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The Software Industry in Transition
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FEATURE ARTICLE:THE SOFTWARE INDUSTRY IN TRANSITION(How it affects buyers)Since the arrival of the personal computer in the early 80s, two basic types of business software have predominated: PC-based single-user software and central-computer-based business operations and accounting software. It's this latter type, now often called "enterprise software", that's covered in this Bulletin. Back about 25 years ago or so, software always ran on large multi million dollar "mainframe" computers . . . mostly IBMs, but not always. Then, in the late 70s, computer use spread dramatically as mid-size companies started using smaller and cheaper computers for these applications. Originally designed for scientific use, these smaller machines were dubbed "minicomputers" although, by today's standards, they're anything but "mini". Both mainframes and minis had a serious drawback, however: a lack of standardization between manufacturers, so software written for one couldn't run on any others. Thus, all the major manufactures had captive markets, which allowed them to keep their prices high. Nonetheless, this situation lasted until about
five years ago when business software developers began to change.
To broaden their markets, many enterprise software developers rewrote their
systems to run on standardized computers (usually running the UNIX operating
system) that cost less than the proprietary minicomputers they'd used in
the past. Unfortunately, this change turned out to be much
more difficult than originally expected, and buyers often experienced a
lot of unreliability until the problems were cured. Today, most enterprise software falls into one of three categories:
Because legacy systems are extremely costly to maintain (and can be nearly impossible to adapt when business requirements grow or change), big companies are replacing them wherever possible. Industry-oriented systems running under UNIX have fallen out of favor too because they've been slow to support Windows. In fact, because most of them still use a 24-line by 80-character screen format (like older DOS-based PC programs), buyers tend to reject them out-of-hand as too hard to learn and use. Thus, when mid-size companies upgrade, most are looking for Windows-based software that runs on PCs. But PC software, because of its mass market orientation, is often too generic to meet the complex needs of mid-size and larger firms. The same is often true for high-growth smaller organizations as well. Thus, the industry is undergoing a major change.
Companies of all sizes have begun to look for packaged software wherever
possible—the large ones to reduce the load on their already overburdened
in-house programming staffs and the smaller ones because they don't have
in-house programming staffs. Software companies are responding with
a second major software migration to Windows-based user interfaces . .
. but many of them still have quite a long way to go. Although many software firms still haven't finished converting all their products over to Windows, the changes affecting the software industry aren't over. Two major factors are driving these changes:
In general, when selecting enterprise software, buyers need to focus first on its "fit" to their needs, its reliability, and the quality of the post-installation support that comes with it. When evaluating these factors, it's advisable to give long-term considerations a higher priority than short-term concerns. What this means is that buyers need to look at, not only what the software looks like and does today, but also how far along the software migration has come. As discussed above, the most capable systems in the past (i.e., those with the most features and flexibility) have generally been the industry-oriented ones that were originally written to run on minicomputers . . . not all of them, of course, lots of those systems were terrible. Nevertheless, even among the better ones, many were slow to adopt Windows, which hurt their sales and caused some to go out of business. On the other hand, the developers that started on PCs have the opposite problem. Because of the effort they've had to devote to upgrading to Windows, many have fallen behind in adding more advanced capabilities. Some of them are now trying to correct this, but the mass market orientation their software has developed makes it uneconomical for them to respond to requests that only affect a few unique customers or a specific industry. The challenge for buyers is to find software that meets their needs (which often includes some unique or industry-specific features), follows modern windows and networking standards and comes from a software company with "staying power". In addition, buyers need to consider the ability of the software to handle the change to the year 2000 (see The Millennium Crisis . . . Time is Running Out). In general, the most important thing to find out when evaluating the status of a software package is how many customers are using the current release and how long they've been using it. But longevity cuts both ways. Being one of the first few users of a major upgrade usually involves suffering through some significant bugs. But the alternative of being one of the last few users of the about-to-be replaced older version may be worse because that means a dual conversion: first converting to the old software, then upgrading to the new. As important as it is to know where a software system has been, is knowing where it's going (i.e., what enhancements are "on the drawing board"). Enterprise software buyers need to get a complete explanation of what improvement are planned for the next few years and what impact these changes will have on its users. This is critical because, if the buyer believes the software company can deliver on these promises (and it shouldn't buy if it doesn't), this can affect hardware and software expenditures, installation of communications lines, and training requirements throughout the buyer's organization. Agree or disagree? . . . Take it up with the author.
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