IDC's software taxonomy, 2007

INDUSTRY DEVELOPMENTS AND MODELS IDC's Software Taxonomy, 2007Richard V. Heiman IDC OPINION IDC's software taxonomy represents a collectively exhaustive and mutually exclusive view of the worldwide software marketplace. This taxonomy is the basis for the relational multidimensional schema of the IDC Software Market Forecaster research database. The information from this continually updated database is used to generate consistent packaged software market sizing and forecasts. Highlights are as follows: ! For 2007, the taxonomy includes 79 individual functional markets grouped within three primary segments of "packaged" software: applications, application development and deployment (AD&D) software, and system infrastructure software. ! Revenue is further segmented across three geographic regions and nine operating environments. ! Additionally, the taxonomy defines a wide range of "competitive" markets that are combinations of whole or fractions of functional markets and that reflect such market dynamics as the problem being solved or the technology on which the software is based. Global Headquarters: 5 Speen Street Framingham, MA 01701 USA P.508.872.8200 F.508.935.4015 www.idc.com Filing Information: February 2007, IDC #205437, Volume: 1, Tab: Markets Software Overview: Industry Developments and Models T ABLE OF CONT ENT S P In This Study 1 Executive Summary.................................................................................................................................. 1 S i t u a t i o n O ve r v i e w 2 Introduction............................................................................................................................................... 2 What Is Packaged Software? ................................................................................................................... 3 General Functional Market Definitions...................................................................................................... 5 Software Taxonomy Functional Market Changes for 2007 ....................................................................... 8 Applications Market Definitions................................................................................................................. 10 Consumer Applications...................................................................................................................... 11 Consumer Software.................................................................................................................... 11 Collaborative Applications ................................................................................................................. 11 Integrated Collaborative Environments ...................................................................................... 11 Messaging Applications.............................................................................................................. 12 Team Collaborative Applications ................................................................................................ 13 Conferencing Applications.......................................................................................................... 13 Other Collaborative Applications ................................................................................................ 13 Content Applications.......................................................................................................................... 13 Content Management................................................................................................................. 14 Authoring and Publishing Software ............................................................................................ 15 Search and Discovery ................................................................................................................ 15 Enterprise Portals....................................................................................................................... 16 Enterprise Resource Management Applications................................................................................ 16 Financial Accounting Applications .............................................................................................. 17 Human Capital Management...................................................................................................... 18 Payroll ........................................................................................................................................ 21 Procurement............................................................................................................................... 21 Order Management .................................................................................................................... 23 Financial Performance and Strategy Management Applications ................................................ 24 Project and Portfolio Management ............................................................................................. 24 Enterprise Asset Management ................................................................................................... 25 Supply Chain Management Applications ........................................................................................... 25 Logistics ..................................................................................................................................... 26 Production Planning ................................................................................................................... 26 Inventory Management............................................................................................................... 26 Operations and Manufacturing Applications ...................................................................................... 27 Services Operations Management ............................................................................................. 27 Manufacturing............................................................................................................................. 27 Other Back Office ....................................................................................................................... 27 Engineering Applications ................................................................................................................... 28 Mechanical Computer-Aided Design .......................................................................................... 28 Mechanical Computer-Aided Engineering .................................................................................. 28 Mechanical Computer-Aided Manufacturing............................................................................... 29 Product Information Management .............................................................................................. 29 Other Engineering ...................................................................................................................... 29 Customer Relationship Management Applications ............................................................................ 30 #205437 ©2007 IDC T ABLE OF CONT ENT S — Continued P Sales .......................................................................................................................................... 30 Marketing.................................................................................................................................... 31 Customer Service....................................................................................................................... 32 Contact Center ........................................................................................................................... 32 Application Development and Deployment Market Definitions ................................................................. 33 Information and Data Management Software .................................................................................... 33 Relational Database Management Systems............................................................................... 33 Nonrelational Database Management Systems ......................................................................... 34 Database Development and Management Tools ....................................................................... 35 Data Integration and Access Software ....................................................................................... 36 Application Development Software.................................................................................................... 39 Unified Development Environments ........................................................................................... 39 Third-Generation Language Tools.............................................................................................. 40 Software Construction Components........................................................................................... 41 Analysis, Modeling, and Design Tools........................................................................................ 41 Web Site Design/Development Tools......................................................................................... 42 Quality and Life-Cycle Tools.............................................................................................................. 42 Automated Software Quality Tools ............................................................................................. 42 Software Configuration Management Tools ............................................................................... 42 Application Deployment Software...................................................................................................... 43 Application Server Software Platforms ....................................................................................... 43 Integration Server Software Platforms........................................................................................ 45 Message-Oriented Middleware................................................................................................... 46 Transaction Server Middleware.................................................................................................. 47 Industry-Specific Application Deployment Software ................................................................... 47 Application Deployment Adapters/Connectors ........................................................................... 47 Other Development Tools.................................................................................................................. 48 Other Programmer Development Tools and Utilities .................................................................. 48 Data Access, Analysis, and Delivery Software .................................................................................. 48 End-User Query, Reporting, and Analysis.................................................................................. 48 Advanced Analytics Software ..................................................................................................... 49 Spatial Information Management Software................................................................................. 49 System Infrastructure Software Market Definitions................................................................................... 50 System and Network Management Software .................................................................................... 50 Event Automation Tools ............................................................................................................. 50 Job Scheduling Tools ................................................................................................................. 50 Output Management Tools ......................................................................................................... 51 Performance Management Software .......................................................................................... 51 Change and Configuration Management Software..................................................................... 51 Problem Management Software ................................................................................................. 52 Network Management Software ................................................................................................. 52 Security ............................................................................................................................................. 53 Identity and Access Management .............................................................................................. 53 Secure Content and Threat Management .................................................................................. 54 Security and Vulnerability Management Software ...................................................................... 55 Other Security Software ............................................................................................................. 56 Storage Software............................................................................................................................... 56 Data Protection and Recovery Software..................................................................................... 56 ©2007 IDC #205437 T ABLE OF CONT ENT S — Continued P Storage Replication Software ..................................................................................................... 58 Archive and HSM Software ........................................................................................................ 59 File System Software ................................................................................................................. 60 Storage Management Software.................................................................................................. 60 Storage Infrastructure Software.................................................................................................. 61 Storage Device Management Software ...................................................................................... 61 Other Storage Software.............................................................................................................. 