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Can enterprise software ever be sexy?

Charles Cooper CNET News

Published: 26 Sep 2003 17:45 BST

Let's be honest about it: enterprise software is deadly boring. Presented with the choice of boning up on the finer points of personnel management and payroll processing applications or ripping my brains out with a plastic fork, I would not dismiss the latter option.

But after two-plus years in the dumper, enterprise software suddenly became one of the sexiest technology stories of 2003.

Some of the credit goes to Larry Ellison, who stirred the pot when he vowed to break up PeopleSoft's union with J.D. Edwards and then threatened to shoot Craig Conway's dog. Although he came up empty-handed, Ellison is still on the hunt and promises that Oracle will capture PeopleSoft -- even if it takes another year to bag its prey. To be continued.

Away from the floodlights, there's a more interesting angle to the enterprise software business that has nothing to do with mergers, acquisitions or the emerging criminological specialty of canine homicide: This is the Lazarus-like revival of the concept of "software as a service".

Many of you may remember this ungainly buzzword, which got a lot of play a few years ago, when Microsoft began to beat the drum for .Net. At the time, Steve Ballmer and his entourage were gushing about how a strategy shift toward selling software as a service through subscriptions would transform the face of IT -- if not Microsoft.

As it turns out, it was neither. In part, Microsoft's own missteps undercut customer acceptance. But just as important was the blowup of so many application service providers, after the economy began to slip into recession. ASPs were around aplenty back then, but too many of them just couldn't pay their bills.

But the idea behind hosted applications, where customers essentially rent what they need, is enjoying a comeback in these times of failed expectations and reduced information technology budgets. For many companies, renting software is a lower-risk, attractive option than locking yourself into an expensive single vendor solution.