Software 500 turns 20, era of honesty dawns

Software Magazine, Summer, 2002

WE WOULD LIKE TO THANK ALL THE COMPANIES that filled out the 2002 Software 500 survey, the 20th year of this ranking of software and service companies. The private companies on this list especially should be congratulated for being willing to report on a year-2001--that many would like to forget about for a number of reasons, not the least of which was the slowness in IT spending that became worse as the year dragged on. Some 34 percent of this year's 500 reported declining revenue from the previous year. So this year's Software 500 tells a story of which pockets in the software industry did well in a down year --and there are many such pockets as the coverage in this issue shows.

Last year's Software 500 coverage discussed issues around pro forma reporting and the difficulty of tracking the true performance of public companies when so much accounting interpretation was being allowed. But, this was nothing compared to the financial reporting misrepresentations from Enron to Worldcom we have experienced since then. And the downfall of Arthur Andersen points to the need for a new era in corporate accounting--the era of honesty--that we can apply to the software and services industry as well.

We need a re-examination of ethics on the accounting side. The CFO of Enron and the lawyer at Andersen who, in effect, endorsed the shredding of important documents, no doubt both came from fine families, went to fine schools and probably believed they were doing the right thing. For confidence to be restored in the economy--an economy that the software industry supports and depends upon as an engine of growth--we need to do a lot better at asking the difficult questions, such as: Is this the right thing to do? Is this fair for investors and customers? In many ways the era of honesty will be a relief. Not everyone is a crook.

Special thanks for this issue goes to Karen Larkowski, executive vice president with The Standish Group, a West Yarmouth, Mass.-based research and analyst firm. Larkowski and her organization oversaw the collection of the Software 500 data as a 100 percent online effort this year. We very much appreciate their efforts.

Please send your comments and suggestions to me at jdesmond@softwaremag.com for consideration as letters to the editor online at www.softwaremag.com or in print in a future issue.

Regards,

John P. Desmond

jdesmond@softwaremag.com