62 System Software ............................................................................................................................... 62 Operating Systems and Subsystems ......................................................................................... 62 Clustering and Availability Software ........................................................................................... 62 Virtual User Interface Software................................................................................................... 63 Virtual Machine Software............................................................................................................ 63 Remote Control Software ........................................................................................................... 64 Other System Software .............................................................................................................. 64 Geographic Area Definitions..................................................................................................................... 65 Operating Environment Definitions ........................................................................................................... 65 Other Market Views .................................................................................................................................. 67 Formal Competitive Markets Tracked................................................................................................ 67 Not Necessarily Mutually Exclusive ................................................................................................... 69 Applications-Based Competitive Markets .......................................................................................... 71 Data Warehousing Tools and Analytic Applications ................................................................... 71 Enterprise Resource Planning Applications................................................................................ 72 Enterprise Workplace ................................................................................................................. 73 Mobile Enterprise Applications ................................................................................................... 73 Supplier Relationship Management Applications ....................................................................... 74 Product Life-Cycle Management Applications ............................................................................ 75 Application Development and Deployment Software Competitive Markets ....................................... 76 Business Process Automation Software..................................................................................... 76 Embedded Database Management Systems ............................................................................. 77 Enterprise Metadata Technologies............................................................................................. 78 IT Governance............................................................................................................................ 78 Master Data Management .......................................................................................................... 79 Service Oriented Architecture and Web Services....................................................................... 81 Legacy Integration and Analysis Software.................................................................................. 83 System Infrastructure Software Competitive Markets........................................................................ 84 IT Asset Management Software ................................................................................................. 84 Mobile Device Management Software........................................................................................ 85 Mobile Middleware and Infrastructure Software ......................................................................... 85 Mobile Security Software............................................................................................................ 86 Software Distribution .................................................................................................................. 86 Future Outlook Essential Guidance Learn More 87 87 87 Related Research ..................................................................................................................................... 87 Appendix A: Lexicon ................................................................................................................................. 87 Appendix B: IDC's Software Market Forecast and Analysis Methodology ................................................ 99 #205437 ©2007 IDC T ABLE OF CONT ENT S — Continued P Company Revenue Modeling ............................................................................................................ 100 Revenue Recognition ........................................................................................................................ 100 Immediate Recognition............................................................................................................... 100 Deferred Recognition ................................................................................................................. 101 Subscription Revenue ................................................................................................................ 101 Mergers and Acquisitions: "Backstreaming" ...................................................................................... 101 Calendar Versus Fiscal Years ........................................................................................................... 101 Treatment of Exchange Rates ........................................................................................................... 102 Allocating Revenue to Geographic Regions ...................................................................................... 102 Allocating Revenue to Operating Environments ................................................................................ 102 Historical Data Reporting................................................................................................................... 102 Determination of "Other".................................................................................................................... 103 "When a Product Becomes a Feature" .............................................................................................. 104 Forecast Methodology ....................................................................................................................... 104 Competitive Market Maps .................................................................................................................. 105 ©2007 IDC #205437 LIST OF T ABLES P 1 2 3 4 5 Packaged Software Functional Taxonomy, 2007: Applications by Secondary Market ................. 6 Packaged Software Functional Taxonomy, 2007: Application Development and Deployment Software by Secondary Market .................................................................................................... 7 Packaged Software Functional Taxonomy, 2007: System Infrastructure Software by Secondary Market ........................................................................................................................ 8 Summary of Software Functional Market Changes for 2007........................................................ 9 IDC's Software Competitive Markets, 2007.................................................................................. 68 #205437 ©2007 IDC LIST OF FIGURES P 1 2 3 4 5 Packaged Software Revenue Data Model ................................................................................... 2 Model of Overlapping Competitive Markets.................................................................................. 70 Model of Mutually Exclusive Competitive Markets ....................................................................... 71 "Other" Company Estimation Model............................................................................................. 104 Sample Competitive Market Map ................................................................................................. 107 ©2007 IDC #205437 IN THIS STUDY This IDC study provides a detailed description of IDC's software market taxonomy. For 2007, the taxonomy includes 79 individual functional markets grouped within three primary segments of "packaged" software: applications, application development and deployment (AD&D) software, and system infrastructure software. Revenue is also segmented across three geographic regions and nine operating environments. More granular geographic detail is available in many cases from various IDC regional and country offices. Additionally, the taxonomy defines a wide range of "competitive" markets. Competitive markets are combinations of whole or fractions of functional markets that reflect such market dynamics as the problem being solved or the technology on which the software is based. Executive Summary IDC's software research programs maintain a centralized database that includes worldwide total packaged software revenue for more than 1,000 software vendors. We do not contend that this is an exhaustive list of software providers; in fact, we believe there are more than 10,000 such suppliers. However, our database is designed to support very precise forecasting, and the suppliers in the database represent a majority of the software market's revenue overall and a majority of the revenue in each of the various segmentations it supports. The revenue is allocated to functional market segments, geographic areas, revenue types, industries, channels, and operating environments. The functional software markets defined by the taxonomy represent a collectively exhaustive and mutually exclusive view of the worldwide software marketplace. IDC's software market taxonomy is the basis for the relational multidimensional schema of the IDC Software Market Forecaster research database. The information from this continually updated database is used by IDC's software Continuous Intelligence Services (CISs) (i.e., our subscription research services) to generate consistent packaged software market sizing and forecasts. Total packaged software revenue is defined as license revenue plus maintenance revenue plus subscription and other software revenue. It is primarily the total packaged software revenue that is further allocated to markets, geographic areas, and operating environments. In addition to total packaged software revenue, IDC collects software license revenue, software maintenance revenue, subscription and other software–related revenue, and total company revenue (see Figure 1): ! License revenue includes revenue collected for software licenses, either limited term (lease) or perpetual, that include licenses for new installations of a software product, licenses for additional software options, changes to existing licenses permitting more users or more computer system resources to be used by the licensed software (based, of course, on the original license agreement); such changes are often necessitated by server upgrades or staff increases or conversions of licenses that result in incremental additional revenue such as ©2007 IDC #205437 1 conversions from a fixed number of users or processors to a site or enterprise license. License revenue does not include license maintenance revenue, which typically includes fees covering version upgrades, the automatic delivery of bug fixes and patches, and basic telephone support, all of which are normally delivered during a fixed, renewable term of service. ! Maintenance revenue consists of fees charged for continuous improvement of the software by repairing known faults and errors and/or enhancing and updating the product, as well as for technical support. ! Subscription/other software revenue consists of fees to use software products and to receive maintenance and support for those software products for a limited period of time. Subscriptions consist of bundled software and services where the fair value of the license fee is not separately determinable from maintenance/support. This category also includes software lease or rental revenue (often, but not exclusively, applied to mainframe software). FIGURE 1 Packaged Software Revenue Data Model License revenue + + = + = Maintenance revenue Subscription/other software revenue Total packaged software revenue Other revenue (e.g., nonrecurring IT service fees, hardware, business process services) Company revenue Source: IDC, 2007 SITUATION OVERVIEW Introduction The first section of this study describes the IDC software functional market taxonomy as updated for 2007. It includes general definitions of terms, functional market definitions and descriptions, and definitions of geographic areas and operating environments. The functional markets are defined in terms of the features, functions, and attributes of the software package, not the problem being solved or the technology on which it is based. 