Software 2006

    April 4, 2006

I’m at MR Rangaswami’s big event, Software 2006, where Socialtext is selected as a showcase company.

His intro began with a suggestion for what the buzz in enterprise software could be this year.

  • Software 2004: Offshoring opportunities
  • Software 2005: Vendor consolidation
  • Software 2006: Ecosystem health

The focus this year is maturing as an industry and understanding constituents and how we can work together. It’s open for debate if the software industry has matured, Web 2.0 is consumer-driven (catch me in the hallway if you really want to know) or if Ecosystem is just a buzzword. He thinks that the software industry is going through a quet revolutin., Software’s Share of the IT Budget will grow from 30% to 35% in 2008 according to a CIO survey released today (pdf), VC interest growing and opportunities abbound for SaaS, SoA and Open Source.

The web 2.0 enterprise potential

Revenue will flow when and automaker pays for podcast about new car features, consumer goods company delivers an RSS feed for new product info and tech giant blog to the world about R&D. If you are doing wikis or blogs, how do you get that information out to the world? Tacit person-to-person interractionis 41% share of worker activity, but only 24% of software spending. Lots of good things for customers as well as helping them get to the consumer.

McKinsey Report and McKinsey released an industry report in pdf. Let me unpack it for you and show you the good stuff:

Technology Discontinuity: Web 2.0 for the Enterprise. As in previous innovation cycles, whenever multiple point capabilities converge – such as wireless, pervasive broadband, and online collaboration – many new applications become possible. In these cases, consumers tend to adopt the new services and products before the enterprise, but in the end the enterprise market is usually far larger and more profitable. We believe that much of the hype around “Web 2.0” for consumers – with its rapid innovation in content (e.g., blogs, wikis, user editing and tagging), tools like search, and services like content hosting – heralds a much larger opportunity to put these innovations to work in the enterprise…

In particular, we believe the opportunity will exist to complement and enable “tacit interactions” – the most rapidly growing component of business labor cost. Person-to-person tacit interactions involve judgment or insight applied to complex communications or problem solving, and often occurs in, say, management, sales, customer service. , Tacit interactions differ from transformational interactions (changing a physical good into something else) and transactional interactions (following set rules in a repeatable fashion). They now represent 41 percent of all U.S. worker activity (measured by number of jobs) and are growing the most rapidly. However, only 24 percent of software investments today support them, indicating a significant potential opportunity for vendors with the right solutions. The software capabilities required will be different from those which led to significant productivity gains over the last decade through transaction automation and scaling Key opportunities for innovating in tacit interactions include software tools to increase access to data and information, support decisions, improve communications, and support multi-party workflows and collaboration – all likely parts of Web 2.0 for the enterprise.

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Ross Mayfield is CEO and co-founder of Socialtext, an emerging provider of Enterprise Social Software that dramatically increases group productivity and develops a group memory.

He also writes Ross Mayfield’s Weblog which focuses on markets, technology and musings.