What's next for enterprise software

I'm at the Enterprise Ventures 2005 conference in Redwood City, where dozens of enterprise software startups pitch their companies to venture capitalists, interspersed with panels on topics, such as "The Future Yet Unseen: What's Next for Enterprise Software."

The panel about the unseen future of enterprise software didn't shed much light on what's next. Compliance software is generating lots of interest among investors and developers in an opportunistic way, driven by the regulatory environment. Services-oriented architecture (SOA) is started gain some traction. According to Chris Hollenbeck, managing director of Granite Ventures, analytic software, XML, SOA and open source are growth areas.   

Drew Brosseau, managing director of SG Cowen, noted that Linux momentum  is slowing down. "Linux has penetrated most of the Unix sites, but it's having trouble getting into Windows sites," Brosseau said. "I can't explain why, but a lot of companies are not tradition Unix shops. They don’t care about technology--they care if  it's integrated and works and they don’t have to cobble it together." That may apply more to small- and medium-size businesses than large enterprises.

Software as a service is on the rise, but it tends to be applicable in areas of non-strategic core functionality, said Ted Schlein, a managing partner at Kleiner Perkins Caufield & Byers. I guess that means that CRM is core but not as strategic as financials. That may be true today, but over time more strategic applications will move to the Net, just as most of us don't keep money under mattresses anymore and rely on banks. As the technology matures, and as software services can be evaluated and rated on the basis of factors such as reliability and trustworthiness, the model of outsourcing functions in a multi-tenant or single-tenant model will be prevalent. 

Schlein also talked about Microsoft as being less relevant in the enterprise. Given his venture firms backing of Google that's not surprising. The 'Web operating system' implies that a Windows operating system--or any other lower level core software-- is less important as users spend their time using Web-based communications and other kinds of applications. It's not an either or situation. Over time, Microsoft, Apple, Novell and any other company with a client (desktop) interface will offer more rich media, Web-based versions of their software, beyond browsers. It's not a religious issue--thin or thick client--it's more about getting serious bandwidth and quality of service in the network, and having hybrids that allow users to work both online and offline with the same interfaces and tools.