2 #205437 ©2007 IDC Additionally, this study defines a wide range of competitive markets. Competitive markets are combinations of whole or fractions of functional markets that reflect such market dynamics as the problem being solved or the technology on which the software is based. Competitive markets are typically more ad hoc because they are meant to reflect current market approaches, coalitions, standards, and software architectures. Some competitive markets have been modeled to address a broad solution market category. Others, for example, define a market view particular to an architecture or represent revenue in subsets of geographic regions. What Is Packaged Software? How does IDC identify the companies it measures and the resulting value of the markets? Our objective is to define companies and markets that are relevant for market research purposes — not for legal or accounting purposes nor simply for publishing historic lists. Clearly, many companies have software and other types of business units; this taxonomy is not about deciding on the relative strengths of these business units and applying a single label to the entire company. The question therefore is, When does a company market and deploy software that should be counted as such for market research purposes? IDC uses the term packaged software to distinguish commercially available software from "custom" software, not to imply that the software must be shrink-wrapped or otherwise provided via physical media. Packaged software is programs or codesets of any type commercially available through sale, lease, or rental, or as a service. Packaged software revenue typically includes fees for initial and continued right-touse packaged software licenses. These fees may include, as part of the license contract, access to product support and/or other services that are inseparable from the right-to-use license fee structure, or this support may be priced separately. Upgrades may be included in the continuing right of use or may be priced separately. All of the above are counted by IDC as packaged software revenue. Packaged software revenue excludes service revenue derived from training, consulting, and systems integration that is separate (or unbundled) from the right-touse license but does include the implicit value of software included in a service that offers software functionality by a different pricing scheme (as described directly below in more detail). Increasingly, packaged software is also being marketed and deployed on a subscription and transaction basis, as well as via other arrangements (e.g., for "free" with the packaged software's "owner" taking a percentage of the revenue enabled by the software as implicit "product" revenue), some of which do not involve a license. Software has also long been available for lease or rent, typically on mainframes. Furthermore, we must not be limited by accounting directives (such as those released by AICPA and FASB) because this would neglect to count large segments of software markets in a way that accurately reflects market dynamics and future opportunity. ©2007 IDC #205437 3 IDC's Software Market Forecaster research database includes revenue from a company if the company competes in a packaged software market defined in the taxonomy. From the market research standpoint, this is the most important question. Software revenue is defined in terms of two types of offerings from the viewpoint of the customer: ! The market for software code of a given functionality sold as such, typically via a perpetual license ! The market for software code bundled and marketed in another way (e.g., an application service) that competes with perpetually licensed software products To be classified as packaged software revenue attributed to a company in the Software Market Forecaster research database, all of the following have to be true: ! Ownership of intellectual property. Application service providers (ASPs) that do not own the software code are not software vendors but channels for software vendors. However, some vendors own the code and also provide an ASP offering. In this case, IDC estimates a value for the software provided in that manner. However, in the case of packaged open source software (where there is no "owner" of the intellectual property), revenue is attributed to the distributor. ! Product is replicated. Software companies assemble a package of code from components and "sell" multiple copies in a one-to-many business model. The software product is replicated to support that model. Even though it may be customized as it is being installed, when the customization capability is an attribute built into the code, it is still considered replicated. Value-added resellers (VARs) do customization to packaged software, often on a one-to-one basis. In this case, VARs are a channel for the software. When a company takes code and adds its own changes and sells the resulting package substantially as changed to many customers, it is — in turn — an ISV that resells or OEMs components and adds value. (In these cases, IDC estimates the pass-through revenue and deducts it from the reseller and attributes it to the original owner of the intellectual property so as not to double count revenue and artificially inflate the size of the software market.) ! Competitive domain includes packaged software companies that license intellectual property rights to functionally similar software code. There are companies that offer to their customers packaged software functionality not via a right-to-use license but as a "service" that is wholly or partially based on software functionality. In this case, the question becomes, Does the company compete with packaged software companies that provide the same functionality? If so, a significant part of the basis of competition is the functionality of the software. Thus, there is a software component of the service company's revenue stream, and the value of the software must be "implicitly derived" or "attributed" and subtracted from the commingled revenue stream. Counting becomes difficult if the commingled product never has had a history of standalone software sales, and thus there is no requirement (from accounting rules) for calling out the revenue on the income statement. This accounting rule does not change the market dynamics — as far as the customer is concerned, services with the same 4 #205437 ©2007 IDC functionality are available as substitutes for licensed software products, and IDC must account for this in our estimate of the size of the software market. This procedure has been used by IDC in the operating system market for many years when operating system revenue is bundled with hardware platforms. The operating system is an important part of the value of the competitive hardware offering. Software vendors sometimes do not offer the same functionality in standalone form. See Appendix A: Lexicon for a definition of terms used frequently throughout the IDC software taxonomy but that are not defined within the body of this study because they are not markets or submarkets. Also, see Appendix B: IDC's Software Market Forecast and Analysis Methodology for an overview of the methodology employed by IDC's software analysts for collecting, analyzing, and reporting revenue data for the categories defined by the software taxonomy. General Functional Market Definitions ! The worldwide software market includes all packaged software revenue across all functional markets or market aggregations. ! Primary software markets are the aggregation of the functional markets for applications, AD&D, and system infrastructure. The three primary markets together make up the worldwide software market. ! Secondary software markets are 18 important aggregations that make up IDC's packaged software market taxonomy. These secondary markets are consumer applications, collaborative applications, content applications, enterprise resource management (ERM) applications, supply chain management (SCM) applications, operations and manufacturing applications, engineering applications, customer relationship management (CRM) applications, information and data management software, application development software, quality and life-cycle tools, application deployment software, other development tools, data access, analysis and delivery software, system and network management software, security, storage software, and system software. These markets map into the three primary markets and collectively equate to the worldwide software market. ! Functional markets are the focal point of IDC's analysis. IDC defines 79 individual functional markets for which it analyzes revenue by vendor, geography, and operating environment. Functional markets also provide the foundation and revenue base for the generation of competitive markets. ! Submarkets describe one or more discrete functional areas within a specific market. Although submarket-level data may be reported in selected IDC studies, this level of detail is not recorded in the Software Market Forecaster database. Tables 1–3 provide an overview of the functional markets and secondary markets that constitute the applications, AD&D, and system infrastructure software markets. ©2007 IDC #205437 5 T ABLE 1 Packaged Software Functional Taxonomy, 2007: Applications by Secondary Market Enterprise Resource Management Applications Financial accounting applications Human capital management Customer Relationship Supply Chain Operations and Management Manufacturing Engineering Management Applications Applications Applications Applications Logistics Services operations management Manufacturing Mechanical CAD Sales Consumer Applications Consumer software Collaborative Applications Integrated collaborative environments Messaging applications Content Applications Content management Authoring and publishing software Search and discovery Production planning Mechanical CAE Marketing Team collaborative applications Conferencing applications Payroll Inventory management Other back office Mechanical CAM Customer service Enterprise portals Procurement Contact Product center information management (PIM) Other engineering Other collaborative applications Order management Financial performance and strategy management applications Project and portfolio management (PPM) Enterprise asset management Source: IDC, 2007 6 #205437 ©2007 IDC T ABLE 2 Packaged Software Functional Taxonomy, 2007: Application Development and Deployment Software by Secondary Market Information and Data Management Software Relational database management systems (RDBMS) Nonrelational database management systems Database development and management tools Data integration and access software Application Development Software Unified development environments Quality and LifeCycle Tools Automated software quality (ASQ) Application Deployment Software Application server software platforms Other Development Tools Other programmer development tools and utilities Data Access, Analysis, and Delivery End-user query, reporting, and analysis Third-generation languages (3GLs) Software configuration management (SCM) Integration server software platforms (ISSPs) Advanced analytics software Software construction components Messageoriented middleware Spatial information management Analysis, modeling, and design tools Web site design/ development tools Transaction server middleware Industry-specific application deployment software Application deployment adapters/ connectors Source: IDC, 2007 ©2007 IDC #205437 7 T ABLE 3 Packaged Software Functional Taxonomy, 2007: System Infrastructure Software by Secondary Market System and Network Management Software Event automation Security Identity and access management Secure content and threat management Security and vulnerability management Other security software Storage Software Data protection and recovery software Storage replication software System Software Operating systems and subsystems Clustering and availability software Virtual user interface software Virtual machine software Job scheduling Output management Archive and HSM software Performance management Change and configuration management Problem management File system software Storage management software Storage infrastructure software Storage device management software Other storage software Remote control software Other system software Network management software Source: IDC, 2007 Software Taxonomy Functional Market Changes for 2007 IDC's software functional market taxonomy is updated annually to reflect the dynamic nature of the software marketplace. This section describes the significant structural changes made in 2007. For reference, the previous version of the software taxonomy is documented in IDC's Software Taxonomy, 2006 (IDC #34863, February 2006). Note that in addition to structural changes, some markets were renamed and definitions were updated to reflect the evolution of specific market categories. The software taxonomy changes for 2007 are relatively few in comparison with previous years. They can best be characterized as relating to consolidation or clarification of market categories. For example, the previous content access tools market was renamed as search and discovery to more accurately reflect the functionality of applications included within it. This renamed market (along with enterprise portals) was moved to the content applications secondary market because these markets have 8 #205437 ©2007 IDC evolved to become more closely aligned with content management than with the former information access and delivery secondary market — which is now termed data access, analysis, and delivery to denote the change in coverage. As an example of consolidation, four previously defined database markets (pre- and postrelational, object-oriented, XML, and end user) have been aggregated as the single nonrelational database management market. All of the functional market structural changes for 2007 are summarized in Table 4. T ABLE 4 Summary of Software Functional Market Changes for 2007 2006 Market Applications Content access tools Search and discovery Name changed and market moved from information access and delivery (an AD&D secondary market) to content applications to better reflect market coverage Translation/globalization market merged into search and discovery market Market moved from information access and delivery (an AD&D secondary market) to content applications to better align with associated markets Renamed (no change in coverage) to provide clear differentiation from the financial performance and strategy management applications market Name changed to better denote coverage area 2007 Market Comments Translation/globalization Search and discovery Enterprise portals No name or definition change Financial applications Financial accounting applications Business performance management and financial analytic applications Application development and deployment Pre- and postrelational DBMS, object-oriented DBMS, XML database management, end-user DBMS Financial performance and strategy management applications Nonrelational database management systems Small database markets consolidated ©2007 IDC #205437 9 T ABLE 4 Summary of Software Functional Market Changes for 2007 2006 Market Information access and delivery 2007 Market Data access, analysis, and delivery Comments Secondary market name changed to denote that the content access tools and enterprise portals markets are no longer included in this secondary market (see comments in previous Applications section of this table) See comments in previous Applications section of this table Content access tools and enterprise portals System infrastructure software Network and service management Moved to applications Network management software Name changed to better denote coverage area Secondary market name changed for clarification — no change in coverage from 2006; security appliance revenue is included in this market Markets merged Security software Security Secure content management, threat management Enterprise connectivity software Secure content and threat management Other system software Enterprise connectivity software market merged into other system software market Market moved to system software secondary market — there is no longer a networking software secondary market Remote control software No name or definition change Source: IDC, 2007 Applications Market Definitions Packaged application software includes consumer, commercial, industrial, and technical programs and codesets designed to automate specific sets of business processes in an industry or business function, to make groups or individuals in organizations more productive, or to support entertainment, education, or data processing in personal activity. The packaged application market includes the consumer, collaboration, content, and enterprise applications subsegments; the enterprise applications market, in turn, is made up of the enterprise resource management, supply chain management, operations and manufacturing, engineering, and CRM applications markets. 