In enterprise software, look for more consolidation, says a top consultancy; in CRM, more customer-touching interaction.
Posted Dec 24, 2007
It's the time of the year for technology-industry observers to issue predictions for 2008, and Booz Allen Hamilton is no exception. The consultancy recently issued an industry letter in which it made the following five predictions for the year to come:
1. A slower economy and a weak dollar will intensify cost pressures and focus on non-U.S. markets.
2. The adoption of common industry standards will be a powerful spur to innovation.
3. The software sector's consolidation will pick up speed again.
4. Consumers' taste for all-in-one technology devices will grow even stronger.
5. The push is on for greener technology products.
Points 1 and 3 are the most relevant for the e-business software sector, so we asked Booz Allen Hamilton Vice President Barry Jaruzelski, author of the predictions, to expand on them. To begin with, Jaruzelski says that currency dynamics compel American technology companies to pay increasing attention to foreign markets. "Part of the reason HP reported such good earnings is that they have a higher percentage of non-U.S. business," he says, praising an example of a successful global strategy.
While overseas markets are vital for stateside revenue, don't expect foreign software companies to start fielding competitive applications right away, Jaruzelski adds. "It'll be within the next three years, and it'll be because startups will emerge as an offshoot of outsourcing," he says. If this prediction is accurate, look for entrepreneurs with experience in India's service-oriented technology sector to branch out into software, and begin to compete with U.S. companies. Jaruzelski thinks that India is way ahead of China on this front.
As for the domains in which e-business companies operate, Jaruzelski singles out security as particularly hot for 2008, but adds that CRM still has legs -- and that some areas of CRM will be hotter than others, "like the integration of different capabilities, particularly things like virtual call centers." And, he notes, "companies will want to be able to touch real people as opposed to just Web-enabled interaction."
That's good news for CRM vendors focused on human-to-human interactions. Overall, though, Booz Allen Hamilton depicts 2008 as a challenging year for technology companies in particular and the U.S. in general, as a number of adverse economic conditions may plunge the country into recession. But, based on Jaruzelski's comments, non-service areas of the U.S. tech sector need not fear direct competition from the rest of the world just yet, and will likely continue to prosper in 2008.
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