Software InduStry 2.0
A sea-change in the world’s IT
T
he information technology sector is not However, the credit crunch has had quite
immune to the global downturn, but a marked effect on software development Where To invesT?
if anything the recent hard economic industries in traditional areas such as Europe. how do you make a decision on where
times have accelerated the race among both The consulting and business information group to expand your iT or software business?
established and up-and-coming software Oxford Intelligence reports that foreign direct according to oxford intelligence in its
developers to chase new markets and unearth investment into Europe’s software development recent software benchmarking report,
fresh opportunities. sector declined by 17% in 2008, with investment the most frequently-mentioned reasons
The headlong rush by the world’s from the US dropping by 32%. This should relating to the selection of specific
software developers over the last decade to only be a short term occurrence. Investment european destinations for investment
take advantage of low-cost markets such as will decline by another 11% this year, before projects were:
India, China and Eastern Europe has gathered reporting a modest recovery of 5% in 2010, with
l Local market growth potential
momentum as they look for new ways to gain accelerated growth predicted after then.
l Proximity to key clients
a market advantage. In turn, those outsourcing Oxford Intelligence predicts the UK will be
l Availability of skilled labour
destinations are increasingly becoming lucrative the first country to benefit from the upturn in
l Size of local market
markets in their own right. foreign investment in software development,
l Transport links
As a result, the balance of power in the followed by Germany and Ireland. Interestingly,
l R&D infrastructure
world’s software development industry is slowly the next grouping was dominated by Eastern
l Availability of academic expertise.
shifting away from Western Europe and North European destinations, including Poland, Hungary,
America and towards a larger group of countries Ukraine, Romania and the Czech Republic. Information from The Software Report 2009:
who will be playing a key role in the industry‘s But even established markets provide a wide International Investment Strategies and
next incarnation. variety of investment opportunities. According European Benchmarking Study , published by
The downturn has had a somewhat muted to Mike Shiel of Scottish Enterprise, his region Oxford Intelligence
effect on the amount of money actually spent offers high-level skills, but with operational costs
on software by consumers, businesses and that are up to 40% cheaper than elsewhere in informatics and computer science.” His territory
governments. According to the research company the country: “Scotland’s population is mainly in is promoting its existing skill sets in financial
Gartner actual global spending on software will the central belt, which is the corridor between services, public sector and energy technology,
remain flat in 2009 at $223bn, but will grow by Edinburgh and Glasgow, which has the highest the latter causing it to be heavily focused on
5% in 2010 and 7% in 2011, reaching $289bn density of universities in Europe and is home to the Middle East as a destination for its own
by 2013. one of the world’s top five research clusters in investments.
WhaT is cloud compuTing? back. This is akin to the common model of which are often integrated with others to provide
Just as the development of the electricity grid outsourced applications hosting. greater functionality for the customer.
100 years ago freed manufacturers from having The next level is platform-as-a-service One of the best known examples of SaaS
to generate their own power through steam (PaaS), which may also provide the basic computing is the Salesforce.com customer
engines or water wheels, cloud computing is operating software, as well as some add-on management application. This is integrated with
freeing businesses from the need to buy their services such as database access or billing other hosted software through the company’s
own IT infrastructure. Cloud computing services systems. This model is designed for companies AppExchange service, and customers can host
are accessed across the internet, in the same way that wish to host their own software and make their own SaaS applications with Salesforce.com
that websites are today, although they provide it available to users, often on a commercial basis. on its Force.com service.
access to entire applications, rather than just There are entire software businesses that are now Other popular SaaS applications include email
pages of information. run in this way, without ever selling packaged (both Hotmail and Gmail are SaaS applications,
Cloud computing comes in three main software. and Microsoft’s Exchange email can be run in the
formats. The third model is known as software-as- cloud as well), and accounting, payroll and human
Infrastructure-as-a-service provides basic a-service (SaaS), and this provides customers resources systems. But practically any application
access to server hardware, storage and bandwidth with access to complete software applications, can be run as a SaaS service.
pathfInder buSIneSS l JUNE/JULY 2009 27
PBS12 pp26-29 Software.indd 25 5/6/09 15:28:54
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