10 #205437 ©2007 IDC Consumer Applications Consumer applications are software products for recreation, education, and/or personal productivity enhancement. Consumer Software The consumer software market includes home education/edutainment products sold to homes for specific educational purposes (for either adults or children) or reference (e.g., dictionaries and encyclopedias); games and entertainment (sports, adventure/role playing, arcade/action, strategy, and family entertainment applications); and home productivity that covers the software categories of home creativity, including all help, how-to, and lifestyle applications (e.g., cookbooks); personal productivity products, including resume writers, standalone calendars, expense records, will makers, and family-tree makers; and personal finance and tax preparation programs. The following are representative vendors and products in the consumer applications software market: ! Electronic Arts (SIMS 2) ! Intuit (Quicken) ! Microsoft (Encarta) Note: IDC does not provide detailed functional analysis of the consumer applications market but tracks related revenue to provide a holistic view of the industry because some software providers market consumer, collaboration, content, and enterprise applications as well as other types of software. Collaborative Applications Collaborative applications enable groups of users to work together by sharing information and processes. Definitions of collaborative applications market are presented in the following sections. Integrated Collaborative Environments Integrated collaborative environments (ICEs) provide a framework for electronic collaboration, typically within an organization, based on shared directory and messaging platforms. The core integrated-functionality areas are email, group calendaring and scheduling, shared folders/databases, threaded discussions, and custom application development. Administration and customization are generally performed by centralized IT staff. The following are representative vendors and products in this market: ! IBM (Lotus Domino/Notes) ! Microsoft (Exchange/Outlook) ! Novell (GroupWise) ©2007 IDC #205437 11 Messaging Applications Messaging applications consist of the submarkets discussed in the following sections. Standalone Email Applications Standalone email applications provide a platform based on a message store, a message transfer agent (MTA), a directory, and access protocols for use by enterprises or service providers to host email users over a local or wide area network, the Internet, or a dial-up connection. The following are representative vendors and products in this submarket: ! Critical Path (Memova) ! Mirapoint (Message Server) ! Openwave (Email Mx and Mobile Email) ! Sun (Java Systems Messaging Server) Instant Messaging Applications Instant messaging applications provide instantaneous text messaging between users who are online. Instant messaging management products are deployed in conjunction with an EIM application server or service to provide enhanced management, mobility, security, connectivity, or regulatory compliance. The following are representative vendors and products in these submarkets: ! FaceTime (Enterprise Edition) ! IBM (Lotus Sametime) ! Jabber (XCP) ! Microsoft (Office Communications Server and Office Live Communications Server) Unified Messaging Applications Unified messaging applications provide a single mailbox for email, fax, and voice messages accessible by PC, Web browser, and telephone. The following are representative vendors and products in this submarket: ! Avaya (Modular Messaging System, Unified Messaging, Communications Center) ! Cisco (Unity Unified Messaging) ! Microsoft (Exchange Unified Messaging ! Nortel (CallPilot Unified Messaging) 12 #205437 ©2007 IDC Team Collaborative Applications Team collaborative applications (TCAs) provide an integrated set of Web-based tools for collaboration among team members from one or more organizations. The core integrated functionality areas are shared work spaces for managing and sharing files, assigning and coordinating tasks, and maintaining other project and team information. User and workspace administration, configuration, and customization are generally performed by individual users. Although all work asynchronously, several have added real-time collaborative tools. The following are representative vendors and products in this market: ! EMC (Documentum eRoom) ! IBM (Lotus QuickPlace) ! Interwoven (WorkSite) Collaborative applications designed for a particular vertical market such as manufactured product design or life-cycle development (product data management [PDM] and product life-cycle management [PLM]) are not included here. Conferencing Applications Conferencing applications provide a real-time connection for the exchange, creation, and viewing of information by two or more users during scheduled or spontaneous online meetings or events. The following are representative vendors and products in this market: ! Cisco (MeetingPlace) ! IBM (Lotus Sametime) ! Microsoft (Office Live Meeting, Office Communications Server) ! SABA (Centra 7, Symposium, Online Business Collaboration) ! WebEx (Meeting Center, Event Center, Enterprise Edition) Other Collaborative Applications Other collaborative applications include group calendaring and scheduling applications as well as those designed specifically for collaborative applications to provide enhanced capabilities such as workflow and imaging. (General-purpose applications are not included here.) The following are representative vendors and products in this market: ! Sun (Java System Calendar Server) Content Applications Content applications include content management software, authoring and publishing software, search and discovery software (including translation and globalization ©2007 IDC #205437 13 software), and enterprise portals. The specific market definitions are presented in the following sections. Content Management Content management software builds, organizes, manages, and stores collections of digital works in any medium or format. The software in this market includes document management, Web content management, capture and image management, digital asset management, and electronic records management. Content management forms the foundation or the infrastructure for knowledge management. Applications in this market include one or more of the following functions: ! Gathering and feeding documents and other media into collections via crawlers or other automated and/or manual means and performing metadata capture/enrichment, formatting, transformations, and/or conversion operations. ! Organizing and maintaining information, including some or all of the following: # Indexing, cataloging, and/or categorizing information in the content management system Building directories Defining workflows for tracking documents and changes and sending alerts when action is required Record keeping, auditing, and logging Updating and purging content Searching for information in the content management system (embedded tools may be provided) # # # # # ! Ensuring document security by managing rights and permissions to create, edit, post, or delete materials; managing user access; and protecting intellectual property Representative vendors in this market include: ! Web content management, document management, capture and image management, and records management: Alfresco, CoreMedia, CrownPeak, Day Software, Ektron, EMC/Documentum, Fatwire, Hyland Software, IBM/FileNet, Inmagic, Interwoven, Kofax, Mediasurface, Meridio, Microsoft, Mobius Management Systems, Open Text/Hummingbird/RedDot, Oracle/Stellent, Percussion Software, Tridion, Vignette, Xerox, and ZyLAB ! Digital asset management: Autonomy, Blue Order, Canto, Chuckwalla, ClearStory Systems, Dalet, EMC/Documentum, Extensis, Harris, IBM, Interwoven/MediaBin, Konan Digital, North American Systems/Ancept, North Plains Systems, Open Text/Artesia, Siemens, Venaca, and WAVE 14 #205437 ©2007 IDC Authoring and Publishing Software Authoring and publishing software is defined as software used to create, author, edit, and publish content, including text documents, spreadsheets, presentations, images, audio, video, and XML-structured documents. It does not include the software used to design Web sites. Authoring and publishing software is further segmented into six categories with representative vendors and products: ! Office suites include word processors, spreadsheets, and presentation software (e.g., Microsoft Office [not including Access], Corel WordPerfect, and IBM Lotus 1-2-3). ! Graphic design and layout includes image editing software, and layout and design software (e.g., Adobe Creative Suite, Apple Aperture, Corel CorelDRAW, and Quark QuarkXPress). ! Compound document includes manual XML authoring software as well as software for the automated and semiautomated generation of paginated, structured electronic documents from content components (e.g., Adobe FrameMaker, Adobe LiveCycle, Adobe Central Pro Output Server, JustSystems XMetaL, Exstream Dialogue, PTC Arbortext Advanced Print Publisher and Arbortext Publishing Engine, and StreamServe EDP). ! Forms design and input software includes software to design forms and render the forms for display and enter data into the forms but not to route, manage, or process the forms beyond form-level validation or actions (e.g., Adobe LiveCycle Forms, Adobe Acrobat Reader, Autonomy [Cardiff] LiquidOffice Form Designer, IBM [PureEdge] PureXML, and Microsoft InfoPath). ! Audio/video (AV) authoring software lets professionals and advanced consumers edit, manipulate, and assemble audio and video content, including the creation of custom professional CDs and DVDs (e.g., Adobe's Premiere, Encore DVD, and Audition; Apple's Final Cut Pro, Shake, and DVD Studio Pro; Autodesk's Max, Maya, and VIZ; and AVID Liquid and Media Composer). ! Information diagramming applications provide for the diagramming and visual representation of information (e.g., Microsoft Visio, Mindjet MindManager, and TheBrain BrainEKP). ! Other authoring tools include tools for creating learning management systems content, online help, and other types of content (e.g., Adobe Captivate, Adobe RoboHelp). Search and Discovery Search and discovery applications create access to unstructured information. They also provide alternative access to structured data. This group of software applications analyzes, tags, and searches text, often in multiple languages, and rich media such as audio files, video, and image files. This market also includes extended search platforms, search engines, question-answering applications, categorization/metadata tagging tools, categorizers and clustering engines, visualization tools for information navigation and analysis, filtering and alerting tools text analytics and, beginning in ©2007 IDC #205437 15 2007, translation and globalization software (which were formerly covered as a separate functional market). The following are the major submarkets and representative vendors for the search and discovery market: ! Search engines, platforms, and applications: Autonomy, FAST, Endeca, Google, IBM, Inxight, Coveo, and Vivisimo ! Text mining and text analytics: NStein, ClearForest, Insightful, Inxight, Attensity, SAS, and SPSS ! Browsing and guided navigation: Endeca and Siderean ! Categorizers and clustering engines: NStein, Recommind, Lexalytics, Stratify, and Vivisimo ! Question answering: Inxight, NStein, Clearforest, Attensity and InQuira ! Language analyzers: Basis Technologies and Inxight ! Translation and globalization software: Systran, SDL, Idiom, Basis Enterprise Portals Enterprise portals integrate access to information and applications and present it to the business user in a useful format. This software is used by business users but includes IT administration tools and natively has some level of the following functionality: ! Role-based or rule-based administration ! Collaboration functionality ! Content management and access ! Access to structured data such as end-user query and reporting The following are representative vendors in this market: BEA, IBM, Microsoft, Oracle, SAP, Sun, and Vignette. Enterprise Resource Management Applications Enterprise resource management applications are designed to automate and optimize business processes related to resources required to meet business or organizational objectives but are not customer or prospect facing or specialized to various types of engineering. The resources automated include people, finances, capital, materials, and facilities. The resulting applications forecast, track, route, analyze, and report on these resources. The market includes software that is specific to certain industries as well as software that can handle requirements for multiple industries. Definitions of the relevant functional application segments are presented in the following sections. 