Big gains for
The old dogs of enterprise software applications learned a new trick in 2006--how to roll with on-demand software applications.
Industry titans SAP, Oracle and Microsoft either dished out on-demand applications or announced plans to do so.
Interest in delivering applications over the Internet has grown rapidly in response to competitive threats from Web-based upstarts such as Salesforce.com and Workday.
Customers increasingly are seeking ways to avoid buying software and accompanying upgrades that they install and maintain on their own systems. A growing number of businesses are turning to on-demand applications vendors, which, for a monthly fee, allow clients to use current versions of software that the vendors host on their own servers.
The trick for established enterprise applications vendors is to offer a dual-delivery system to customers that strikes the right balance between on-demand options and annual licensed subscriptions.
SAP, for example, initially had reservations about offering on-demand applications, but eventually changed its mind. In February, the software giant launched an on-demand customer relationship management (CRM) software service.
Oracle, which had tinkered with its own on-demand CRM product before its acquisition of Siebel Systems, hit the market in October with
its integrated, hosted Siebel CRM service.
Not to be left out, Microsoft in July announced its plans to enter the hosted CRM market in mid-2007. The offering will be part of the Redmond giant's Microsoft Dynamics CRM Live service.
In the meantime, the on-demand applications market is quickly filling up with start-ups. In November, former PeopleSoft founder Dave Duffield fully unveiled his on-demand services company Workday. Initially focusing on applications for the human capital management industry, the company plans to eventually branch out into financial and other services.
On-demand applications pioneer Salesforce.com stayed busy defending its turf. It recently introduced its Apex technology, designed to provide customers with more customization options for their on-demand applications.
Companies that sell applications for corporate tasks such as tracking accounts and customer relationships also embraced consumer applications and open-source software to a greater degree in 2006.
Web-enabled social networking, a tool that caught on in a big way with consumers, is increasingly finding its way into corporate America. Web 2.0 technologies such as blogs and wikis are being adopted by Fortune 500 companies with greater frequency.
And open-source software is increasingly being used in the development of corporate applications. Oracle, for example, announced in October it would sell support to Red Hat Linux customers and, in an additional competitive challenge to Red Hat, provide a free clone of the open-source operating system.
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Dave Duffield's new company to compete with Salesforce.com, recent on-demand moves by SAP and archrival Oracle.
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