Analysis & opinions of leading software executives
Analysis & opinions of leading software executives
A view from the top
PwC's Mark McCaffrey discusses software industry trends that are causing leading companies to change the way they are doing business.
- Raman Chitkara
- Global leader
Technology - Tel: +1 (408) 817 3746
- Mark McCaffrey
- Global leader
Software - Tel: +1 (408) 817 4199
What are leading executives saying?
The well-known trends—cloud, software-as-a-service (SaaS), mobile devices and consumerisation of IT—are making their own individual waves for software vendors. Dive beneath the surface, however, and you will find a strong undertow created by the combination of all these forces. It’s a multiplier effect that is redefining how software vendors develop, market, sell, distribute and support their products.
PwC interviewed the CEOs and senior executives of large software providers around the world about how these key trends will impact their business.
Although it isn’t new, the deep implications of consumerisation of IT are only now starting to hit home for software vendors. While enterprises have been adjusting to a flood of smartphones and tablets, as well as the increasing use of consumer-grade cloud services like Dropbox, the rules of the enterprise software sales game are changing.
Jim Whitehurst President and CEO, Red Hat
"Customer loyalty is going to become more and more important."
Jim Ensell Chief marketing and strategy officer, CollabNet
"There is a big, big onus on us to really focus on service levels to make sure we have happy users."
Jim McGeever COO, NetSuite
"We lose money in the first couple of years after signing up a new customer, so retention is crucial."
Mouli Raman Managing director, OnMobile Global
"The market is changing from B2B to end-user-centric."
Jonathan Becher Chief marketing officer, SAP
"Like many marketers, we have invested heavily in technology over the last two years."
Jim Davis Senior vice president and chief marketing officer, SAS
"We take social media very seriously. We do not view social media just as a channel to broadcast information."
Mark Garrett CFO, Adobe
"Our Creative Cloud offering will become a platform for our partners to offer services to our customers."
Tatsuo Otsuka President, K.K. Ashisuto
"The goal is to achieve a large number of downloads so the software company becomes attractive as an acquisition by larger companies."
Ken Berryman Senior vice president of strategy and corporate development, BMC Software
"We see a lot of potential in delivering services across mobile devices, but those services require a connection to a back-end database or system."
The shift in enterprise software sales from license to services is amongst the most significant upheavals the industry has seen. Regardless of how quickly, or slowly, companies make the transition to SaaS, the evolution is extremely stressful, creating a number of dilemmas for the vendor.
Bernard Charlès CEO, Dassault Systèmes
"The vision that financial investors and clients have of the software industry is not accurate anymore. The industry is changing."
Jim Whitehurst President and CEO, Red Hat
"I would say 90 percent of the customers are looking to move to SaaS, but at least 75 percent of the dollars will remain in selfhosting for the next few years."
Mark Garrett CFO, Adobe
"The most exciting thing is we’ve got the opportunity to take a US$4.5-billion company and shift the business model in a way that will drive faster growth both on the topline and the bottom line, with much, much more predictable revenue."
Munehiro Hashimoto Division President of IT Platform Business Management Division, Hitachi, Ltd., Information & Telecommunications Systems Company
"The market is changing and customers are asking why software is not a service the way hardware is a service."
Godfrey Sullivan Chairman and CEO, Splunk
"To think that the industry will somehow transform itself to a 50 percent mix of SaaS in the next three years—I think is probably reaching. But, maybe 20 percent, that could happen."
J.B. Wood President and CEO, TSIA
"Why should the stock price tank while management does the right longterm thing for both the customer and, ultimately, the shareholder?"
Diwakar Nigam Managing Director, Newgen Software
"SaaS is benefitting us. It is a great option for our clients who prefer Opex to Capex. It helps us offer better demos and reduces our sales cycles."
Les Elby VP of business strategy, AVEVA
"We are working with our customers on SaaS and mobile-based products to better serve their evolving workflows."
Virender Aggarwal CEO, Ramco Systems
"We've taken our cloud offering global. In addition to signing new customers, we are also seeing a healthy trend of our on-premise customers moving to cloud."
Patrick Bertrand CEO, Cegid
"As mobility is growing really fast, cloud becomes the back office of mobility. It is key for competitiveness."
Dr. Liu Jiren Chairman and CEO, Neusoft Corp
"We are trying to build a sustainable business model to provide sustainable value for our customers, making software and service an integral part of social transformation and people's daily lives."
The metered usage patterns typical of SaaS enables instant feedback from users, giving vendors an opportunity to gather and analyse reams of data about how their products are used or not used, data they can apply to improving existing products, providing better tech support and developing new products and features.
Godfrey Sullivan Chairman and CEO, Splunk
"Companies like telecoms and banks will choose to take advantage of their corporate big data in a variety of ways."
Bertrand Diard Co-founder and CEO, Talend
"Big data is starting to revolutionise the software industry."
Basab PradhanSenior vice president and head of global sales, Infosys
"The cloud allows us to participate in the value creation through software."
Several acquisitions over the last 12 to 18 months illustrate how established software players are buying their way into the cloud and SaaS business.
J.B. Wood President and CEO, TSIA
"Buy and keep separate? Buy and integrate into the core? Buy and let the acquisition eat the core? These are the options and there is not yet a proven winning model. At some point, it has to reach the core."
Jamal Labed Co-founder and CEO, EasyVista
"To stay ahead, leaders will need to buy innovation."
Vin Murria CEO, Advanced Computer Software
"Corporate balance sheets are full of cash, so companies will need to decide whether to use the money for dividends or to do something with it, like acquisitions."
Evan Puzey Chief marketing officer, Kewill Systems
"Achieving scale is key to the software industry."
Globalisation is certainly nothing new. Nevertheless, competition is increasing and many of them come from emerging markets.
Basab Pradhan Senior vice president and head of global sales, Infosys
"We're very comfortable in the United States, but as we expand further into continental Europe we're realising that we have to do business differently."
Andy Tiller Vice president of corporate product marketing, AsiaInfo-Linkage
"We have a big challenge of building a team that can actually deliver to customers and support customers in the new markets."
Tony Zingale Chairman and CEO, Jive
"We have seen significant [regional] differences in how information is shared and connections are made."
Bharat Goenka Co-founder and managing director, Tally Solutions
"Our three top global challenges are increasing the managerial bandwidth at the pace the company has to grow, the right entry strategy for emerging markets and alignment to each market's socio-economic objectives."
Mahendra Negi COO/CFO, Trend Micro
"Globalisation in the software industry is definitely accelerating. Cloud computing, consumerisation [of IT] and other trends are driving globalisation. Applications will become global."
Shen Guokang President, Shanghai Boke Information Technology
"Many Chinese state-owned enterprises use Bokesoft products because they are customised for the idiosyncrasies of the Chinese government."