We recently posted an opinion article on the ISV Stress Test facing enterprise software companies. In that piece we included a graph that conveyed some research on the investments levels and productivity benefits delivered by software in the US. The main point, ROI on enterprise software has been falling since the tech bubble and before the global economic crisis started. Now software companies with poor effective adoption levels will be faced with a significant revenue growth challenge.
As I have subsequently discussed this issue with a number of software executives and listened to their stories of poor adoption and orphaned accounts I am even more convinced that a significant correction is underway. It is still true that major software players will continue to get upgrades, business is dynamic and software must catch-up. But there are other changes afoot, lower pricing, more pay-as-you-go options, more pressure on maintenance services to deliver higher value.
Fundamentally the threshold expectations from customers around the level, nature and value of service they receive from software companies is shifting. Software companies that can lead their customers to adoption success are going to benefit, others that see themselves solely as product companies run the risk of leaving the future of their P&L in the hands of partners - or even worse their customers!
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