Software and Services Fuel Internet Economy

Software Magazine, June, 2000

THE BIG GET BIGGER YET THE INNOVATION CONTINUES.

The 18th Annual Software 500 results reflect the major trends in the information economy: the rise of the Internet as a business proposition; heightened merger and acquisition activity in the supplier community, in many ways the byproduct of enormous stock valuations; and the growth in the services economy.

This year we put services on a more even footing with software product sales by counting software-related services revenue for the ranking. This is not only because it was getting more difficult to distinguish software product license and maintenance revenue from service revenue, but also because so much more outsourcing is happening in the industry today.

Readers in IT and e-business management challenged to select and manage their service firm partners need all the help they can get. We feel we can help. Thus, in this issue, we offer a framework for evaluating e-business services companies, beginning on page 34, which range from billion-dollar entities to start-ups with snazzy names. The framework is authored by Ian Hayes, principal of Clarity Consulting, and will be a continuing project.

In a similar vein, a new category of services players has emerged--a service to manage service firms--called Professional Services Automation. Dan Kara, CTO of Intermedia Group, fleshes out the idea beginning on page 42.

The hype and heightened expectations surrounding Internet start-ups in 1999 has been tempered greatly in 2000; Amazon.com, for example, experienced layoffs after the holidays and many of the high-flying Internet stocks trading on the Nasdaq have come down to earth. Still, the game has changed for IT organizations. While many a mainframe system is still in place running a 30-year-old Cobol system, the Software 500 data shows that the fastest-growing companies are in the e-business products and services area, in categories such as customer relationship management (CRM), application service providers (ASPs), and integration (EAI and XML).

The promise of e-business to transform the economy, disrupt the established players in each industry, and deliver increased value to customers and shareholders is very real. We hope the 18th Annual Software 500 ranking will help our print magazine readers and visitors to www.softwaremag.com on the Web in their efforts to select the best software and services providers for their organizations.

Many thanks to Software 500 Project Editor Colleen Frye for leading the team on another stellar effort. Also thanks to Amy Sauer, Project Coordinator, Virginia Gagliardo, editorial assistant, fact-checkers Kathie Gow and Sue Bencuya, and consultant and data analyst Thomas Nee.

Software is the basis for growth in the Internet economy. It fuels the underlying products and services needed to support the e-business infrastructure. Tell us how you like the issue and how you would like us to enhance it. Write to me at jdesmond@softwaremag.com.

Regards,

John P. Desmond