September 12, 2005 (Computerworld) --
Despite recent press stating that the software industry has matured, I believe the next six to 12 months will be fruitful times for innovation. It's true that many segments of the enterprise software market are consolidating. These trends, however, mark the ending phase of a digestion process of technologies that originated in the 1990's. Now that IT organizations have hardened their maturing infrastructure, they're beginning to plan new improvements.
A number of factors are driving and enabling new advancements. The most basic one is the reach and interconnectivity of everything, as the Internet has become the ubiquitous backbone for communication. Another factor is computing mobility. Location has become fungible. Finally, as decentralization has become more commonplace, coordination has become a paramount skill of high-performing organizations.
How these factors translate into innovation is hard to predict, even with a crystal ball. But based upon the above factors, here are some areas that I believe have promise:
On-Demand Computing Also known as software as a service, on-demand computing appears to be an accelerating and irreversible trend. Enterprises have improved their competitiveness during the last bear market, and they've also become acutely aware of their core strategic capabilities. Companies are keeping what's core and outsourcing what's not.
Outsourcing computing-based services isn't new. Payroll outsourcing, for example, has been around for decades. What is relatively new is that the maturation of connectivity and application logic now allows business functions to be managed remotely while still providing round-the-clock accessibility.
The best recent example of an on-demand service is Salesforce.com Inc. Last quarter, the company announced major enterprise wins at Merrill Lynch & and Citizens Bank. Expect even bigger customer wins to come. Large companies are choosing Salesforce.com because they realize that while sales management is strategic, application development to support it is not. Salesforce.com wins because it can continually improve its application much faster than most, if not all, internal IT organizations.
Over the next 12 months, I believe more on-demand services will start hitting the radar screen of large organizations. Jobster Inc., a company that specializes in recruiting management, has already ramped up beyond 150 corporate users after launching its service in March, 2005. They count as customers companies such as The Boeing Co., Cisco Systems Inc., Google Inc., Samsung Corp. and T-Mobile USA Inc. Another emerging company is Right90 Inc., which focuses on improving the coordination of sales forecasting and operations management. Good on-demand services have fast implementation cycles and good returns on investment for the customer. They may also have the potential to become as universal as Automatic Data Processing Inc.
Voice-Driven Applications and Infrastructure Even though voice-based communication has been around longer than modern-day computing, I believe voice services and management will re-emerge as central concerns of enterprises. New services such as that of Skype Technologies SA are invading the enterprise on the promise of free end-user telephony. Google, Yahoo Inc. and Microsoft Corp. have voice-based instant messaging in the works. And cell phone usage continues to grow inside corporations.
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Despite recent press stating that the software industry has matured, I believe the next six to 12 months will be fruitful times for innovation. It's true that many segments of the enterprise software market are consolidating. These trends, however, mark the ending phase of a digestion process of technologies that originated in the 1990's. Now that IT organizations have hardened their maturing infrastructure, they're beginning to plan new improvements. 
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