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Wednesday, October 11, 2006

Advertising as a Revenue Stream for Software Companies ?

Advertising could be a possible incremental additional source of revenue for ERP companies besides the traditional ones. There would be multiple revenue streams.

The B2B Advertising Market place in the US itself is in Billions of Dollars. Maybe Google (or any other company) would become the medium for advertising in any software (including ERP).

Online advertising as a variable incremental cost can be measured (perhaps much more accurately than the traditional media) against incremental Sales Revenues, making it more attractive for the advertisers.

The incremental cost of delivering software via the Net is close to zero. There is also a 'long tail' in software revenues that can be utilised more effectively by ERP vendors. Hybrid (Mix of Advertising and other Revenue Streams) Models could be perhaps an interim solution.

One of the advantages of online media over traditional ones is the availability of contextual advertising. Also, it can have multiple forms - ugly, distracting pop-ups that force user response are only one of the possible options.

Also, organizations may have to redefine their definition of users and customers to arrive at more balanced and even more hybrid revenue models.

Wednesday, October 04, 2006

The 4th Wave as per Forrester - Death of ERP as we know it ?

George Colony, Chairman of Forrester Research believes that in the next 5 years, large enterprise software (in competition to SAP and others) would become free for corporates largely supported by advertising. This is an extremely outrageous prediction to make.

He also mentioned that Google would be the company driving the same.

He said this in Mumbai today at an event sponsored by NASSCOM.

In Forrester's viewpoint, it is the Executable Internet - the 4th Wave - A Technology Thunderstorm that will cause the same, the earlier three ones being Mainframes, Personal Computers and the Current Web. These waves repeat at intervals of approximately 16 - 20 year gaps.

His presentation had a graph displaying Moore's law growth projections vis-a-vis other curves depicting increase in the technology adoption factors - training, management readiness, education.

Obviously, the graph did support his viewpoints as regards the Wave occurences at timelines with the minimum gap and intersections between the Technology adoption factors and the Moore's law growth line.

Unfortunately, I did not get time to question the source or authenticity of the data in the presentation graphs.

In response to my question, he also replied that it also means as a logical extension that enterprise software ERP companies would become media companies.

Is that not what Google is already today ?

So, should ERP companies brace for innovative business models and tough organizational transformations ahead ?

What about the reluctance of corporate customers to use advertising supported software ?

George's specific reply on the same was that this is the standard reaction of all CIO's and a typical employee already sees hundreds or even thousands of advertisement messages every day during work related PC activities.