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The Commodity Problem

This industry has a problem, it’s been commoditised! The words of a Marketing Director of a well-known Enterprise software company, they reflect a prediction that was made in the early nineties.

Software vendors are increasingly telling me that they are struggling to differentiate their products in the minds of customers and potential customers, ‘Middleware’ and Applications Servers being two examples. You see, it wasn’t really that long ago when IT was exciting trailblazing stuff, with it’s own fair share of cowboys and even Indians, fighting for their share of the Enterprise. Today, it’s rather different. It is invariably expensive, makes remarkable claims about it’s ROI and comes in boxes, which business never really owns but licenses instead, for seemingly outrageous amounts of money.

Let’s be honest, my friend said, IT is getting boring, the market is in recession and advertising doesn’t seem to work anymore. I commiserated, “Of course, there aren’t many IT publications left and the more successful survivors have gone on-line, which seems to be where the advertising money is these days”. “True”, she said, “We don’t think that many people actually read hard-copy publications, they don’t have time and if they are in IT, chances are they’ll use a handful of Web sites, like CW360 for their news each day”.

“So what does this mean for you”, I asked, “How do you attract customers, what works?”

“Well, my friend answered, “if we could work sex into the product title somewhere, or arrange to have our domain hijacked by a porn site for twenty-four hours, that might suddenly drive-up the traffic but I somehow don’t think I’d get the idea approved”. “We’re starting to think more about advertising in the nationals but we haven’t solved the ‘Must-have’ problem, without falling back on the old ROI argument, which everyone has heard before”.

Software as a commodity, rather than software as a service, presents a disturbing challenge to what I would call second-division vendors. Big companies, but by an order of magnitude, not up there with IBM or Oracle or Microsoft. As the industry continues to consolidate around the biggest players and end-to-end business solutions, it’s becoming increasingly more difficult for the smaller “clubs” to compete as IT Directors think in component terms. Making a product ‘special’ or even different might even make potential customers wary, as a uniform grey of even ‘blue’ might feel safer.

At the end of the nineties, everyone wanted an eBusiness. The may not have known what it was and how much it might cost but it was ‘cool’ and had a sense of excitement and importance about it. Today, we know what an eBusiness is or more importantly, what it’s not and we are far more pragmatic about software, which we know, frequently disappoints. Perhaps we’ve had enough excitement for a decade and it’s time to be bored by an industry that’s constantly attempting to re-invent this year’s upgrade into the next big thing? – What do you think, has software finally lost it’s sex appeal and if so, why?

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