Serve and Volley: Keller Updates his Stance on "Death of Packaged Apps"

A few weeks ago Erik Keller penned a piece called, "The Death of Packaged Applications." It was a thought-provoking analysis and one I had been anticipating since meeting Erik at SAP Sapphire. Upon it's release, I offered my reaction on where we agreed (and where we didn't).

Others offered their own views:

• Charles thinks SOA is the top driver, but reminds us that the so-called "trend" is really part of a cycle
• Dennis wonders if we're all drinking the SOA Kool-Aid too much
• Vinnie agrees on the direction, but wishes it weren't so

Well, undaunted, Erik comes firing back with new data points to reinforce his initial conclusions. I invited you to read the piece on Sandhill.com directly.

Much of my initial reaction stands. Frankly I think we have a tendency to over react at the highs and the lows. As I interpret the data presented, about the only tangible long-term trend is a reduction in EXTERNAL custom development, at the benefit of internal development AND packaged applications. I'll stand by my contention that we're entering a bifurcated software market. The apps vendors that are able to convince customers to leverage a platform approach will not only survive, but flourish. SAP has the right vision...providing a way for customers to protect their considerable legacy investments while finding a way to monetize custom development work and their own proprietary application process work. Erik's view that we're seeing the "Death of Packaged Applications" may in fact be spot on, but the misnomer is that SAP, Oracle and other leading software vendors don't understand that. If SAP (Netweaver), Oracle (Fusion), salesforce.com (AppExchange) and others are successful in their vision, they will no longer BE packaged applications vendors.

Related Posts:

• My Reaction: Erik Keller's "The Death of Packaged Applications"

Note: At the time of this writing I, and/or funds I maintain discretionary control over, maintained long equity positions in CRM, ORCL and SAP.

erik keller sandhill.com packaged apps software innovation sap oracle crm woodrow

Comments

[Jason Wood]

Thanks Charles. I also struggle with how anyone can dispute SOA as the driving force behind this trend. If SOA is really effective, the entire development lifecycle (and cost) should be dramatically reduced. Inherently a company is going to be more efficient at reusing a process component within its own enterprise than an outside developer who has to retrofit any development work to meet the different process flows of its clientele.

[Charles Zedlewski]

I really think you hit this topic spot on Jason as you did with the previous post. I just don't see how you can ignore the data that it's external development spend that's shrinking, not packaged apps. As you rightly point out, the large players are well hedged regardless.