A brief look at the impact of the financial crisis of 2008 on the software industry and the emerging new business models, trends, etc.

1. Michael Fauscette, Group Vice President, SBS
©Copyright 2008 IDC
2009 IDC 7-09

2. Episodes of Financial Stress
%
Stock Market
Crash
Scandinavian
banking crises LTCM
ERM crisis collapse
Nikkei/junk
bond collapse
Source:IMF
© 2008 IDC
© 2009 IDC 7-09 2

3. Economic Outlook
2009 GDP Growth: Forecast Change
© 2009 IDC Source: EIU October 6, 2008, January 14, 2009, April 7, 2009 3
7-09

4. Economic Outlook
2009 & 2010 GDP Growth Picture
© 2009 IDC Source: EIU April 7, 2009 4
7-09

5. Where We Stand
WW IT Spending
Worldwide GDP Forecast
© 2009 IDC Source: Q2 & Q3 2008 Worldwide Black Books; IDC Downside Scenario Model 7-09 5

6. Applications Forecast Changes
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2009 IDC 7-09

7. SaaS forecast comparison
$M
• IDC has increased its SaaS growth projection for 2009 from 36% growth to 42% growth over
2008.
• The percentage of U.S. firms which plan to spend at least 25% of their IT budgets on SaaS
applications will increase from 23% in 2008 to nearly 45% in 2010.
Source: Economic Crisis Response: Worldwide Software as a Service Forecast Update (IDC #215504, January 2009)
©Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
2009 IDC 7-09

8. An Economic Unknown
$1-3 Trillion For
 Bank Bailouts
 Tax Cuts
 Smart Grid
 SMB Incentives
 Health Care
 Infrastructure
 Broadband
 Auto Manufacturers
 Green Building
© 2009 IDC 7-09 8

9. The Potential Impact of Stimulus Plans
WW ICT Spending Growth WW ICT Spending (B)
$250 Billion over
4 Years
© 2009 IDC Source: Q4 2008 Worldwide Black Book, IDC Estimates 7-09 9

10. Poll #3
What do you think global IT spending growth in
2009 should be?
( 2% ) + 1% or higher
( 15% ) 0%
( 27% ) - 1%
( 38% ) - 2%
( 7% ) - 3%
( 4% ) - 4%
( 6% ) - 5% or lower
© 2009 IDC 7-09

11. Poll #5
What have you heard from clients in the last
quarter about their order rates?
Apr 09 Jan 09 Oct 08
( 4% ) ( 7% ) ( 50% ) Have not talked to them
( 4% ) ( 4% ) ( 17% ) No crisis-related change
( 43% ) ( 38% ) ( 23% ) A minor drop in orders
( 45% ) ( 49% ) ( 10% ) A significant drop in orders
( 5% ) ( 1% ) ( 1% ) An increase in orders
© 2009 IDC 7-09

12. Software Megatrends
Structural Changes Accelerated by the Financial Crisis
• New Delivery Models:
 Software as a Service/On-demand
 Open Source
 e2.0 (social networking, Web 2.0)‫‏‬
• New Architectures:
 Service-oriented Architecture (SOA)‫‏‬
 Event-based
 Unified access to content and data
• New Ways to Source a Business Process:
 Build (mashups, process modeling, business rules, Web 2.0))‫‏‬
 Buy (“good enough” suites vs. best-of-breed)
 Integrate (software/services convergence)‫‏‬
 Outsource (asset-based delivery)‫‏‬
• New Targets:
 SMB (intensifying competition for applications)‫‏‬
 Channels
 Partnerships (with partner-partner collaboration)‫‏‬
© 2008 IDC
© 2009 IDC 7-09

13. Applications Software Top Ten Predictions 2009
Business Models:
* The 2008 Financial Crisis Will Drive Accelerated Growth of Software-as-
a-Service–Based Solutions.
* Open Source Software Gets the Boost to the "Mainstream" by the Effect of
the Economy and the Subsequent Change in Buying Behaviors.
* Platform as a Service Will Create a "Custom" Alternative for Vertical-
Specific Solutions, Putting Pressure on the Major Enterprise Software Vendors
to Develop or Acquire a Platform-as-a-Service Offering.
* Next-Generation Enterprise Applications Vendors Will Win the Trifecta of
Business Models. (On Premise, On Demand/SaaS, BPO)
Enterprise 2.0
* Consumer-Born Web 2.0 and Social Networking Tools Will Permeate New
Customer and Partner Initiatives.
* An Economic and Technological Perfect Storm Will Raise the Enterprise
2.0 Ship Higher than Others.
© 2008 IDC 7-09
© 2009 IDC

