In 2006, JDA Software Group gobbled up Manugistics, a company that for several years had cut a dash in the supply-chain management software field. Catalyst International, a software firm specialising in supply-chain execution, rather than planning, was last year bought by CDC Software, a $300m ERP company with roots in China. Vastera, which focused on international trade compliance, was bought by JP Morgan Chase in 2005. You get the picture: many specialised, logistics-related technology firms have been absorbed into larger software companies in the last five years.
It’s the end of an era indeed. But which era? Many see these deals as signs that it no longer makes sense to sell ‘best-of-breed’ software – that is, software that helps businesses run specific departments such as human resources or specialised supply-chain management. Often, these software packages operate in isolation, without easily communicating with other IT systems.
“We’re increasingly hearing from manufacturers that ease of integration is probably more appealing than the extra functionality they might get from a best-of-breed vendor,” says Simon Ellis, an analyst with IDC’s Manufacturing Insights, quoted in Information Week. Many industry experts are declaring best-of-breed software to be dead in the water.
But the issue that’s emerging is about how capabilities get delivered. The specialists of the software world weren’t wrong in thinking people wanted specialised knowledge to guide their business processes into a perfect state of automation. They were just wrong in thinking that anyone wanted to install and maintain one-time instances of software that didn’t speak to other software. What’s really ending is the dominance of licensed, installed software, making way for the emergence of technology delivered through the web, already translated into the language of your internal computers, and accessible ‘on-demand’ – meaning you get only the firepower you want at any given time, and you pay only for what you use.
Perhaps the more significant news story is the announcement that Salesforce.com – often hailed as the poster child for on--demand services – has replaced Freddie Mac in the Fortune 500.
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