Former Oracle head calls on ISVs to change perspective

San Francisco — Software 2004, a first time industry event that exclusively addresses the enterprise software industry, was launched Monday with some straight talk from former Oracle president Ray Lane, now general partner at  venture capitalist Kleiner Perkins Caufield & Byers.

Lane grabbed the attention of the 1,100 software executives in the audience by telling them that the industry has arrived at a watershed point that will render it totally different than the past.

“This industry usually grows by looking for the next big thing. I don’t know what the next big thing is, but while we are waiting we should be making the last big thing work,” said Lane.

Lane’s premise throughout his morning talk was that capital expenditures on major programs like ERP are a thing of the past and in the new economy the enterprise will be looking to make operational expenditures to improve processes.

“Last decade we put $3 trillion in the enterprise. We need to use it not just rip it out. Some say we didn’t get value, didn’t get the ROI. I say the value is yet to come.”

While software innovation may not be dead, there are constraints that cannot and should not be ignored. Lane ticked off a number of them including the volatility of current markets that are not conducive to the traditional two-year cycle time required to go from invention and innovation to deployment.

“By the time it is ready to be rolled out there’s a good chance it no longer has value.”

Other restraints include the need for transparency as it relates to Sarbanes Oxley and other compliancy regulations and the extended enterprise whose goal it is to connect all the players from raw materials to the customer.

Lane said companies want things done faster, cheaper and better but not necessarily by using “new stuff.”

After laying the foundation for the changing market in enterprise software in the first half of his talk, Lane built the case in the second half for a software industry that must differentiate itself through service, both in the traditional sense of the word, customer service, and in the more current sense of the word, delivering applications to an enterprise’s service-oriented architecture, rather than delivering proprietary or packaged software.

The enablers that will grow the software industry as it shifts to a service industry include offshoring, Lane said.

“Before I went to India I thought it was a black box. Take unimportant work send it over there and then get it back. But what I saw was innovation, work ethic, and people with incredible skills. They have students in their universities that any dean of any school here in the U.S. would be proud of.”

 Offshoring allows ISVs in the U.S. to “put costs where they have competency,” said Lane. Lane said if a company is developing product in Silicon Valley they are at a 50-percent cost disadvantage.

“If you move things offshore you reverse that in your favor.”

The use of broadband communications and English as the language of business will position India advantageously, according to Lane.

Lane called on the software industry to be renovators not innovators.

“Take an idea and put it into an existing environment.”

Lane told the audience that technology has to be service-centric not component centric.

“It is not that the [software] stack matters less, but it is more important to think how functionality is delivered, not as a component but installed as a service that can be updated whenever [the customer] needs it.”

Lane ended his talk with a call to ISVs to invest their money where it counts, have predictable metrics, and be ready to serve a total Web service environment.

“It has to interface with anything and integrate with anything. Include continuous updates like salesforce.com, and deliver flawless service,” he said.