Software firms stop research

Vendors continue to face a slowdown, while some companies have stopped research and development altogether, moving into ‘maintenance’ mode. These include CA Masterpiece, McKeown, Mapics and Scala.

IT consultant Dennis Keeling pointed to a recent survey of the application software industry, which provided the first firm evidence of the slowdown in application software sales.

Further industry reports, expected to be released next month, will continue to show a decline in sales for a large percentage of players in the market.

Keeling said: ‘Some 70% of accounting systems providers are now in maintenance-only mode, where they live off customer revenue incomes, do not want to do any more research and development, and show no interest in coming up with new products.’

‘As a result of these companies not being interested in moving to the next generation of software, we are seeing a slowdown.

‘It has nothing to do with customers having a shortage of money. They have money but are simply not willing to spend it unless they are going to get something new from their purchase.’

A spokesperson for Peoplesoft, a top-end vendor, added: ‘A lot of companies have not expanded their capabilities. Many vendors need to ask themselves whether they would commit to a product which may be considered old in a year’s time. It is our belief that potential customers are looking for technology which will remain relevant for at least five years.’

Meanwhile, Basda’s forward projection for quarter three shows only 56% of companies are expecting growth, compared with 77% in the first quarter.

It is also expected that a number of major players will announce problems over the next 12 months as the slump continues to bite.

The software industry has also suffered a major slowdown following the passing of the millennium bug, while the US economic slowdown has also been blamed.

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