Saturday, 16 August 2008

A new generation of software

All the recent news in software has been about putting established categories of application software online. Online CRM software - salesforce.com. Online project management software - Basecamp. Online accounting software - Xero, Freshbooks, FreeAgent. Online ERP software - SAP Business One and Netsuite. Office productivity software - Google Apps. Email software - GMail. Even Photoshop has online competitors - Picnik (among others).

This will continue, and I think most observers agree that desktop and client-server software in these categories will gradually be overtaken by the online/SaaS alternatives - though Microsoft Office will probably hold out longer than most.

But when was the last time a genuinely new category of software became prominent? Think of the main categories of software:
- CRM
- ERP
- Office suites (which used to be several separate categories: word processors, spreadsheets, presentation software)
- Project management
- Drawing and graphics
- Email clients
- Web browsers
- DTP (remember them?)
- Games
- Antivirus software
- Databases
- CAD

Most of these categories have identifiable periods when they emerged as important, widely adopted applications. Usually they are associated with a particular company who introduced the category or became an early leader - Wordperfect, Netscape, Photoshop, Pagemaker, Eudora, Pong - often to be overtaken by the current market leaders, in several cases Microsoft (though not as many as you might assume).

But how often in the last ten years has a genuinely new and important category of software emerged? Web browsers were big in 1995 and the term CRM emerged around the same time. Some types of Internet software - blogging, peer-to-peer sharing, instant messaging or content management - probably have a claim to be new categories but all have been around for at least five years. Wikipedia has a useful list of categories at http://en.wikipedia.org/wiki/Software_genre - and again, none seem to be newly emergent in recent years. Perhaps social networking has a reasonable claim to be a new category, although it is probably associated more with new websites than new software applications. I would like to think CVM (client value management or customer value management) will make it as a new category, but that's yet to be seen.

Naturally it takes some time for new categories to be recognised as such - many people will tell you they have invented a new type of software, in line with the recommendations of numerous marketing gurus - create your own category and be the market leader. But surely five years is enough time for new types of application to become recognised?

Maybe everyone has become too good at marketing since the mid-90s, and everyone has learned that they are supposed to invent a new category name for the applications they produce. And a category won't really be accepted and referenced until there are three or four vendors all selling applications under the same name. Maybe we will never see a new category again. Maybe all the billions to be gained from creating new categories and getting consumers and companies to buy into them will be foregone by game-theory-optimising companies which are not willing to invest their marketing money into validating a market segment that someone else owns. Maybe existing vendors will never spot a newly successful entrant who has invented a category for their product and try to outspend them to grab some of their glory and profits. Maybe.

Yeah, right. At least we can rely on Microsoft for something.

3 comments:

Tiberiu Ghioca said...

Do you think that "Collaboration software" is an eligible category?

Craig Klein said...

Great article! Very thought provoking. What name would you give to the new category of CRM, contact management combined with Social media?

Leigh Caldwell said...

Tiberiu: I suppose the question is, how widely is it used and when was it first thought of? Groupware has been around for donkey's years, but perhaps we could acknowledge Skype as one of the first collaboration tools to successfully achieve wide adoption. So yes, I would add it to the list but I don't think it's a recent invention.

Craig: I think that what you describe definitely has the potential to emerge as a category, and we have been working with a couple of clients to build systems in that kind of area (though we wouldn't yet call it a product - it may be that we keep it limited to a feature to be plugged into larger bespoke systems that we build). I would say it's not widespread enough to be considered a real segment yet, but it could well take off once people understand the concept and start to see the benefits. Maybe we could call it Network Conversation Management?

I wonder if all enterprise categories have to end with the word "management". It seems a bit redundant.

Is this a direction you're going with SalesNexus? I had a glance at your blog and I think you probably have some good ideas about what people really need from their sales tools - is this a feature that you think your clients will really benefit from?

Some of the social networks have their own basic tools built in - LinkedIn and Ecademy come to mind - but they aren't much good, and you certainly don't want to be maintaining one contact history in Ecademy, another in LinkedIn, and a third in your own sales software. So it does feel like there's an opportunity there.