Despite the nervous reactions by global markets to recent comments by UK Prime Minister Gordon Brown or United States President Barack Obama regarding regulatory reform of the global financial system, major software vendors continue to make acquisitions and invest in solutions targeting governance, risk and compliance (GRC). IBM’s acquisition of Guardium, RSA and EMC’s Security Division acquisition of Kansas-based Archer Technologies all provide clear examples in the last three months alone.

The advent of SaaS offerings and re-packaging of enterprise systems for the mid-market is creating an environment where organisations of any scale can execute almost identical business processes. While providing advantages to smaller businesses by allowing them to achieve the outcomes of much larger organisations on an incremental cost basis, it also exposes smaller firms to the increasing likelihood of regulation and compliance requirements.

In a period of intense application renewal the traditional suppliers of hardware appliances are being forced to re-evaluate strategies for growth. On the one hand mega technology vendors such as IBM, Oracle, and HP are consolidating solutions across all aspects of information, applications and technology stacks. This shift is forcing channel partners and value added resellers to become proficient in true solution style engagements where they may have previously only been specialists in one point solution. For example as IBM moves ahead with its Information on Demand agenda incorporating information strategy, business intelligence, analytics, content management, and master data management it is no longer enough for an IBM BI channel partner to simply offer point solutions in Cognos. At the same time, the as-a-service phenomenon continues to grow at pace, fuelled by end-user demands for everything from system performance improvements through to virtualisation, remote worker, and mobility enablement. As the available as-a-service offerings become more prevalent and wide-ranging to address these needs the fact is that any supplier of technology that is currently standing still with regards to as-a-service offerings will not meet the demands of their traditional client markets over the coming years. Change is required. However in the rush towards the cloud-based services only agenda that is sweeping the industry it is important that organisations not forget the role of infrastructure in the mix, even if it is only a transitory one. In this regards the on premise appliance is proving to be a significant change catalyst and is by no means dead. Instead the on-premise appliance may yet help to redefine the success of both the vendor channel and the end-user market in the current technology cycle.

When Larry Ellison throws down the gauntlet of transaction processing benchmarks and offers to pay “any company $10 million if [their] Oracle database application doesn't run at least twice as fast on SUN hardware as on IBM's fastest computer”, there is no doubt that a rivalry exists between the Red Army of Redwood City and the Blue Suits of Armonk. What began in the 1980’s as a contest at the database layer has progressed over the last quarter of a century ever upward through an increasingly complex software stack. Regardless of how different these two giants of the ICT industry may seem on the surface, the truth is that the real battle has always been about who runs the world’s enterprise level business applications. Next year is shaping up as the inflection point from which true supremacy in this arena will be decided.

Longhaus often begins any discussion of the local ICT economy by outlining the role of application versus infrastructure renewal cycles. For some time we have been advising end-users and vendors alike to prepare for a period of application renewal that was to inevitably follow the last infrastructure boom; a boom that peaked in late 2007 when according to the Longhaus Australian Tech Index   activity in the local ICT economy reached 154.48 basis points above its turn-of-the-century levels. Longhaus continues to see significant evidence of this cycle, whether through increasing approvals of business and ICT projects from the Longhaus CIO Poll, or demand from new and existing clients for early market sounding through our Last Mile Markets service, the common signs of a change in the ICT economic cycle are all there. However, a new trend has emerged that should have many traditional application software vendors worried.