused by political repression of nationalist aspirations. This year in enterprise software, the stage was set by economic failures of an entire generation of software companies that attempted to take advantage of the internet but failed spectacularly and squashed entrepreneurial aspirations.
Sparking the changes of 1848 was a revolution in France that soon spread to Western and Central Europe. Sparking the changes of 2005 is Oracle’s acquisition of PeopleSoft. Three trends that underlie today’s revolution in software are:
- Software as a Service. Just as the first generation of ASP’s are finally being folded into larger institutions (i.e. IBM’s acquisition of Corio) a new generation of software companies is coming into fashion. The new generation hosts its own software and offers term instead of perpetual software licenses. Siebel CRM On Demand is one of these companies. In twelve years, Siebel Enterprise has gone though seven major releases. In fourteen months, Siebel CRM On-Demand has gone though as many. This is revolutionary by any measure.
- Globalization. According to Gartner, offshore IT services spending is expected to reach $50 billion by 2007. IDC analysis anticipates that the worldwide IT outsourcing market will grow to $18 billion by 2008, at an annual compound growth rate of 20%. By 2008, IDC estimates nearly one-quarter of U.S. spending on application development, integration and management services will go to offshore providers.
- Open Source. The growth of Linux is taking even its creators by surprise. Linus Torvalds has written “I'd like to say that I knew this would happen, that it's all part of the plan for world domination. But honestly this has all taken me a bit by surprise.” Linux today has millions of users, thousands of developers.
The revolutions of 1848 failed notably because three kinds of demands—social and economic, liberal, and national—were not easily reconciled. The software revolution of 2005 may fail because the three leading trends –software as a service, globalization, and open source – are not easily reconciled. The results of the uprisings in 1848 were the spread of parliamentary governments, the extension of suffrage in France and Austria and the beginnings of the German and Italian unification movements which were good for the citizens of those countries. The results of the software revolution of 2005 are likely to be similarly sweeping and good for the customer.