R&D investments stagnating and engineering software sales slow down.
From a software customer perspective, three factors are shrinking investments in engineering software:

1. Open source software. Customers start to consider open source software as an option.
2. Mergers or acquisitions.  Newly-consolidating client companies maximize interoperability and reduce software redundancy, i.e. they get rid of the ones they don’t need anymore.
3. Wide Area Network vs. Local Area Network. Global companies want to deploy software on global scale. They need to reallocate software licenses into main servers, to gain economies of scale and optimize expenses for software.

From a software vendor perspective, three factors are driving sales down:

1. Open source software. Software editors consider open source (only) as a threat.
2. Mergers or acquisitions. Newly-consolidating software companies maximize interoperability and reduce software redundancy… It takes time, money and makes their clients endlessly ‘waiting for the next release’.
3. Wide Area Network vs. Local Area Network. For obvious reasons, global software vendors (still) like to sell software on local basis, avoiding clients to gain economies of scale and optimize expenses for software.

Symmetric perspectives on software sales drop-off.

Software and Sushi are two of my favourite things.

I like the customizability of sushi meals. There’s always a sushi meal that fits with my appetite. I also like the inexpensiveness of sushi. Or actually the inexpensive price per item. Three Euros for a Temaki, two for an Uramaki, etc. Low price per item means low pain in the buying process. Moreover I like the zenlike design of sushi sets.

Like with the sushi, some software editors offer component-based software, where clients choose from a “menu” the modules they need.

Sushi restaurants & software companies success factors:

1.     High quality components

2.     “A la carte” pricing

3.     Product design

Componentware means software designed to work as components for larger applications.

Like in the PC, that is built from keyboard, monitor, mouse, etc.

In componentware, because the interfaces between modules are standardized, it is possible to mix software from different providers. Componentware is changing the dynamics of the business of software.

Some software companies see it as an opportunity; SAP for example, plans to split its monolithic solution into components that will facilitate the integration of third party components. Other software companies see componentware as a threat, as it could make the entrance barrier lower and the life easier for newcomers. ]]> http://www.giorgiobuccilli.com/2008/09/software-dis-integration/feed/ 0 http://www.giorgiobuccilli.com/2008/08/id-have-thought-of-that-moments/ http://www.giorgiobuccilli.com/2008/08/id-have-thought-of-that-moments/#comments Wed, 06 Aug 2008 06:44:18 +0000 Giorgio Buccilli http://127.0.0.1/wordpress27/?p=264

Things to consider before launching a new software company.

1. build a niche website – get credibility
2. ask your family doctor (or a friend, non programmer) for opinions – find out what you’re missing
3. buy your competitors’ products – turn shortcomings into advantages
4. test your prototype with representative users – build not what you think people might want, build what they need.

]]> http://www.giorgiobuccilli.com/2008/08/id-have-thought-of-that-moments/feed/ 0 http://www.giorgiobuccilli.com/2008/07/software-version-control/ http://www.giorgiobuccilli.com/2008/07/software-version-control/#comments Mon, 28 Jul 2008 14:03:30 +0000 Giorgio Buccilli http://127.0.0.1/wordpress27/?p=263

In software engineering, version control tracks the changes made to the software. Version control tells Who, What and When any modification was made to the software.

Alas, it doesn’t say much on Why it was made. Did the modification come from a client request? Or was it made because it was easy to implement and inexpensive?

Any inexpensive but unrequested product feature generates expenses for promoting, selling and supporting the software.

As persons, our “Positioning” is the place in the mind of our friends and parents. We are all defined by the perceptions the others have of us. The same happens with products. An example of product positioning is: “Software3.0 is [the] [most] advanced and easy to use Optimization Tool [for desktop applications].”

Product Positioning statements use the definite article [the] to put the product in a given, unique place in mind of the market. The superlative feature [most] places the product at the top of your category. Last, the statement defines the target market segment [for desktop applications].

Example of a clear positioning statement:

“EDEM is [the] world’s [first] general-purpose CAE tool [for the simulation of particles]“.

I just learned that Engineous, a competitor of mine, was acquired by Dassault Systemes.  Last year Engineous tied a partnership with IBM, and its acquisition by Dassault Systemes (an IBM company) was in the air.

A colleague of mine in UK writes: “In the interim we should be ok, Abaqus hasn’t bore fruit after being acquired by Dassault Systemes”.

Savvy, in the interim.

Roland Thomas (Moldflow CEO) told me: “the more the Computer Aided Engineering (CAE) market consolidation leads to standardized software, the more opportunities will come for profitable niches to be exploited”.

E-Xstream makes a software that calculates the behaviour of composite materials, like plastics reinforced with glass fibers. The opportunity for E-Xstream came from the multi-phase nature of composite materials. The software Digimat they produce calculates the physical properties of the material to be used for further calculations.

This is an example of what Roland predicted.

Companies like Google and Netscape knows what it takes to run a successful business. It is the business model, and not the product that determines success or failure of software companies. That’s what many start-ups have unhappily discovered for themselves.

I’ve still much to learn, yet something have learned on what start-ups should better do:

1. -remain a “product company” long enough to build a customer base, before offering customization and services
2. -run the business independently from distribution channel
3. -avoid appointing the chief engineer as business manager.

The motivational book Who Moved My Cheese? features two mice and two humans living in a maze -a representation of our ever changing environment, and looking for cheese -representative of happiness. One day they are faced with change: someone moved their cheese. The humans, having counted on the cheese supply to be constant, rant at the unfairness of the fate and head home hungry; while the mice, having noticed the cheese supply dwindling and prepared for the change, rush in search of a new cheese.

No rush, friends. Our cheese won’t move. It has already moved, and keeps on moving. Our cheese is moving to Chindia. On Linkedin, thousands of engineers are applying for your job (and mine).  Grid Computing and Open source might be the new supply of cheese. At least for a while.

It is not the strongest of the species that survives, but the most responsive to change.