While new technology and delivery models change the way software is consumed, legacy vendors are scrambling to evolve portfolios at pace with more nimble pure-play vendors and rationalise traditional portfolios.
Recent Technology Business Research findings claim software providers that also have hardware portfolios to monitor during the transition are implementing flexible delivery models and marketing the value of robust, integrated and optimised portfolios.
“We are seeing vendors embrace their inherent strengths, as large multiline vendors integrate products to control more of the stack, while smaller pure plays leverage a deeper niche focus,” says Meaghan McGrath, Research Analyst, TBR.
“These actions indicate different go-to-market efforts remain as software vendors look to maximise the monetisation of their existing portfolios amid consumption changes.”
McGrath says the shift of applications software to a subscription model has been a more rapid migration than in the infrastructure management (IM) space, which TBR attributes to the less complex transition of applications to the cloud rather than databases and middleware technology.
While bring-your-own-license movements have marginally slowed the forfeiture of license contracts, overall license revenue continues to decline.
To balance the lower up-front revenue of subscriptions, McGrath believes many applications vendors have looked to new customer segments.
Some smaller vendors have been afforded up-market expansion into large enterprise accounts, but more prevalent is the down-market opportunity for larger vendors with solutions that were previously too expensive and complex to deploy for SMBs.
Vendors face similar challenges within the IM market, as evolution is being driven by changing application delivery methods as well as increasingly complex hybrid cloud environments.
“Vendor performance in the infrastructure management space continues to be challenged by delivery model shifts that favour subscriptions and ongoing financial headwinds outside core markets,” adds Andrew Smith, Research Analyst, TBR.
“However, our research this quarter identifies opportunities for vendors, particularly in the professional services space, to capitalise on demand for business transformation services as more customers adapt their legacy infrastructure to enable agile application development and DevOps methodologies.”
Smith believes “persistent declines” of license and maintenance revenues across benchmarked vendors indicate market opportunities in the IM space are shifting to higher-value engagements.