Monday, January 7, 2008

Eyes on 2008

More software piped down the Internet in 2008

By Christopher Calnan

The web is expected to play a prominent role in the delivery of software in 2008, along with the storage and backup of data, industry observers said.

The demand for "software as a service" is expected to continue to rise and replace packaged software in the coming year, while the line between consumer-focused Web 2.0 applications and enterprise applications blurs, they said.

More than 50 percent of software makers -- large and small -- are adopting on-demand applications because of the advantages it offers such as fast implementation combined with low initial investment due to the subscription model, according to Nucleus Research Inc., a Wellesley-based firm.

On-demand software has grown more powerful and easier to tailor to individual customer needs, Nucleus vice president Rebecca Wettemann said. "Businesses have gotten much more comfortable looking for solutions on their own," she said.

Local on-demand software firms include Woburn's HighRoads Inc. and Waltham's Oco Inc. and Brainshark Inc.

Nucleus and other industry analysts are projecting greater adoption of on-demand software for functions such as project management, content management, e-commerce, and collaboration -- mirroring the trend of application service providers in the late 1990s.

"The difference today is that it's the users that are pushing for on-demand because the applications and the way they're delivered is dramatically different," Nucleus reported.

Framingham's IDC is projecting the advent of a software product to organize the "tsunami of unstructured data" generated by social networking. The firm also projects an increase in online delivery to generate more profits in high-growth markets, especially small and midsize businesses.

A greater demand for online storage services in response to "shrinking floor space and rising costs of power" is expected by IDC during the coming year. The online approach began during 2007 as a backup tool for consumers and small businesses, but has since evolved into a disaster recovery and regulatory option for larger businesses.

New England online-backup companies include Boston-based Carbonite Inc. and Southborough's Iron Mountain Digital.