16 #205437 ©2007 IDC Financial Accounting Applications Financial applications are designed to support accounting, financial, and treasury and risk management functions. The financial applications market consists of the submarkets discussed in the following sections. Accounting Accounting software supports general financial management business processes such as accounts payable, accounts receivable, general ledger, and fixed asset accounting, as well as more specialized functions such as credit and collections management and automation, dispute resolution, enterprise spend management, project accounting and costing, tax and revenue management and reporting, nonprofit fund accounting, point of sale, invoicing, electronic bill presentment and payment, and transactional financial reporting and business intelligence embedded into accounting applications. The following are representative vendors and products in this submarket: ! Epicor (Epicor Financials Suite) ! Microsoft (accounting modules in Dynamics GP, AX) ! Oracle (E-Business Suite Financials) ! Sage Software (FAS Fixed Assets) ! SAP (financials modules in mySAP ERP 2005) Treasury and Risk Management Treasury and risk management applications support corporate treasury operations (including the treasuries of financial services enterprises) with the corresponding financial institution functionality and optimize related cash management, deal management, and risk management functions as follows: ! Cash management automation includes several treasury processes involving electronic payment authorization, bank relationship management, cash forecasting, and others. ! Deal management automation includes processes for the implementation of trading controls, the creation of new instruments, market data interface from manual or third-party sources, and others. ! Risk management automation includes performance analysis, Financial Accounting Standard (FAS) 133 compliance, calculation of various metrics used in fixed-income portfolio analysis, market-to-market valuations, and others. The following are representative vendors and products in this submarket: ! SunGard eTreasury eXchange (eTx) with AvantGard enterprise applications ! Thomson Financial Treasury Solutions ©2007 IDC #205437 17 ! Wall Street Systems Treasury Human Capital Management Human capital management (HCM) applications software automates business processes that cover the entire span of an employee's relationship with the corporation (as opposed to the department or group to which the employee belongs) as well as management of other human resources used by the enterprise (e.g., contingent labor, contractors, and consultants), including — increasingly — human resources employed by suppliers and customers. The center of the HCM applications suite is designed for core HR functions such as personnel records, benefits administration, and compensation. Increasingly, these functions are being delivered as employee self-service or manager self-service in order to automate record keeping and updating as well as consolidated reporting. The following are representative core HR applications vendors: ! Kronos Workforce HR, Employee, Manager ! Lawson Human Capital Management ! Oracle Enterprise HCM Suite ! SAP Human Capital Management ! Ultimate Software Ultipro Globalization, flexible work rules, job mobility, and the strategic importance of people assets have forced organizations to transform their human resources systems into a more real-time, personalized, and operational intelligence business function that goes beyond the traditional view of aggregating personnel data. Core HR functions are being supplemented by extensions that form the basis of a new generation of HCM applications framework. The extensions are categorized in four major segments or submarkets: erecruiting, incentive management, performance management, and workforce management. Increasingly, core HR applications are also adding selective and functional-equivalent features of these HCM extensions to meet changing customer requirements. The following sections describe the functional aspects of these HCM extensions. eRecruiting eRecruiting applications are designed to automate the recruitment process through better tracking of applicants, screening and skills assessment, profiling and resume processing, and identifying talents inside or outside the organization. Key features include: ! Managing skills inventories ! Creating and managing job requisitions ! Identifying appropriate employment candidates 18 #205437 ©2007 IDC ! Coordinating team collaboration within hiring processes ! Facilitating resource planning ! Deploying workers to appropriate jobs, projects, or teams Representative erecruiting applications include: ! Kronos Workforce Acquisition ! Peopleclick Recruitment Management ! Taleo Enterprise Staffing Management Incentive Management Incentive management applications are designed to automate the process of providing cash and noncash incentives to employees, partners, and external users through advanced modeling, reporting, and built-in interfacing to payroll processing systems. Key features include: ! Quota and territory management ! Calculation and distribution of commissions, spiffs, royalties, incentives to employees, and channel and business partners ! Compensation analysis using internal and external data for retention risk analysis ! Linking incentives — cash and noncash — to business objectives ! Payroll and payment engine interfaces ! Account payables integration Representative incentive management applications include: ! Authoria Compensation Advisor ! Callidus TrueComp ! Synygy EIM HR Performance Management HR performance management applications are designed to automate the aggregation and delivery of information pertinent to the linking of job roles and the mission and goals of the organization. More specifically, the system allows users to automate the performance review process by using mechanisms such as training and key performance indicators (KPIs) to constantly track and monitor the progress of an individual employee, work team, and division. ©2007 IDC #205437 19 Key features include: ! Assessment of individual and organizational skills gaps that impede performance and job advancement, as in ability testing ! Continuous reviews and establishing milestones ! 360-degree evaluation and real-time feedback ! Performance appraisal automation ! Competency assessment and management ! Goal setting and tracking ! Employee surveys ! Alignment of human assets to corporate objectives ! Learning development and career improvement programs ! Fast tracks for top performers ! Delivering training based on certification requirements ! Succession planning Representative performance management applications include: ! Kenexa Career Tracker ! SHL Group Objective Assessment ! Witness Systems Equality Contact Store Workforce Management Workforce management applications are designed to automate the deployment of the workforce through workload planning, scheduling, time and attendance tracking, resource management, and rules and compliance management. Increasingly, workforce management applications are being integrated into customer relationship management applications in a contact center environment. Through extensive use of workforce management applications, organizations are also able to develop training guidelines, career advancement plans, and incentive compensation programs to improve, motivate, and sustain the quality of their employees. Key features include: ! Skills and certification tracking ! Shift/vacation bidding ! Workload planning, forecasting, and scheduling 20 #205437 ©2007 IDC ! Scheduling optimization ! Customer wait-time forecasts ! Coverage management ! Absence management ! Labor activity tracking ! Rationalization of revenue per full-time equivalent ! Cost of sales activities ! Sales resource planning based on local and regional opportunities Representative workforce management applications include: ! Eclipsys Sunrise Enterprise Scheduling ! Kaba Benzing B-Comm for R/3, Enterprise Data Collection ! Kronos Workforce Central ! Witness Blue Pumpkin Director Enterprise, Activity Manager, Advisor Express ! Workbrain Enterprise Workforce Management Payroll The functionality involves payroll processing and other labor-related payments, including tracking of stock-option compensation and other variable and nonvariable payments. The following are representative vendors and products in this market: ! CBS Payroll from Intuit ! Oracle Enterprise HCM and Global Payroll ! Ultimate UltiPro Payroll Administration and Tax Management Procurement Procurement applications automate business processes relating to purchasing material (whether direct or indirect; raw, in process, or finished; as a result of or flowing into a product supply chain–specific business process; or in support of performing a service) and services (business or professional). With the advent of the Internet, the procurement function is being expanded to cover Web-based sourcing, procurement, transaction processing, and payment support, all of which are connected to create a single view of the spending levels at a company. As a result, purchasing activities are integrated into a supplier community that can be easily tracked, benchmarked, and analyzed by both buyers and suppliers. Existing and upcoming features of these procurement modules include: ©2007 IDC #205437 21 ! eProcurement ! Self-service requisitioning ! Order entry (PO email) ! Approvals, workflow ! Transaction processing, EDI, EDI-INT ! Procuring configurations ! Global agreements, time-phased pricing, mass update price ! eSourcing ! Strategic sourcing ! Dynamic pricing ! eRFX ! Product design management ! Commodity strategy, spot buying ! Contract compliance ! Contract library ! Contract management, tracking, enforcement ! Content management ! Standardization, function equivalent ! Consolidated buy/group purchasing organizations ! Data synchronization and management ! Item master cleansing ! Category management for commodity buying ! Catalog aggregation, syndication ! Supplier performance management ! Supplier enablement, portal ! Vendor-managed inventory support ! Supplier performance tracking 22 #205437 ©2007 IDC ! Supplier consolidation ! Supplier satisfaction metrics ! Machine-to-machine connection such as EDI exchanges ! Electronic invoice presentment and payment/dispute resolution ! Volume discount discovery ! Consolidation of accounts ! Invoice, PO, multiple document matching ! Standard applications templates for exceptions handling ! Procurement analytics ! Integrated analytics The following are representative vendors and products in this market: ! Ariba (Enterprise Spend Management) ! Infor (SmartStream Procurement) ! Lawson (M3 Procurement) ! Oracle (Oracle Advanced Procurement) ! SAP (mySAP SRM) Order Management Order management applications are designed to automate sales order processing from capture to invoice and settlement as well as built-in features to handle order planning and demand management capabilities. Item lookup and order placement are the prerequisites of order management applications, followed by issuance of receipts and advance shipping notices as well as payment processing functions. Increasingly, Web-based order management applications are replacing legacy systems for faster and more accurate order processing. Order and product configurations, as well as pricing options, freight calculation, and credit checking, are being combined to form an integrated order management application, regardless of the sales channels. Other features include view price history, profit management, multiple order types (including quotes and credit orders), blanket and release orders, direct ship and transfer orders, kit processing, and product returns processing. The following are representative vendors and products in this market: ! Comergent (Ebusiness Suite Order Management) ! Manhattan Associates (Distributed Order Management) ©2007 IDC #205437 23 ! Oracle (Enterprise One Sales Order Management) Financial Performance and Strategy Management Applications The financial performance and strategy management applications market consists of cross-industry applications whose main purpose is to measure, analyze, and optimize financial performance management processes using prepackaged applications that include the following: ! Budgeting and planning includes applications to support operational budgeting processes, corporate budget consolidation and adjustment processes, and planning and forecasting processes. ! Financial consolidation includes applications that support both statutory and management financial consolidation, reporting, and adjustment processes across multiple entities and divisions. ! Profitability management and activity-based costing applications include packaged applications to support detailed cost and profitability measurement and reporting processes. ! Strategy management applications include those that support a closed-loop performance management strategy such as the balanced scorecard. Strategy management applications incorporate domain expertise across a range of business processes, such as finance, human resources, operations, and CRM, but enable strategic management processes rather than performance management reporting processes of these functions. The following are representative vendors and products in this market: ! Cartesis (Financial Control and Reporting) ! Hyperion (such as Financial Management, Planning, and Customer Profitability) ! Longview (Budgeting/Planning/Forecasting) ! Oracle (Enterprise Planning and Budgeting) ! PerformanceSoft (formerly Panorama Business Views [pbviews]) ! SAP (SEM) ! SAS (Financial Intelligence and Performance Management) Project and Portfolio Management Project and portfolio management (PPM) applications are used for automating and optimizing the initiating, planning/scheduling, allocation, monitoring, and measuring of activities and resources required to complete projects. In addition, the portfolio management capabilities enable the tracking of an aggregation of project, products, programs, and/or initiatives to oversee resource allocation, for making ongoing investment and prioritization decisions, and to track risks — as part of an overall portfolio. Ultimately, PPM applications help organizations to manage the scope, time, and cost of discrete sets of related people processes (projects) on an individual and 24 #205437 ©2007 IDC portfolio basis. IDC uses a wide definition of PPM to include the breadth of solutions that use PPM features at their core, such as construction/architectural/engineering management (AEC), asset/capital management (A/C), IT project portfolio management (ITPPM), new product development/introduction management (NPDI), professional service automation (PSA), and other industry-oriented solutions developed around the primary premise of successful "project" completion as the main business purpose. The following are representative vendors and products in this market: ! CA Clarity Portfolio Manager and Clarity Project Manager (former Niku) ! Deltek Vision ! Meridian Proliance ! Microsoft Office Project ! Oracle Projects ! Primavera Project Management ! PTC ProjectLink ! SAP xRPM (Resource and Portfolio Management) Enterprise Asset Management Enterprise asset management application software automates the many aspects of asset management and maintenance, repair, and overhaul (MRO) operations (e.g., machinery and equipment, buildings, or grounds). The software generally includes functionality for planning, organizing, and implementing maintenance activities, whether they are performed by employees of the enterprise or by a contractor. Typical features include equipment-history record management, descriptions of items maintained, scheduling, preventive and predictive maintenance on the assets, work order management, labor tracking (if integrated within the maintenance management applications), spare parts management, and maintenance reporting. The following are representative vendors and products in this market: ! Avexus ! IBM Tivoli MAXIMO ! Indus International Supply Chain Management Applications Supply chain management application software automates supply- and demand-side business processes that bring a product or service to market, including multisite organizations involved in a complex supply chain process, including raw materials suppliers, contract manufacturers, 3PL and 4PL providers, and individual transportation and warehousing organizations. Definitions of the relevant functional application markets are presented in the following sections. ©2007 IDC #205437 25 Logistics Logistics application software automates activities relating to moving inventory or materials of any type. Examples include software that automates distribution resource planning, warehouse management, and transportation planning business processes that are not specific to an industry. (Logistics applications specific to the transportation industry are included in the services operations management applications market.) The following are representative vendors and products in this market: ! Four Soft, 4S eTrans, and 4S i.Logistics Drive ! JPMorgan Chase Vastera, Tradesphere products ! Manhattan Associates, Transportation Management, Carrier Management, Reverse Logistics Management, and Trading Partner Management ! RedPrairie, Optimized Transportation, Global Trade Management, In-Transit Control, Freight Settlement Production Planning Production planning (PP) applications software automates activities related to the collaborative forecast and continuous optimization of manufacturing processes. PP applications span supply planning, demand planning, and production planning within organizations. These applications identify demand signals, aggregate historical data that informs short- and long-term demand expectations, and provide supplier capabilities across multiple manufacturing sites. Production planning application software is key to any supply chain management initiative because supply and demand planning dictates the rest of the supply chain activities. The following are representative vendors and products in this market: ! Aspen Supply Planner and Aspen Plant Scheduler ! Oracle Advanced Planning and Scheduling (APS) ! SAP Advanced Planning and Optimization (APO) Inventory Management Inventory management application software automates activities relating to managing physical inventory, whether direct or indirect; raw, in process, or finished; as a result of or flowing into a product supply chain–specific business process; or in support of performing a service. This includes inventory control/materials management business processes in any industry, not just in manufacturing. The following are representative vendors and products in this market: ! Catalyst CatalystCommand Warehouse Management ! SAP Inventory Management ! SmartOps Multistage Inventory Planning and Optimization 26 #205437 ©2007 IDC ! SSA Global (acquired by Infor in 2006) SCM Warehouse Management Operations and Manufacturing Applications Operations and manufacturing applications are enterprise applications that automate and optimize processes related to planning and execution of services operations and manufacturing activities, as well as other back-office activities. The resources automated include people, capital, materials, and facilities. The applications track, route, analyze, and report on these resources. The market includes software that is specific to services, manufacturing, and other industries. Definitions of the relevant functional application segments are presented in the following sections. Services Operations Management Services operations management applications support the services supply chain and are unique to particular industries. These industry-specific applications cover a broad range of activities such as automating claim processes (as applied to insurance functions), automating admissions/discharges and transfers of patients (as applied to healthcare functions), or automating energy trading (as applied to energy and utility functions). Other examples of industry-specific applications are those that enable the automation of real estate, business, legal services, banking and finance, education, government, social services, and transportation. The following are representative vendors and products in this market: ! ADP (Claims Services applications) ! Cerner Corp. (Millennium) ! SunGard (Entegrate applications) Manufacturing Functional applications in manufacturing include material and capacity requirements planning (MRP), bills of materials (BOMs), recipe management, manufacturing process planning and simulation, work order generation and reporting, shop floor control, quality control and tolerance analysis, and other functions specific to manufacturing execution (MES). The category does not include computer-aided manufacturing (CAM) applications for NC and CMM machine programming. (Advanced planning and scheduling applications are included in the supply chain planning functional market.) Representative vendors and products in this market are: ! Aspen Technology aspenONE solutions ! Dassault/DELMIA production process planning and simulation applications ! UGS/Tecnomatix Assembly Planning Other Back Office Other back-office applications include various types of application automating functions not otherwise covered previously, such as computer-based training, elearning applications, speech and natural language, and environmental health and safety applications. These applications also cover a wide range of point solutions for ©2007 IDC #205437 27 product-related applications other than services operations management and manufacturing. These applications have at their core a product orientation focused on efficiencies related to item maintenance, replenishment, and site management. Among them are retail-specific and wholesale-specific applications. Representative vendors and products in this market are: ! JDA Software Portfolio Solutions ! NSB Retail Systems Connected Retailer Solutions ! Oracle Retail Merchandise Operations Management ! SAP EH&S Engineering Applications Engineering applications automate all of the business processes and data management activities specific to ideas management, concept planning, and design and the handoff of a design to execution (manufacturing, construction, or other). The markets include mechanical computer-aided design (MCAD), CAM, computer-aided engineering (CAE), product information management (PIM), and other engineering applications, which include those for electronic design automation (EDA) and architecture/engineering/construction (AEC). Definitions of the engineering application segments are presented in the following sections. Mechanical Computer-Aided Design MCAD software is utilized for tasks typically performed by designers and drafters. Specifically, this category includes computer-assisted designing, drafting, and modeling (wire frame, surface, and solid). MCAD also includes conceptual design and/or industrial design, animation and visualization, and assembly design. (Light geometry visualization such as UGS' JT, Agile's AutoVue, or Autodesk's DWF is included in PIM.) The following are representative vendors and products in this market: ! Dassault Systèmes Catia and SolidWorks applications ! PTC Pro/Engineer applications ! UGS NX and Velocity applications Mechanical Computer-Aided Engineering Mechanical CAE applications address tasks such as structural/stress analysis, kinematics, fluid dynamics, thermal analysis, and test data analysis. The following are representative vendors and products in this market: ! ANSYS analysis products ! Moldflow Corp. plastic moldflow analysis ! MSC Software NASTRAN and PATRAN analysis products 28 #205437 ©2007 IDC Mechanical Computer-Aided Manufacturing Mechanical CAM applications prepare data for actual production on the shop floor (e.g., NC tape generation and data for CNC machines). The following are representative vendors and products in this market: ! CimatronE NC ! CNC Software MasterCAM ! UGS CAM applications Product Information Management PIM applications provide engineering groups, but also increasingly cross-disciplinary teams across the enterprise as well as outside of its four walls, with software tools to electronically coordinate, manage, and share product data throughout the product life cycle. The major subsegments of this market are product data vaulting, document management, light geometry with view/markup capabilities, change management, and parts libraries. Ideas management and product-focused environmental compliance management are now emerging as additional application subsegments. The following are representative vendors and products in this market: ! Agile Software Autovue product line ! IDe IdeWeb for idea and innovation management ! UGS TeamCenter Note: The aggregation of MCAD, CAE, CAM, and PIM applications is termed the collaborative product development applications market by IDC. Other Engineering Other engineering applications support electronic design automation, architectural/engineering/construction, and other engineering functions. AEC applications software automates drawing/design of building- and civil engineering– related projects. (AEC project and portfolio planning and facilities management are part of the project and portfolio management functional market.) The following are representative vendors and products in this market: ! Autodesk civil engineering applications ! Bentley Systems civil engineering applications EDA application software includes applications for component and board/systems design. Functions include simulation, design creation, synthesis, layout, design verification, and analysis. Representative vendors and products in this market include applications from Cadence, Mentor, and Synopsys. (IDC does not provide detailed functional analysis of the EDA applications market.) ©2007 IDC #205437 29 Customer Relationship Management Applications CRM enterprise applications automate the customer-facing business processes within an organization irrespective of industry specificity (i.e., sales, marketing, customer support, and contact center). Collectively, these applications serve to manage the entire life cycle of a customer — including the conversion of a prospect to a customer — and help an organization build and maintain successful relationships. The CRM applications classified as collaborative provide functionality to enable two or more individuals to share content to achieve a common goal. Definitions of CRM application segments are presented in the following sections. Sales Sales automation applications include both sales management applications and sales force automation applications. Functionality includes the following: ! Account/contact management ! Lead tracking ! List management ! Mobile sales ! Opportunity management ! Partner relationship management (PRM) ! Sales analysis and planning tools ! Sales configuration tools ! Sales history ! Team selling ! Telemarketing and telesales scripting ! Territory management The following are representative vendors and products in this market: ! Oracle (Oracle Sales, Oracle's Siebel Sales) ! Salesforce.com (Sales Force Automation) ! SAP (mySAP Sales and xApp Mobile Sales) ! The Sage Group PLC (ACT! by Sage, Sage CRM SalesLogix) 30 #205437 ©2007 IDC Marketing Marketing applications software automates a wide range of individual and collaborative activities associated with the various dimensions of the marketing process. These dimensions include the following: ! Ad management/placement ! Brand management ! Campaign execution ! Campaign planning and management ! Collateral management/distribution ! Database marketing ! Direct marketing ! Electronic catalog ! Event/trade show management ! Focus groups/media testing ! Fulfillment status linkage ! Lead qualification/distribution ! List management ! Marketing resource management ! Media and analyst relations ! Personalization ! Primary research ! Reactivation ! Surveying ! Upsell and cross-sell programs ! Web activity analysis ! Web advertising The following are representative vendors and products in this market: ! Infor CRM Marketing ©2007 IDC #205437 31 ! NCR Teradata (Teradata CRM) ! Onyx CRM for Marketing ! SAS (Marketing Automation) Customer Service Customer service applications provide customer/client (e.g., patient and student) information management (CIM). Each application is designed to enhance the management of relationships with existing customers. Customer service software is used to support customers who are external to an organization. Defining characteristics of the customer service category include problem tracking, customer history, and incoming contact management. Functionality includes: ! Case assignment and management ! Self-service ! Web chat ! Live collaboration ! Conferencing ! Cobrowsing ! Automated assistants ! Email response management ! Field service IT help desk applications are covered under "problem management" in the system management software category and are thus excluded from this market. The following are representative vendors and products in this market: ! Amdocs (Support Self-Service, Customer Interaction