Wednesday, 16 December 2009

2010: Another year of “if it ain’t broken….

…. don’t fix it”.

I’ve had the opportunity to talk to a number of software and service suppliers to the UK local authority market over the past few weeks, and with the exceptions of out-sourcers and suppliers into the social services, education and housing sectors, they are broadly pessimistic about the opportunities for new business in 2010.

As I predicted early this year, 2009 has not been too bad a year, with the April re-organisation throwing up some good new contracts and opportunities, whilst some existing customers have had the budget to buy additional functionality and services from existing suppliers. But now supplier orderbooks seem to be depleted, and without significant new business in the offing, many suppliers continue to review their costs and staffing structures to batten down the hatches for a tough 2010.

As 2010 is an election year (both general and local), it will spread uncertainty in many purchasing areas and exacerbate the opportunities for indecision. In normal times suppliers would have expected a poor year, but in today’s troubled financial times, it promises to be even worse.

Not surprisingly, several companies are looking at acquisitions as a way of growing their customer base, and with poor sales forecasts for many smaller suppliers potentially driving down their valuations, I think 2009 will see further consolidation in the application software market. Indeed, a few suppliers are not expecting their competitors to survive the the next couple of years, and I would agree that there are a number of smaller suppliers that will not survive what I believe will be an orders drought through to at least 2012.

As I've said before, existing suppliers will try to maximise revenue from existing customers, both through increased services offerings and new modules & functionality for existing systems. Larger suppliers will attempt to cross-sell between departments within existing customer sites (I think, in 2010, with limited success, although customers may be tempted by the lower cost of procurement).

However, the corollary to all this, particularly for the smaller or bolt-on applications, is that we may see the arrival of new, smaller players with new offerings that are significantly cheaper and potentially technically superior to existing suppliers who have not invested enough in their products.

So 2010 – an even tougher year for the software suppliers.

Tuesday, 15 December 2009

Agile vs waterfall – the debate continues

It’s been good to see the number of new readers that have found this blog by searching for this topic – and I welcome the many comments that I’ve received on my previous posts.

Over the past year I’ve met with a number of advocates of agile methods, and had the opportunity to review a number of new software products being developed using agile methods. Whilst my view remains that it’s “horses for courses” when deciding on agile vs. waterfall methods for development (see my original post - Agile vs. waterfall methods), I’ve yet to find anyone that is using agile development methods for new application package products effectively.

Yes – I’ve seen some very successful agile developments of bespoke systems for single customers, but agile methods seem unable to cope with the development of package products that need to be designed to meet multiple and differing customer needs. The key appears to be the need to understand the many different customer requirements in advance, so as to be able to decide upfront on the core parameters for the product.

As noted in my post Agile methods for package enhancements?, when there is an existing product, where the majority of core parameters have been defined already, agile methods can be used effectively to develop new modules – always providing that you have the right types of team members and a true agile methodology (rather than a “let’s give the techies control of this development” approach).

However, do any of my readers know of new application software products that have been built successfully using agile methods? If so, please let me know.....

OT - America’s Cup 2010

For those of you that don’t keep up-to-date on sailing, the next meeting of the giants of match-race sailing, the America’s Cup, has been totally changed by the courts following legal battles between Larry Ellison (CEO of Oracle) and the Swiss challengers, Alinghi. Rather than a competition open to all entrants to fight to challenge the holders, next year’s competition will be solely between the holders, Alinghi and BMW Oracle Racing – racing in mighty multi-hulls rather than the normal 12 metre yachts.

We may not yet know for sure where the February competition will be held (my betting is on Valencia), but next year’s America’s Cup racing looks as if it will be more a technology rather than a tactical race. Just look at the competitors....

Visit the BMW Oracle Racing and Alinghi web sites for more information, photos and videos.

I can’t wait to see who wins this competition next year – I just hope that the two boats are relatively evenly matched, otherwise the competition could be as boring as some Formula 1 GPs, where one car can be so dominant as to result in predictable, processional races. I don’t see multi-hulls as the ideal vehicles for close match racing, however, if we get some good breezes, just watching these monsters at speed could prove exciting on its own....

I hope that we will see a return to common sense rather the courts after 2010, with the competition returning to open races in boats built to an agreed specification (ideally 12 metres, but if not, let’s have a tight standard that puts the emphasis back onto the skills of the teams).

Friday, 11 December 2009

After the downturn

Let me draw your attention to a joint paper by CIPFA and SOLACE on the Pre Budget Report – a paper that tries to start the discussion on how Local Authorities will have to start planning for public spending cuts. A bit like the PBR, it neither identifies specific areas for change, nor the levels of cuts, but discusses the strategies that LA’s will have to adopt over the coming years.

The paper focuses on two scenarios, one envisaging a 7.5% cut in real terms over 2011-14, the other 15%. Whilst the 7.5% cut is possible, I believe that the 15% cut scenario is much more likely, and I believe it may even be more than 15% – particularly as I believe the ability for LA’s to increase Council Tax will be substantially reduced over the same period.

I won’t repeat the contents of the paper here, other than to say that I strongly agree with the need to re-think the delivery of services, and the paper’s three options of:

  1. redefining the relationship between the state and the individual
  2. a significant de-layering of the public sector
  3. a major initiative to maximise economies by much more effective collaboration between public bodies

After the ‘ring fencing’ of some key services, I believe that many LA’s will have no choice but to terminate or almost remove some other services (e.g. the library service is one area that could be under threat in some areas). However, de-layering of the public sector, combined with more effective collaboration between public bodies, in my mind, potentially gives the greatest potential for savings.

Perhaps severe cutbacks in funding will force organisations into sharing services, and the government into more ‘vertical integration’ of services (e.g. between national, regional and local bodies). This will inevitably lead to more out-sourcing, but if the public sector was to think more in an out-of-the-box way, perhaps we will see the more innovative use of out-sourcing to commercial operations where true synergy is possible – e.g. local supermarket chains, or even banks (or can some of them be already regarded as part of the public sector?).

Congratulations to CIPFA and Solace on their paper. Hopefully it will encourage the public sector to discuss the major shifts in service delivery that the current crisis in public sector finance demands.