This talk focuses on how both the enterprise and consumer software businesses have been changing over the past decade. A major change is the shift from a products-centered business to a services and maintenance business. Another change is the increasing importance of non-traditional business models, where software products (or functionality once sold as products) is now offered as a service or as free to the end user and paid for indirectly through advertising or other revenue sources. Part of the reason for this shift is the aging of software companies and the saturation and commoditization of many product markets. Another factor is the platform shift to the internet, which has increased demand for services or allowed the appearance of new business models. The basis for these observations comes from a multi-year study through which we have compiled ten or more years of annual financial data on all public software product firms (approximately 400) and IT services firms (approximately 500) listed on US stock exchanges.

The landscape for enterprise software has changed. While the industry was worried about the decline after the 90’s industry boom, the Internet has grown the number of users above 1 billion and Web 2.0 applications, popular in the consumer world, have started to migrate to the enterprise. This has bifurcated the industry into “category leaders” and “innovative start-ups” which represent less than 10% of the number of companies in the industry. The remainders are trapped in a “no man’s land.” Both of these groups possess an R&D advantage – disruptive innovation by start-ups and continuous innovation by category leaders. This has led to a new way to innovate, deploy, and service applications in the enterprise, and a classic innovator’s dilemma is occurring with collaborative applications getting adopted from start-ups and many getting acquired by category leaders. Mr. Lane has drafted seven laws for Web 2.0 enterprise applications and the creation of the personal enterprise for Web 2.0 enterprise applications and the creation of the personal enterprise.

The service sector – which includes government, education, medical and healthcare, banking and insurance, consulting, information technology services, retail and wholesale, tourism and hospitality, entertainment, transportation and logistics, and legal, among others – accounts for most economic activity, but is the least studied and least understood part of the economy. Innovation in service, in particular, is not approached as systematically as innovation in agriculture and manufacturing, which have both experienced large productivity and quality gains in the last two hundred years. To remedy this, IBM and others have proposed developing a science of service, which aims to provide theory and practice around service innovation. In this talk, Dr. Maglio will discuss progress toward this goal, arguing that the proper basic category is the service system, in which entities exchange performance of beneficial action, and that a service system can be understood as a system composed of people and technologies that adaptively computes and adjusts to the changing value of knowledge in the system. Professor Zysman, author of Manufacturing Matters: The Myth of the Post-Industrial Economy, will offer a counterpoint that our "post-industrial" economy in which manufacturing has been displaced and somehow rendered obsolete by white-collar and service economy is a dangerous myth that is seriously undermining our ability to compete successfully in world markets.

The software industry is undergoing a major shift. Traditional software companies like Oracle and Microsoft have committed to delivering software as a service. Bill Gates has written in his famous memo of October 2005: “The coming 'services wave' will be very disruptive. We have competitors who will seize on these approaches and challenge us — still, the opportunity to lead is very clear.”

Almost all of the new software companies are built in the software on demand model. Webex IPOed in 2002 and was followed in 2004 with the public offerings of Salesforce, RightNow, WebSideStory and finally, in 2005, ended with the launch of Kenexa, Taleo, Vocus and DealerTrack. They are far from alone. Today there are hundreds to thousands of new software companies providing everything from social networking software to environmental compliance software as a service.

So why is this shift happening? Is it simply a passing fad? What technology is powering this transformation and how will it transform the business of software? Finally, if all software is delivered as a service – what’s next?

The software industry is going through a rapid and significant transition. Almost every aspect is in flux from underlying business models to development processes to user needs and devices. It is not clear where we are in this process of disruption and reinvention. What is clear is that a rich platform, both in the cloud and on the desktop, will be needed to develop and deliver new user experiences. Exploring and inventing new software products and services has never been more exciting – or the opportunity more promising.

Craig will discuss the importance of long-cycle research in providing a rich development platform and the role that a highly innovative partner ecosystem will have on the impact of the future of technology.

As software applications increasingly move from the desktop to the web, companies – especially startups – are looking for effective and inexpensive ways to quickly build their SaaS applications and deploy them.   There is a large and growing body of high-quality open source components to support the development of the infrastructure for these applications.  Moreover, open source style development, in which ecologies of corporate, consulting, and volunteer interests collaborate on common resources, is be better suited than traditional organizational forms and software practices for key parts of service development. This session discusses the current and future use of open source software to further development of services.

Software engineers face new challenges in creating and operating software for the world of the "perpetual beta;" many propose to totally ignore all we have learned over the past 30 years. As agile methods, open source, and software as a service are more widely used, we see significant changes in the way the software is developed, deployed, operated and maintained.   Hosted applications and service-oriented systems involve small teams, rapid change in features and deployed systems, and no user-installed applications. There is an intimate connection of development and maintenance, deployment and operation.

As educators and practitioners, we ask "What should we use and teach about software engineering today?" "What about traditional artifacts such as requirements and specifications?” We see tremendous value in many artifacts, milestones, methods and roles of the traditional software development lifecycle. The panelists will discuss these changes and the opportunities for reintegrating the best of these methods, artifacts and tools in practical ways, incorporating reuse, architecture, agile development, mashups, and web services in a much lighter-weight approach for the smaller development/deployment team.

This session will focus on software investing. What types of software companies do venture capitalists find most attractive these days? How does the increasing consolidation of the traditional software industry impact investment decisions? How much of an impact has open source had and how much will it have on the software industry? Which software sectors have the SaaS model impacted? Will the SaaS model revolutionize the software industry? What are the key metrics investors look at when evaluating software companies? How does the growth of the software industry overseas effect your investment decisions? If you had to pick only one public software company to invest in for the next ten years, which would it be and why? Which company would you short and why?

While we are pondering the future from the perspective of technology, applications, and business opportunities, we should also ponder how software companies can cooperate more effectively in the context of the new software industry. There has always been a lot of collective industry activity such as standardization, cross-licensing agreements, consortia, and so forth. Are there opportunities to improve how the companies in the industry work together? Do the new realities of the software business discussed in earlier sessions lead to special opportunities or special challenges for industry cooperation? This session will examine several areas of opportunity for future cooperation, including planning overall software architectures that serve the industry and its customers well, managing intellectual property, and effectively capturing innovation.