14. Applications Software Top Ten Predictions 2009
Partner Programs:
* Several Large Software Vendors Will Restructure Their Partner Program
Tiers in 2009.
* Partner Analytics Will Come of Age in 2009 as Vendors Seek Partner
Quality over Partner Quantity.
* Partners Will Create Several New "Partner Run" Partner-to-Partner
Communities in 2009.
Other:
* Compliance, Litigation Preparedness, and Business Process Efficiency Will
Continue to Drive Content Management Budgets.
© 2008 IDC 7-09
© 2009 IDC

15. Consolidation
Consolidation continues – the “mega” ecosystem
Partners coalesce around an epicenter
Partners consolidate to expand footprint & reach
Hybrid business models
© 2009 IDC 7-09

16. The new landscape of Tech
Mega-Vendors: HP, Oracle (post Sun close),
IBM, Cisco, Microsoft, Google, Apple, Intel
Prime Acquisition Targets
Survivors: niche markets, redundant portfolio, too
unique
Start ups
© 2009 IDC 7-09

17. The Social Enterprise
Democratization and Empowerment: Spreading control across
a broad audience, adding value, building relationships,
conversations and increasing transparency
It’s not just “tools”, it’s changing processes and culture
© 2009 IDC 7-09

18. The Social Enterprise
Internal:
Wiki’s
Collaboration / email / IM / microblog
Mashups / Platforms
Networking
Social Analytics
Sales Productivity
© 2009 IDC 7-09

19. The Social Enterprise
External
• Customer / Partner / Suppliers / Outsourced
• Blogs
• Microblogs
• Private Label Communities / Networks
• Public Social Networks Sales
• Idea Sourcing Marketing
• Virtual Conference / Tradeshows Product development
• Syndication Customer Service
© 2009 IDC 7-09

20. Consumer
Apps Collab CRM Content
Apps
Online Community Platforms – connecting,
sharing, collaborating, building relationships/trust,
publishing/authoring – UGC, customers as
consumers
Social Analytics
Ideasourcing
Enablers Wiki Social Wiki
Customer
Blogs Service Blogs
+traditional Social SFA Crowdsourcing
Collab (predictive
selling)
Brand
Monitoring /
building
© 2009 IDC 7-09

21. Consumer Collab CRM Content
Apps Apps
Online Community Platforms – connecting,
sharing, collaborating, building relationships/trust,
publishing/authoring – UGC, customers as
consumers
Social Analytics
Facebook SocialText Concursive Google Apps
Lotus UserVoice Cisco Eos
LinkedIn Connections Oracle Sales Reality Digital
MySpace Sharepoint Prospector
MyLife
Twitter Jive Bright Idea
OneRiot
Google Apps Omniture
Google Wink
Apps
© 2009 IDC 7-09

22. Growth markets
Market 2009 2010
Conferencing Apps 6.5% 7.8%
Content Management 6.1% 7.3%
Enterprise Search 10.7% 8%
HCM 5.4% 6%
GRC / Financial Perf 7.3% 9.4%
CRM 4.9% 5.9%
SRP 12% 12.8%
Business Rules Mgt 10% 11%
Integration and Process 7.8% 8.9%
Automation MdleWre
Data Access, Analysis & 6.5% 7.7%
Delivery
Security 8.4% 9.3%
Storage SW 6% 7.3%
© 2009 IDC 7-09

23. Preparing for the recovery
Refocus on key opportunities like SaaS, BI, integrated hybrid
solutions (SOA), vertical specific add-ons to core platforms /
products
Good opportunity to leverage megavendor’s portfolio and add
value on top rather than overlap
P2P networking to provide broader / deeper solution set
P2C – social initiatives to grow customer community
© 2009 IDC 7-09

24. Contact
Michael Fauscette
mfauscette@idc.com
Twitter: mfauscette
Blog: www.mfauscette.com
© 2008 IDC
© 2009 IDC 7-09