The Right Choice Makes All the Difference

Software Market Trends

Because the business software market evolves so quickly, it is important to keep track of the latest software market trends so that you can utilize technology as a strategic advantage for your company. Technological and functional improvements in business software can have a big impact on how you do business. The following are the top 7 recent software market trends we have observed in our software evaluation work.

Cloud/Software as a Service (SaaS)

Over the past few years, Cloud software solutions (also known as Software as a Service (SaaS)) has been gaining market acceptance. In basic terms, the Cloud is really just a different software delivery method. In this scenario, a software vendor hosts the software application and customers access it via the internet. The Cloud model can be particularly appealing for smaller companies that have limited technology personnel. Cloud implementations for certain types of software such as Customer Relationship Management (CRM), HR/Payroll, Project Management, and low end accounting software have been growing. ERP systems for mid to large companies on the other hand have not seen widespread acceptance yet due to cost and security concerns, however that is now changing and more companies are opening up to the possibility of using Cloud ERP solutions.

Merger Mania

Mergers, acquisitions, partnerships and strategic alliances between business software vendors have been very active the past decade. These mergers can have an impact on your business systems, so you need to be prepared for the day that your software vendor may be acquired.


On the technical side, the software vendors have really focused on three databases – Oracle, Microsoft SQL Server, and IBM DB2. Another database worth mentioning is Progress (particularly in the manufacturing and distribution industries). Pervasive SQL is common for vendors that are focusing on the lower end of the market. These relational databases allow business software vendors to store and retrieve data and provide excellent ad hoc reporting capabilities.

Functional Expansion

The software vendors are continuing to add new functionality to their software. They are working to become a “one-stop-shop” to provide all of the functionality you need from one vendor. They are doing this through product development as well as acquisition. This has led to an explosion of new development and functionality available including Customer Relationship Management (CRM), Human Resources/Payroll, and e-commerce functionality to name a few.

Tier 1 Vendors Moving to the Mid-Market

Tier 1 vendors such as Oracle, and SAP (see the tier chart in the Software Market Overview) have been expanding their marketing efforts downward to penetrate the middle market. They are doing this with different strategies including offering scaled down, pre-configured versions of their applications, trying new methods of implementation, pursuing new distribution channels to sell and implement their software, and acquiring mid-market software. (A good example of this approach is SAP’s acquisition of the Business One software product for the middle market, and their development of Business by Design – in-house developed Cloud solution that is focused on the lower to mid-market).

Tier 3 & 4 Vendors Moving to the Upper-Market

On the other side, software vendors that have traditionally focused their applications towards smaller organizations (see the tier chart in the Software Market Overview) are moving their products upward to target the tier 1 and 2 enterprise markets. These vendors have significantly improved functionality and scalability allowing smaller companies to grow without having to change systems. (Microsoft is the most aggressive in this space with the Dynamics AX product.) The challenge these vendors face is having an implementation channel that can handle more complex software implementations.

Internet Capabilities

The Internet has opened up new opportunities for conducting business in today’s economy. The software vendors have developed functionality to take advantage of this technology including web browser access, web portals for customers and suppliers, mobile technologies with smart phones and tablets, e-commerce capabilities and much more.

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