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Software's unfinished business for 2007

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SOA: the long, long road to sanity

The continued absence of an agreed SOA standard meant 2006 was a big year for SOA hype and three companies had a grip on the bullhorn: IBM, SAP and Oracle.

Oracle kicked off with a massive customer event in January to clear the confusion it had caused the previous year by running Fusion Middleware and Project Fusion in parallel.

Also, Oracle continued a two-year, $20bn plus buying spree that claimed 24 scalps while succeeding in reassuring the companies' customers their software's future is safe in Oracle's hands. The trick worked and customers began spending money again.

By September, Oracle said its revenue growth and SOA strategy was putting the squeeze on SAP. "We think Oracle's strategy is helping us overtake SAP and win market share," Ellison said. Stung by claims and results that disappointed analysts, SAP officially responded with growth stats of its own and by calling Oracle's Fusion "slide ware".

SAP eschewed growth through acquisition. It delivered the first, full SOA implementation of its software, mySAP ERP 2005, in spring. In the summer it outlined a five-year roadmap for a 100,000-strong customer base, up from 35,000, with 50 per cent using its new software by 2010.

Underlying both companies' strategies is a desire for growth among both the existing, enterprise customer base and new markets - crucially the mid market. 2007 will be important for SAP in getting the ball rolling on upgrades to mySAP ERP 2005 and delivering a new version of its mid market All-in-One product, based on mySAP 2005 and NetWeaver. Oracle, meanwhile, should release updates of Siebel, PeopleSoft and JD Edwards certified on Fusion ahead of Fusion's promised completion in 2008.

But what of IBM? Not involved in business applications, IBM continued its stately progress of releasing 20 and 30 new products at a time on SOA. Expect more next year.

A new chapter in SaaS

Software as a service (SaaS) continued to grow. Salesforce.com overcame data centre outages and customer disquiet by hitting the 500,000 subscriber mark at 27,000 companies and bringing in $500m in revenue for the year.

NetSuite, meanwhile, stepped up its campaign against Salesforce.com, trying to get customers to switch. Both were buoyed by AMR Research that said 40 per cent of companies are using hosted CRM. Incumbents responded.

SAP launched its long-awaited hosted CRM suite, offering a "mixed" approach with both online and onsite CRM. Oracle retorted with a sleight of hand, claiming 1.7m subscribers at 2,000 companies for its On Demand business. On Demand in Oracle's book, though, came to mean Oracle software delivered on an external suppliers' infrastructure and SaaS, instead of just SaaS. The SaaS business it acquired in 2005 from Siebel lost both visibility and roadmap.

2007 will be an important year for SaaS. Salesforce.com will need to reconcile the talk of saying it has enterprise users by providing a customer list that goes beyond that already touted Merrill Lynch. To get there, expect Salesforce.com to announce more technology and partnerships for deep data synchronisation between its own CRM and business applications and database products from rivals – notably Microsoft.

A critical factor will be the long awaited launch of Microsoft's hosted CRM. While Microsoft lags Oracle and SAP in business applications, it generally does well in the mid market. How Microsoft delivers its own CRM suite in 2007 could determine how far Oracle and SAP start to offer a good, clean SaaS pitch. It will also force Salesforce.com to push into the enterprise to compensate for the new competition.

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