Manager) ! Knova (Contact Center, Self-Service) ! Oracle (Siebel OnDemand, Siebel Call Center, Siebel Field Service, TeleService) ! RightNow Technologies (Service, RightNow Live, and Voice Self-Service) Contact Center Contact center applications automate functions relating to the operations of the CRM installation. These applications, although enabling in function, do not have a desktop end-user focus. Products included in this category are ACD, predictive dialing, telephony integration, and universal queuing. The following are representative vendors and products in this market: 32 #205437 ©2007 IDC ! Aspect (EnsemblePro, Uniphi Suite) ! Avaya (Call Center, Contact Center Express) ! Genesys Labs ( Customer Interaction Suite) Finally, within the analytic applications market, CRM-specific analytic applications have evolved. These analytic applications are included in the marketing segment of CRM because most of the applications are specifically targeted at marketing automation processes. The following are representative vendors and products in this market: ! Omniture (SiteCatalyst, Discover) ! PROS Pricing Solutions ! Oracle (Siebel Business Analytics) ! SPSS (Predictive Web Analytics)) ! WebTrends (WebTrends Analytics 8) Application Development and Deployment Market Definitions Information and Data Management Software Information and data management software includes products that manage a common set of defined data that is kept in one or more databases (structures of managed data shared by multiple application programs) and is driven by data definitions and rules, whether this involves single databases accessed directly by applications or distributed databases accessed by multiple applications in multiple locations. The distinguishing characteristic of all information and data management software products is that they use definitions of data structure and behavior along with rules governing their integrity, validity, security and, in some cases, alternative formats to manage the storage, movement, and manipulation of data kept in databases. Relational Database Management Systems The relational database management system (RDBMS) market includes multiuser DBMSs that are primarily organized according to the relational paradigm and that use SQL as the foundational language for data definition and access. Also included are RDBMSs that have been extended to support embedded tables or other nonrelational enhancements or to include extended attribute types (such as graphical, geospatial, and audio), object-oriented formalisms (such as data encapsulation), or direct support for XML data. The following are representative vendors and products in this market: ! IBM (DB2 family and Informix family) ! Microsoft (SQL Server) ©2007 IDC #205437 33 ! MySQL (MySQL) ! NCR Teradata (Teradata) ! Oracle (Oracle Database, TimesTen) ! Sybase (Adaptive Server Enterprise, Sybase IQ, Sybase SQL Anywhere) Nonrelational Database Management Systems Nonrelational database management systems (NDBMS) are those are not based on the relational paradigm. They use a variety of other approaches to the organization, management, storage, and retrieval of data. Types of nonrelational DBMSs are discussed in the following sections. Pre- and Postrelational Database Management Systems The pre- and postrelational DBMS market includes multiuser DBMSs that are accessed using explicit navigation of the structure by the problem program and are typically organized using either the CODASYL or a proprietary structure. List-oriented, hierarchical, b-tree indexed, network, and inverted list are examples of organizations included in this category. Object-Oriented Database Management Systems Object-oriented DBMSs are designed to provide data storage and support services using an object-oriented architecture. Object DBMSs support the basic features of object-oriented development, including inheritance, polymorphism, encapsulation, and state. XML Database Management Systems The XML database management systems market includes native XML database management systems, which decompose XML documents into data structures based on their tag structures and store them in an internal data storage facility that has been optimized for XML tag-based retrieval. Such facilities typically include the capability to convert XML documents into XML documents of other types, driven by XSL or other mapping specifications. This market also includes XML data search and retrieval facilities that are driven by XML schemas. It does not include XML-based end-user query tools, access integration middleware, or analytic applications that may happen to use XML-based access protocols. This market does not include software that simply serves as a relay or remote connection facility between programs and XML files. It also does not include software that has as its sole or principal purpose the ability to provide online XML content services for end users. End-User Database Management Systems End-user DBMSs are single-user, database-centric solutions that reside on desktop operating environments for use by knowledge workers. These tools typically include a DBMS engine tightly integrated with a scripting language and report writer, which provides a localized environment for data management and analysis. The following are representative vendors and products in this market: 34 #205437 ©2007 IDC ! Prerelational DBMSs: # # # # # # CA (IDMS and DATACOM) CCA (Model 204) Cincom (Supra) IBM (IMS) Oracle (Berkeley DB) Software AG (Adabas) ! Postrelational DBMSs: # # ENEA (Polyhedra) InterSystems (Caché) ! Object-oriented database management systems # # # # # db4objects (db4o) Matisse (Matisse) Objectivity (Objectivity/DB) Progress Software (ObjectStore and PSE) Versant (FastObjects and Versant ODBMS) ! XML database management systems: # # # Raining Data (TigerLogic XDMS) Software AG (Tamino) Sonic Software subsidiary of Progress Software (eXcelon) ! End-user database management systems: # # # CA (Clipper) FileMaker subsidiary of Apple Computer (FileMaker) Microsoft (Access and FoxPro) Database Development and Management Tools Database development and management tools are used to develop, load, reload, reorganize, recover, or otherwise manage and optimize databases, and to maintain replica databases for either recovery, performance, or availability purposes. This category also includes database-specific accelerators, SQL optimization tools, and other database utilities. Tools provided by a DBMS vendor that support only that ©2007 IDC #205437 35 vendor's databases are excluded from this market and are included with the DBMS revenue. Types of database development and management tools include: ! Database tuning and monitoring tools. Software used by DBAs to monitor the performance of databases, detect problems in database operations, perform routine change operations to the database, and improve database operation by reallocating storage, reindexing the database, and so on (Note that when database monitoring software is incorporated in general system monitoring products, its revenue is reported under performance management software.) ! SQL authoring tools. Software used by DBAs and developers to build efficient SQL calls to access and manipulate data from within programs and reports ! SQL optimization and analysis tools. Software used by DBAs and developers to correct defects in SQL and to improve SQL performance ! Database replication software. Software used for maintaining an exact copy of a live database, typically for recoverability, high-availability, or nonstop maintenance purposes ! Database archiving software. Software used to build and maintain archives of databases, often allowing transparent access to archived data, preserving original schema information about archived data and intelligence for selecting referentially complete subsets of data for archiving (Such products also can be used to create referentially complete subsets of databases for populating subset or test databases as well.) The following are representative vendors and products in this market: ! BMC (DATABASE INTEGRITY PLUS and CATALOG MANAGER for DB2, SmartDBA, some aspects of PATROL Knowledge Modules for databases, et al.) ! Bradmark (NORAD) ! CA (Unicenter Database Management) ! Embarcadero (Embarcadero DBA tools, DBArtisan, et al.) ! HP (StorageWorks ILM Information Management) ! Princeton Softech (Optim) ! Quest (SharePlex, LiveReorg, TOAD, database components of Spotlight, Foglight, Quest Central, and SQL Navigator) Data Integration and Access Software Data integration and access software brings together data sets for use by other software or for presentation to end users and also enables access of applications to databases without requiring a direct API connection. The purpose of data integration is to ensure the consistency of information where there is a logical overlap of the information contents of two or more discrete systems. To achieve a total solution, 36 #205437 ©2007 IDC data integration software employs a wide range of technologies, including, but not limited to, data profiling; data quality; extract, transform, and load (ETL); semantic mediation; and associated metadata management. Data access is enabled by data connectivity software (which includes data connectors and connectivity drivers, and also federated data access software). Data integration software may be used in a wide variety of functions. The most common is data warehousing, but other uses include enterprise information integration, data replication, data movement, and data synchronization, to name a few. Data integration may be deployed and executed as batch processes, typical for data warehouses, or in near-real-time modes for data synchronization or dedicated operational data stores. More challenging applications are integrating data from disparate, distributed data sources, including flat files, relational databases, XML files, and legacy applications, and the proprietary data sources associated with packaged applications from vendors such as SAP, Oracle, and Siebel. The data integration and access software market includes the submarkets discussed in the following sections. ETL and Database Synchronization Software ETL software selectively draws data from source databases, transforms it into a common format, merges it according to rules governing possible collisions, and loads it into a target. This software normally runs in batch, but may also be invoked dynamically, in what vendors refer to as "real time" functionality. Such software actively moves data among correspondent databases driven by metadata that defines interrelationships among the data managed by those databases. The software performs transformations, routes the data to the target, and inserts it. It normally either features a run-time environment or operates by generating the program code that does the extracting, transforming, routing of the data, and updating of the target. The following are representative vendors and products in this submarket: ! CA Advantage Data Transformer ! ETI Solution ! IBM (WebSphere DataStage) ! Information Builders WebFOCUS ETL Manager ! Pitney-Bowes (Group 1 DataFlow and Customer Data Quality Platform) Data Quality, Profiling, and Cleansing Software This submarket includes products used to identify errors or inconsistencies in data, to normalize data formats, to infer update rules from changes in data, to match data entries with known values, and for other activities involved in ensuring the validity and consistency of data on the one hand, or schematic details of data not incorporated in the database catalog on the other. Such activities are normally associated with data integration tasks such as data merges and federated joins, but may also be used to monitor the quality of data in the database. The following are representative vendors and products in this submarket: ©2007 IDC #205437 37 ! Business Objects (Data Quality component of BusinessObjects XI EIM Platform) ! Informatica (Informatica Data Quality and Data Explorer) ! QAS division of Experian (QuickAddress) ! Trillium Data Connectivity Software This software is used to establish connections between users or applications and databases without requiring an API or hard-coded database interface. It includes ODBC and JDBC drivers and database adapters. The following are representative vendors and products in this submarket: ! DataDirect subsidiary of Progress Software ! OpenLink Software (Universal Data Access Middleware) ! Sterling Commerce subsidiary of AT&T (Gentran series) Federated and Virtual Database Software Federated database software permits the access of multiple databases as if they were one database. Most are read only, but some provide update capabilities. Virtual database products are similar, but offer full schema management coordinated with the source database schemas to create a complete database environment that sits atop multiple physical databases. The following are representative vendors and products in this submarket: ! CONNX ! IBM (WebSphere Information Integrator) ! Progress Software (DataXtend Enterprise) Data Integration Suites These products blend functionality from several of the submarkets listed above and are offered as singly priced products or product suites. They generally include data quality, data movement, transformation (a subset of ETL), and some federated data access capability, along with design and management tools. The following are representative vendors and products in this submarket: ! IBM WebSphere Information Integrator ! Informatica Data Integration Platform family ! SAS Dataflux Integration Server Metadata Definition and Management Software Products in this submarket are specifically designed to model, capture, and maintain IT metadata that is associated with application development or deployment. 