Whither Software in the Anywhere Era?

February, 2007

My 13-year-old asked me the other night, "So... what's software?" I framed my answer using jargon familiar to the 21st-century kid: The Sims, iTunes, IM, etc. But that casual exchange led me to my own question—one with serious issues for Microsoft and any anyone else wanting to serve the business world. What is software becoming?

We're standing at the precipice of another major shift in computing models. Yes, we've all heard this before: from the mainframes of the '60s, to the minicomputers of the 1980s, to the personal computing of the 1990s. In the new millennium, the high technology landscape as well as the corporations and the people who drive it are moving rapidly to a world where laptops are being left behind. It's not just the post-9/11 remove-your-laptop-and-place-it-on-the-moving-belt world that's at the center of this shift; it's that the software has been decoupled from its heavier, physical counterpart—the PC. Now, with a Treo and a $20 memory stick, I can instantly lighten my briefcase by 6 lbs. Dieting should be so easy.

And that's because we can connect anywhere. Have app, will travel. The global connectivity revolution brings high-capacity, highly capable networks and software to us regardless of location. Meanwhile, inexorable improvements in technology mean that electronic gadgets of a few ounces assume previously unimaginable roles.

We know what it means for music already. What I'm asking is, what does it mean for traditional applications like Siebel and MS Office? Plenty, I think.

At Yankee Group, we believe the Evolution of Anywhere^SM foreshadows a diffusion of business software. The software-as-a-service (SaaS) model already allows enterprise users to connect to critical applications wherever they are. And we all know about changes in how software is developed—being uploaded overnight from Bangalore, for instance. But we see some other trends we will be researching in the next few years.

In physics, an atom is the smallest component of an element that has all the properties of that element. Over the next several years, many new software applications will begin to be atomized. Yankee Group defines atomized applications as lightweight but fully functional components or subsets of legacy commodity software packages. Unlike packaged applications, atomized apps are not physically bound to a specific server or operating system.

The need for these atomized apps to support ubiquitous connectivity via anywhere software will be driven by corporate needs for greater and more flexible functions in specific business processes. The first wave of atomized applications will be in consumer applications and targeted subsets of monolithic enterprise apps. Large enterprise applications such as ERP will live on in high-end data centers, of course. It would be difficult, if not impossible, for the overwhelming majority of corporate enterprises to ditch legacy packaged applications–from Office to CRM to ERP–because of cost, integration issues, security concerns, and support challenges. Therefore, atomized applications will evolve gradually over the next 10 to 12 years. Some aspects we anticipate:

• The Anywhere User Experience: If I might need the same function on my desktop, my handheld, a web site reached from an airport computer, and a special-purpose kiosk or ATM station, how will I recognize it? There could be lessons here in how packaged goods companies such as Nabisco create variation around a common product: Oreo, Oreo Double Stuf, and Mint Oreo all have packaging carefully designed to help us recognize a friendly, consistent experience. Windows Mobile has a long way to go here.
• Location-intelligence: When business can be done anywhere, applications have to know where that is—always. Mapping, GPS and RFID will move from the realm of special-purpose applications to the core of every business application. They will be as central to the business as the search function is today.
• The death of the Borg model: Oracle, Microsoft and others may still acquire small innovative software firms—but beyond giving them the branded corporate Anywhere Experience on the front end, and equal access to data on the back, they'll want to leave them alone rather than relentlessly assimilate them.
• The rise of new corporate software giants: With the speed and increasing diversification of devices—Motorola cranks out who knows how many new models every 12 months—and those same shiny new objects sneaking into office cubes everywhere, we may see vertical integration affecting the corporate world as well. It may be the CE device masters (Nokia, Apple, RIM) that take the lead in diffusing enterprise software.
• When software can be anywhere, security must be everywhere: Yankee Group survey data indicates there will be 269 million enterprise mobile data users by 2010, representing a 20% CAGR, with enterprise B2B messaging generating $1.4 billion in revenue by the same year. This will challenge security vendors, corporate and consumers alike to ensure that, just as the applications are portable and follow them anywhere, the security goes right along with them.

Achieving true ubiquitous connectivity using anywhere software may be fraught with peril for the unprepared. That's where Yankee Group comes in: we'll be looking hard at the changes in architecture, function, costs and suppliers of Anywhere applications.

Sun famously said, "The network is the computer." Funny enough, the network has become the app, too.

Emily Green, with Laura DiDio