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Open source will keep IT costs down, say CEOs

The Software 2004 conference in San Francisco played host to a panel of chief executive officers who opened a debate on the state of the software industry for an audience of 1,100 software executives.

The panel was headed by Tony Zingale, former president and chief executive officer of Clarify, and included panelists Jim Green of Composite Software; Juli Hanna Farris of Scalix;  Arup Gupta of Tata Consultancy Services and Jeff Rodek of Hyperion Solutions.

Zingale's first question dealt with growth of the software industry, asking the panel whether it would come from organic, internal growth, or through mergers and acquisitions.

The chief executive officer at Hyperion, which reports having half of its customer base companies in the $500m range and up, said, "If anything we are deciding which products and even customers to kill, not grow."

However, Farris of Scalix said it is focused on messaging technology where a lot of good work has already been done. The company is using the mergers and acquisitions model to grow.

"We are marrying Linux and messaging. Acquisitions are an important way to accelerate.  Messaging has been around for a while and so there is a lot of important technology that hasn't seen its way to market."

Green, of Composite Software, which creates middleware for data integration, said that innovation can work against a company in the existing climate.

"When a market consolidates to a few players, then the suppliers to them are there to fill in the missing gaps [in their software]. That's how the market will grow."

When asked if they believe IT spending will increase, Rodek said, "People think of total IT spending. But with open source and offshore, total spending can be flat.  IT is growing by investing in process improvements. Software spending could be going up while total spend is flat, down or slightly up."

Farris added, "IT spending follows pain. Spending on Linux is a quick payback but the enterprise is not ready for longer-term spending."

Green agreed that the way IT spends money is changing. "More money is being spent on offshore and open source."

All of the panelists have said that companies are using their previous IT investments to get more out of the same infrastructure.

When it comes to offshore outsourcing, all panelists were in favour and saw only its benefits.

Arup said that in the past it was a cost issue, now it has moved to an issue of process improvement.

All of the panelists said they saw no difference between using a provider in Berkeley or one in India for software development.

Ephraim Schwartz writes for InfoWorld


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