Four Enterprise Software Facts to Keep in Mind

Dennis Byron

In my Enterprise Software Stockholm Syndrome blog post of August 12, I noted how important it is to study enterprise software market dynamics yourself in order to protect your company's or organization's IT investment and your own value to that organization as an IT professional. As I've said in many blog posts, do not depend on the trade or mainstream media for those dynamics; they just don't get it (or in some cases they seem have an agenda that goes against your best interests).

The beat of bad info keeps up this week with an International Data Group (IDG) news or opinion article (can't tell which) based on an interview of Larry Augustin, CEO of SugarCRM. It is getting wide Internet play on IDG networks and even on the BusinessWeek site. So in addition to looking at the facts yourself with a careful eye, make sure your boss gets the message. There is a lot of mixing of facts and unfounded opinion in this and similar articles.


The lead of the article says:

"Open source is giving a mighty boost to the enterprise software industry, changing the support equation for users and signaling to Microsoft and other proprietary vendors that it's time to catch on or be left out"

It's hard to defend that sentence, which is attributed to Augustin although I am not even sure that the attribution or interpretation of what Augustin said is correct.


First, neither open source nor any other factor is boosting enterprise software based on first-half 2009 company financial results. The enterprise-software market has deflated compared to the first half of 2008, and 2009 may turn out to be a total wipe out. Some of this is due to currency fluctuation but most is because -- naturally -- you are not buying new software in a down economy. The only saving grace is that the second half of 2008 was when all the macroeconomic troubles started so the second-half 2009 compare will be a lot easier. CRM software sales seem to be an exception to the downward trend, which maybe be what Augustin was referring to. But whether CRM sales are a lagging indicator of the market deflation or will actually survive the 2008-2009 downturn remains to be seen (tune in to Salesforce.com's earnings call on Thursday 8/21).


In addition, open source is a small "slivver" of the enterprise software market.


Second, open source does not change the "support equation" for you because software licensed under open source terms and conditions (Ts&Cs) is supported and paid for in the same manner as any other software. I suppose Augustin may have been arguing that open source gives you the option of choosing no support, but that has always been an option with try-it/you'll-like it marketing efforts such as associated with most open source licensed software. Sorry, but anything worth using in your enterprises is worth paying for (including SugarCRM); there is no such thing as a free lunch.


Third, there are no "proprietary vendors." The open source movement is owned lock, stock and barrel by the leading enterprise software providers. To pretend that there is some bifurcation between open source and proprietary among the vendor community is the route to many bad decisions.


Fourth, Microsoft is least guilty of the offense that the article seems to hyperventilate most about:

"Those (vendor) control issues, fostered by having source code for applications (available under open source Ts&Cs), will help balance the customer/vendor relationship, Augustin says. In essence, users won't get locked into applications that vendors no longer push forward even while they continue to collect support fees."

Again it is unclear if this is based on something Augustin said or something that the author of the article divined from the conversation with Augustin, but in general Microsoft does not sell its software that way.


When the first sentence of an article has four problems like that in it, that sets up a red flag for using the rest of the article in IT decision-making.

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