Topping Hollywood: Software's Frenzied Year

SaaS, SOA and Virtualization hit new heights in adoption and hype during 2007, while SAP and Oracle continued their grudge match.


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Posted December 17, 2007

Larry Barrett

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Looking Back

If and when striking Hollywood writers finally get back to work, they might want to consider drawing upon some of the intriguing storylines that dominated the enterprise software industry in 2007 for inspiration.

While there was no shortage of villains, upstarts and old familiar faces to entice viewers, "Software 2007" seems like a can't-miss proposition.

Then again, how would they sell advertisers and viewers on a project that reads like a soap opera, looks like an Ultimate Fighting cage match and, at times, sounds more far-fetched than any child's fairy tale?

Imagine this pitch: "It's kind of like 'Wall Street' meets 'Where's Waldo?' with a little bit of 'The Amazing Race' sprinkled in. You know, billionaires circumnavigating the globe in yachts and tricked-out 767s searching for cheap labor, Shai Agassi and anyone who can provide the authoritative definition of SOA."

Even if that would-be producer isn't immediately laughed out of the room, he or she still won't have an ending to the story. Instead, we'll have to wait until next year just to find out what happens next.

Until then, here's a look back at some of the most significant software subplots for 2007:

The SaaS model gets some respect

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Rather than locking themselves into never-ending license service contracts -- to say nothing of the months or years it takes to complete an on-premise software implementation -- companies of all sizes are increasingly turning to Software-as-a-Service (SaaS) (define) for their daily business applications. This has been good news for providers like and NetSuite. during the year extended its lead in the sector. The company reported strong earnings, customer wins (including many wins against on-premise competitors) and the launch of its platform-as-a-service offering,, for developers to build and deliver any application they want, on demand.

Cisco Systems' $3.2 billion purchase of WebEx in March now positions the network-equipment maker as serious threat to top-tier enterprise software vendors servicing corporate customers that are increasingly enamored with the SaaS model for unified communications and collaboration.

Meanwhile, Microsoft is expected to launch its CRM Live on-demand product early next year. Oracle in November announced plans to beef up its Siebel CRM On Demand service with a slew of social networking features.

But the strongest vote of confidence for the SaaS model may have come in fall, when SAP -- the world's largest business application vendor -- jumped on the bandwagon with its first on-demand service, Business ByDesign.

In announcing what amounts to a sea change in the German company's strategic direction, CEO Henning Kagermann stepped up the rhetoric when he called Business ByDesign "the most important announcement I've made in my career."

That a company of SAP's size and stature would spend more than $500 million to launch what can only be viewed as a direct challenge to makes it perhaps the most resounding endorsement of the SaaS model.

Believe it or not,, which eclipsed the 1 million-subscriber threshold in 2007, is pleased by the turn of events.

"I feel like sending Henning Kagermann a fruit basket today," Bruce Francis,'s vice president of corporate strategy, said in an interview with in September. "This is a fantastic thing. What SAP is doing is confusing their customer base and opening minds and markets for the SaaS model."

And then there's NetSuite. On Dec. 6, the company finally formalized its initial public offering, filing to sell 6.2 million shares for between $13 and $16 a share. NetSuite, which is majority-owned by Oracle CEO Larry Ellison, hopes to raise almost $100 million to pay down some debt and build a second datacenter.

Despite being an early mover, the company has yet to turn a profit, however.

And SaaS isn't a sure-fire win for SAP, either. The model may have received the nod from the software giant, but it still represents a gamble.

Business ByDesign "is a big bet for SAP," Gartner analyst Dan Sholler said in an interview with in August. "This has to succeed or they will have a whole host of business challenges ahead of them. No one has ever proven they can sell this type of business technology this way. SAP is betting the profitability of the company that it will be able to do it."

Continued on Page 2: The SAP-Oracle war rages on.

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