50% Of Software Firms Soon Will Vanish

Industry research firm Gartner Inc. is predicting that 50 percent of today’s software vendors will have gone under within the next two years.

Gartner analyst Carl Claunch says the accelerated advances in IT technology should continue for the next 10 years. But that growth won’t completely impede the effects of the economic slide that has led to large layoffs in the IT sector, caused the shut down of high-tech companies and seen the dissemination of the dot-com bubble.

“Not only will the small and weak disappear but major players will merge or be acquired to cause even well-known and substantial brands to vanish,” says Claunch, who adds that an improved economic climate should spur renewed growth in the vendor community by 2007. He predicts that new technologies and initiatives will generate a new round of innovations, funding and start-ups.

And Claunch also predicts that improved technology will lead to greater automation in the workplace, leading to a coming wave of layoffs.

“In some cases, improvements in productivity will mean a growing business with healthy margins will require fewer and fewer people,” he adds.

Claunch also predicts:

• The cost of working remotely will dramatically go down with a shift in the relative cost of bandwidth. Network capacity will increase faster than computing, memory and storage capacity to produce the shift. And optical technology improvements will push this movement along.
• Semiconductor capabilities will continue to double. Nearly 40 years ago, Intels Gordon Moore predicted that semiconductor capabilities would double every 18 months. Claunch stands behind that still.
• Banks will become the main providers of presence services. As banks take more personal and financial information online, consumers will increasingly depend on them – over Internet Service Providers – to be the real guardians of information.
• Business-activity monitoring becomes mainstream. Business decisions will be able to be effectively made on-the-fly as business-activity monitoring provides people with facts and relevant context related to business operations.
• Business units will make more of the IT decisions. As the business value of IT becomes increasingly apparent, more business people will be making key IT decisions. “As IT decisions move to the business departments, they will often be less optimal overall than the centrally planned decisions previously made by IT,” says Claunch.
• Pendulum swings to decentralization. By 2004, eased budget restrictions, the need to react to volatile markets and increased competitive pressure will push IT to decentralize again.
• Major systems will be inter-enterprise. Look for the creation of dynamic systems that can form, use and break connections between separate entities with minimal advance planning. These new systems that allow ad-hoc, trans-enterprise automation are supported by technologies such as Web services, XML and improved business application integration capabilities.
• There will be an economic boost from enterprise systems. Enterprise systems will cut waste and inefficiency producing improvements in productivity. The result will be more efficient use of production equipment, lower inventory levels and less waste as entire systems react more rapidly to change.
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  Reprinted from Datamation.