Software 2006: Changes Ahead

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Software

For the software industry, 2005 was a year dominated by consolidation and the emergence of software as a service as a delivery model, and there’s likely to be much more of this in the coming year.

However, industry watchers also expect the year to include big gains for open-source software and new battles between business software giants Oracle and SAP.

The past year kicked off with the completion of the $10.5-billion Oracle-PeopleSoft buyout, then rolled on with a dozen acquisitions by Oracle, ten by SAP, six by BEA, and several others by IBM. All told, Thomson Financial counted a stunning 656 software deals in 2005.

Software delivered over the Internet gained traction as the sector’s No. 1 player, Salesforce.com’s stock price shot up about 180 percent in value in the span of the year. Other software-as-a-service companies such as NetSuite, RightNow, and SugarCRM emerged as top players in the business.

Expect to see more consolidation during 2006, says Bruce Richardson, chief research officer at AMR Research, and most will likely be in the area of business intelligence, which has been relatively untouched in the past year’s shopping frenzy.

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