There are some in the software industry who would have you believe that the market for so-called best-of-breed applications is on its deathbed or, even worse, ready to be buried. Evangelists of this belief exhort that Oracle's acquisition of PeopleSoft last year and of Siebel Systems recently amount to the most obvious proof that companies that develop software for specific functions cannot remain independent in the mature and consolidating market that enterprise software has become.
Alas, it is the end of days, these pessimistic prognosticators proclaim. Enterprise software has become a game of software suites versus software suites and will soon become a contest of Web-based architectural platforms versus Web-based architectural platforms. The days when single application software companies could survive and thrive, as a PeopleSoft or Siebel had, has given way to a market where buyers demand fewer suppliers and more homogeneous computing environments.
The demands may be true, but reports of the death of best-of-breed software, as the famous American writer Mark Twain used to say, are greatly exaggerated.
The first reason this is so is that the evangelists are looking backward. What they are reacting to is the culmination of the client/server period in software history. This period, which began in the early 1990s, gave rise to PeopleSoft, Siebel, Baan, i2 Technologies and dozens of other companies that pioneered applications built on the architecture prevalent at that time. The consolidation underway in the software industry today is, in effect, cleaning up the remnants of this era. It is the last act of the client/server play.
The second reason is that a new production is in the works. The play coming soon to a computer near you is written in the language of the Web. Concepts such as Web services and service-oriented architectures will dominate in the era now emerging. As they do, a new cycle of innovation will erupt that may very well exceed that of the client/server era.
I've argued before that describing the software industry as mature is a mischaracterization. Cycles become mature, but industries can renew themselves. The advent of a new cycle in the software industry bodes well for manufacturers everywhere. People will figure out how to innovate in specific functional areas based on the new architecture, new companies will form as venture capital seeks growth, success will be had and new fortunes will be made, and the cycle will play out again.
Some of the software suppliers now on the stage may transition to the new style, and some may not. The survivors will have to rethink many things, including basic business models, including pricing, and their "connectedness" to other systems. My bet is that the era of the Web will result in a software industry much more global in nature, much more based on standards, more oriented to how companies actually need to apply software to how their businesses function, and one highly flexible in how it delivers functionality.
Manufacturers will once again invest in the best and the brightest as they seek competitive advantage. They will again manage growing portfolios of applications and then wish for fewer suppliers and more homogeneity - until the next cycle begins.
Best of breed isn't dead. It's just on a holiday. I, for one, can't wait for its return.
What's your view of how software is evolving? E-mail me at Dbrousell@thomaspublishing.com.