Readers who have been following this blog and reading the various posts on Open source & software as service might not be very surprised by the title. This post is based on an article at the IT Managers Journal with the same title, provides us with an insight to the state if the enterprise software licensing business.

Excerpts:
Is the enterprise software business dying? Is anybody out there buying new licenses? Based on news from the past few weeks, it seems that there are very few buyers. The collapse of new licensing revenue isn't news -- it started five years ago -- but the latest news makes it look like a permanent and accelerating fact of life for software vendors. CIO of British Petroleum claims that out of a $2B IT budget, only $30M is allocated for new software licenses.

Why licensing revenue is decreasing - Siebel Systems Inc. (CRM Solution Provider) shows the trend starkly. Siebel is a poster child for the bad old days; software that is very complicated and expensive to acquire and implement. Buyers have had enough. License revenue declined 40 percent in the most recent quarter compared to a year ago.

Mike Kinkead, serial software entrepreneur and one of the founders of the Massachusetts Software Council. He recently moderated a strategy session for the council to figure out the way forward, and his conclusion was that the traditional enterprise software business is dying. That doesn't mean that the software business as a whole is dying, but it has shifted permanently to new revenue models.

New companies erode markets of established ones, and so on ... Siebel is getting eroded by Salesforce.com, a highly configurable, rapidly deployable, application service. That's the Wall Street story, and it is true. You would be crazy to buy Siebel if you can get away with a much faster and easier Salesforce.com deployment. What you don't hear is that Salesforce.com itself is about to get eroded -- and severely -- by the open source CRM systems like SugarCRM (a Salesforce.com knockoff) and CentricCRM.

Prashanth RaiSource: IT Managers JournalTags: Enterprise Software, License.