The "four horsemen" of commoditization--service oriented architecture (SOA), open source, software as a service and offshoring--will lead to cheaper prices and a radical change in enterprise software landscape of the future, according to analyst Forrester.
The Future of Enterprise Software report by Forrester predicts that over the next five years the industry will feature fewer larger IT suppliers than ever before, more pricing flexibility and declining prices.
But the change will be evolutionary rather than revolutionary. While more than half of organizations are already making plans for introducing SOA, large enterprises are being held back by the weight of their IT legacies, which have grown dramatically in the past decade as they have adopted ERP (enterprise resource planning), CRM (customer relationship management) and many other siloed software products.
The integration required for SOA, therefore, remains as difficult and expensive as ever, according to Forrester.
The report said: "Adoption of SOA will be gradual, often painstaking work."
Frustration with traditional software licensing will also drive adoption of software as a service and open source among enterprise IT buyers. Software maintenance fees--which can eat up 80 percent of a company's IT budget--are the main gripe.
The report said: "While business today runs on software, CEOs and CIOs are not happy with either the prices they pay or performance that falls short of vendor promises. Software buyers of all sizes are calibrating their investments much more carefully to business results than they did during previous platform transitions, particularly the Internet boom."
A quarter of enterprises are already using software as a service, with another 10 percent piloting or planning to pilot it. Businesses cited application availability and reliability, and rapid deployment as the main drivers to adoption.
Forrester's advice to IT buyers is to choose one or two of the "big four" IT vendors to anchor the company's IT strategy but retain competitive leverage in architecture and purchasing and open up to the "four horsemen" to drive productive change.
The report said: "Too many IT pros today reject the new ideas behind the four horsemen as 'not ready for prime time'. Blanket dismissals of new ideas are defensive; IT executives should be looking instead for ways that the four horsemen can drive productive changes for business. These forces will define the future of enterprise software."
Andy McCue of Silicon.com reported from London.
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