What’s ahead in 2004: Innovation and Pragmatism in a Dynamically Responsive World

In 2003 the software economy came to a virtual standstill. Buyers continued to hold back on software acquisitions – purchasing only the essentials. While 2004 will be a much better market for software, customers will continue to demand that products can make a significant contribution to the bottom line. Therefore, I do not see customers easing up on their potential vendors. If anything, it will be more difficult for emerging software vendors to gain the attention of the CIO. While it is important for customers to keep vendors focused on their immediate needs, it is equally important for buyers to focus on innovation as the driving requirement. Customers are increasingly demanding that suppliers provide solutions that can adapt to be dynamically responsive environment. In this context, there are several important areas of software that customers should pay particular attention to in 2004 because of their potential to transform business.

• Customer Experience Management – Simply having a web presence is not enough to differentiate any corporation today. One of the most important trends to emerge in 2004 will be software that improves the way customers, partners, and suppliers experience a company’s web presence. This area of software will focus on how well a company can lead a customer to purchase the right product at the right time. This will be the natural evolution of search and customer relationship management technology, content, and document management.
• Business Process Integration Solutions market will mature. While there have been products that created sophisticated workflows or helped companies codify business rules monitoring, none of these solutions have taken hold. A new generation of business process integration solutions will emerge that will help companies synchronize business rules, business process, and model best practices in a flexible innovative way that has the potential to transform business.
• Wireless Management Solutions WiFi will continue to be hot as vendors continue to figure out the right economic model so that adoption is widespread. As this begins to happen solutions will emerge to help companies manage the performance, scalability, and most importantly security of these solutions.
• Security solutions will continue to accelerate. As distributed virtual environments continue to explode, new solutions will come onto the market that safeguards corporate assets. These solutions will protect companies even when they create component applications across partners and suppliers.
• Web Services/Component Architecture software and web services tools will explode – Component architectures, tools, and integration solutions will become the hottest trend in applications development and deployment. This will happen because component architectures help companies create new packaged solutions without having to program from scratch. All sorts of new products aimed at creating modular flexible applications. These will be driven by the emergence of offerings and platform strategies from Microsoft, IBM, HP, and SAP.
• Storage and backup – As more companies begin to use the same components to create new instances of value in real time, the need to have more sophisticated storage and backup capabilities will grow. Companies will continue to emerge with innovative methods of helping companies cope with an unending amount of data and combinations of software that needs to be stored and managed in dramatically different ways.
• Integration solutions are changing from a programmatic model to a linkage model Technologies that enable customers to more easily link their software assets together to create new value will continue to emerge. These technologies will hide underlying complexities of each component so that integration is dramatically simplified for the customer.
• Business Process Management and Monitoring – Technologies that will help companies manage the interactions across their own departments as well as with partners and suppliers will experience tremendous growth.
• Management Technology Market will experience new growth. Driven by component architectures and more distributed solutions, there will be many new innovations in the way companies can manage their highly virtualized computing environments.
• Software as a service will begin to mature. An increasing number of companies are beginning to offer software as a hosted service. In 2004 this trend will accelerate. In fact, within the next five years, more customers will be looking for hosted services than for traditional purchasing models.

One of the most important trends for 2004 is that, as usual, there is little new under the sun. The technologies described above have all been around for decades. The difference for the coming year is that for the first time corporations will be able to deploy standards-based component architectures to solve real world problems. If the past decade has taught us anything it is that solutions must be designed with an equal amount of innovation and pragmatism to solve real customer problems in an increasingly real-time world.

Judith Hurwitz is the president of Hurwitz & Associates, a consulting, research, and analyst firm focused on emerging software markets. She can be reached at jhurwitz@hurwitzassociates.com