38 #205437 ©2007 IDC Standalone products in this category have, as their main feature, the definition or management of metadata, which may include graphical modeling capabilities, categorization and ontological relationship mapping, search, metadata extraction from database catalogs or other such sources, and code generation capability. This technology includes metadata registry and repository software. The following are representative vendors and products in this submarket: ! Fujitsu/Software AG (Centrasite) ! IBM/Ascential (MetaStage, Unicorn) ! Informatica (SuperGlue) ! MetaMatrix (Enterprise) ! Progress Software (DataXtend Semantic Integrator) ! webMethods (Cerebra) Application Development Software The application development software markets include software, tools, and development environments used by developers, business analysts, and other professionals to create both Web-based and traditional applications. Third-generation languages (3GLs), unified development environments, modeling and analysis, business rules engines, and Web site design and development tools are included. Application development software also encompasses markets pertaining to component-based development and includes the specific markets discussed in the following sections. Unified Development Environments The unified development environment (UDE) market represents the convergence and integration of interactive development environments with visual interfaces as well as rapid application development tools and environments, higher-level languages (including 4GLs), and component-based development (CBD). It also includes the tools that help automate various aspects of developing applications from components and within component framework environments. The unified development environment market does not include tools whose primary function is to support formalized modeling and business rules methodologies that assist in generating application requirements, data definitions, and programming specifications. Unified development environments are those environments and/or tools that explicitly use, integrate, or combine the abstract benefits of technologies and features from 4GL, RAD, CBD, and visual interfaces as part of the development environment. This functional market includes: ! 4GL/RAD tools. 4GL/RAD tools are nonprocedural, higher-level language-based tools used by professional programmers to build applications. To be considered a 4GL, a tool must provide a higher level of abstraction than a 3GL, afford ©2007 IDC #205437 39 dictionary-based application development, and perform semantic consistency checking. ! Legacy 4GL tools. Legacy 4GLs are defined as early abstracted development environments that were marketed before the advent of visual programming interfaces. Despite the antiquated nature of these environments, many remain in use primarily to address mission-critical business functions. ! Component-based development tools, including component construction and assembly tools. Component-based development, construction, and assembly tools are primarily used for the construction of software components and/or the assembly of software components into larger components, services, or applications. ! Component frameworks. Some companies package components in the form of an open architecture component technology, often referred to as frameworks. ! Composite development and assembly platforms. Composite development and assembly platforms include technologies that facilitate the construction of composite services or composite applications that are highly standards compliant. These technologies are characterized by a contextual configurationbased approach to development. The following are representative vendors and products in the unified development environment market: ! Borland (Delphi) ! IBM (WebSphere Studio, Workplace Designer) ! Microsoft (Visual Studio .NET) ! Sybase (PowerBuilder) ! Unisys (AB Suite) Third-Generation Language Tools The 3GL tools market includes both emerging and traditional programming languages, such as Java, C++, COBOL, and FORTRAN. 3GL products include all third-generation (object-oriented and nonobject) procedural language tools, such as edit, compile, and debug tools, that are used in the context of an integrated 3GL development environment. C++, Java, and COBOL continue to be the primary 3GL languages that developers use to produce business technology solutions. The following are representative vendors and products in this market: ! Borland (JBuilder) ! IBM (WebSphere Studio Developer) ! Sun (Sun Studio) 40 #205437 ©2007 IDC Software Construction Components Software construction components are functionally specific software subassemblies and libraries sold apart from a programming development environment that may or may not be designed for use with a specific programming development environment. Examples include class libraries, frameworks, ActiveX controls, Java applets, JavaBeans, Enterprise JavaBeans (EJBs), DLLs, and other forms of API-specific libraries. Software components that fall into this category are intended to be used by developers to assemble applications as opposed to fully functional applications that are intended to run on their own. The following are representative vendors and products in this market: ! Desaware (Desaware Universal .NET) ! ILOG (JViews Component Suite) ! Visual Numerics (IMSL Numerical Libraries) Analysis, Modeling, and Design Tools Analysis, modeling, and design (AMD) tools represent the formalized methodologies and technologies (either object oriented or nonobject) that assist in creating or constructing model-generated applications, application requirements, data definitions, programming specifications, sequence diagrams, data and business processes, and business rules. AMD tools and technologies may integrate or combine the abstract benefits of visual modeling and automated methodologies and may include tools to construct applications from domains, rules, and/or components if that ability is fully integrated and sold with the methodology. This class of tools includes business process modelers, business rules engines, business rules repositories, and business process analysis platforms, along with the modeling languages that support them. This market can further be segmented into two submarkets: model-driven development (MDD) and business rule management systems (BRMSs). ! Model-driven development. MDD is an abstract software development process that supports the understanding and definition of objects and relationships rendered as a specification. MDD is centered around five design principles: abstraction, model centricity, implementation independence, round-trip engineering, and the automation of selected IT application and system artifacts. ! Business rule management systems. BRMSs are defined as discrete systems that define, manage, and execute conditional logic in concert with other IT processes and actions. BRMSs are well known for their ability to automatically recognize the interrule relationships that evolve as rules are added or changed, thereby eliminating the need for careful and complex rule sequencing that would otherwise be necessary. The following are representative vendors and products in this market: ©2007 IDC #205437 41 ! Borland (Together Designer) ! CA (ERwin) ! Fair Isaac (Blaze Advisor) ! IBM (Rational Rose) ! ILOG (JRules) ! Telelogic (Tau) Web Site Design/Development Tools Web site design and development tools provide Web site and Web page layout and design, object integration for site and page development, and the tools needed to create Web-based applications. Although HTML editing is often provided, tools in this category typically offer visual abstraction away from HTML through WYSIWYG page editors, animation and other rich media, JavaScript and/or VBScript features, Asynchronous JavaScript and XML (AJAX), simple data integration, and deployment scenarios. The following are representative vendors and products in this market: ! Adobe (Flex) ! Microsoft (ASP.NET "Atlas") ! Nexaweb (Enterprise Web 2.0) ! TIBCO (General Interface) Quality and Life-Cycle Tools Quality and life-cycle tools support the process of software development and deployment. This category includes the specific markets discussed in the following sections. Automated Software Quality Tools Automated software quality (ASQ) tools support software unit testing, system testing, or both; they also support software quality assurance. Functions such as test specification, generation, execution, results analysis, and "bug tracking," as well as test and QA management, are included in this category. The following are representative vendors and products in this market: ! Compuware (QACenter and DevPartner) ! HP (QuickTest Professional, WinRunner, and LoadRunner) (former Mercury Interactive products) ! IBM Rational (Functional Tester, Performance Tester, Robot, and PurifyPlus) 42 #205437 ©2007 IDC Software Configuration Management Tools Software configuration management (SCM) tools are used by application development organizations to provide software revision control and versioning capabilities. More sophisticated functions such as process management, change request tracking, requirements management, and distributed team development support may also be included. The following are representative vendors and products in this market: ! CA (AllFusion Endevor Change Manager) ! IBM Rational (ClearCase, ClearQuest, and RequisitePro) ! Microsoft (Visual SourceSafe and Visual Studio 2006 Team System) ! SERENA (ChangeMan and TeamTrack) ! Telelogic (DOORS and Synergy) Application Deployment Software The application deployment software markets include software and tools used by developers, business analysts, and administrators to create, deploy, and manage Web-based and traditional applications built on both legacy and modern architectures, including service oriented architectures (SOAs) and event-driven architectures (EDAs). In the IDC taxonomy, there are six specific types of application deployment software: ! Application server software platform (ASSP) ! Integration server software platform (ISSP) ! Message-oriented middleware (MOM) ! Transaction server middleware (TSM) ! Industry-specific application deployment software ! Application deployment adapters/connectors Application Server Software Platforms Application server software platforms (ASSP) are middleware that host software application logic. Application servers provide a common programming model, such as JEE, .NET, CICS, or CORBA, that developers use to build their application. By using an application server, developers also gain access to extensions that include connectivity between the presentation layer, network, operating system, and database as well as with other application servers as part of a distributed system. In addition, the application server offers quality of service (QoS) for such things as transaction processing reliability, throughput, scalability, security, and management. ©2007 IDC #205437 43 ASSPs are the foundation of modern applications, whether custom developed or packaged. They are also the foundation for many types of software infrastructure, such as a portal, content management system, or certain brands of an enterprise service bus (ESB). ASSP revenue is not counted in the revenue model when it is embedded in other software. For example, when a portal is built on an application server but sold as a portal, the application server software portion is not counted in this market. However, when an ERP is purchased separately from the application server required to make it run, the ASSP revenue is counted. Where ASSP is part of a multipurpose product, such as Microsoft Windows Server 2003, and we can determine what portion of the software is used as an ASSP, we will include that portion in ASSP revenue. The following list is representative of the more than 100 vendors and products we follow in this market: ! Adobe Macromedia JRun and ColdFusion ! Apache HTTP Server ! BEA WebLogic Application Server ! Borland Enterprise Server products ! Hitachi uCosminexus ! IBM WebSphere Application Server ! Microsoft Windows Server 2003 ! Oracle Application Server 10g ! Red Hat JBoss/Tomcat Extreme Transaction Processing Extreme transaction processing (XTP) is an emerging software category tracked within the ASSP market that improves the performance of clusters of application servers through the use of virtualization, in-memory caching, transaction shaping, service-level monitoring, and provisioning. The following are representative of the vendors and products that fall under the XTP label: ! Cassatt ! DataSynapse ! IBM WebSphere Extended Deployment ! Kabira Transaction Platform and Accelerator 44 #205437 ©2007 IDC Virtual Application Server Appliances ASSPs have included the type of virtualization associated with clustering for several years, where several application servers are managed as if they were one. In addition, the opposite type of virtualization is also emerging, where one server can run multiple instances of an application server. This is similar to the virtual server paradigm popularized by VMWare. A variety of Linux-Apache-MySQL-PHP (LAMP) stack virtual appliances run on top of VMWare's hypervisor. In addition, BEA recently announced its WebLogic Virtual Edition and Liquid VM that introduction of the Virtual Application Server Appliance. Integration Server Software Platforms Enterprises use ISSPs when they need heterogeneous applications and systems to communicate with each other and to exchange data. They also use them when they need to orchestrate interactions between systems and people. The terminology that describes an ISSP has changed over time, and the software used to perform the integration has evolved. For example, vendors used to say that their ISSPs performed enterprise application integration (EAI). They used message brokers to handle transformation and routing. Now, vendors say that integration software allows an enterprise to build composite applications based on an SOA. The transformation and routing are handled through software commonly called an enterprise service bus (ESB). In essence, ISSPs have accomplished the same set of tasks over time, but the technologies used to accomplish this have evolved fairly significantly. System-Centric Integration Platforms The modern system-centric integration stack is based on a variety of Web services and Java standards, and the individual components include process modeling, orchestration, an ESB, and event or business activity monitoring. These components are sold individually or bundled as a single offering by vendors. The following are representative vendors and products in this category: ! IBM WebSphere ESB and Process Server, WebSphere Fabric ! Oracle BPEL Process Manager ! Progress Sonic ESB and Orchestration Server ! TIBCO Business Works Business Process Management Suites Another class of integration software, the business process management (BPM) suite, is focused on people-centric integration. The software models and orchestrates the required handoffs between an application front-end and people, from person to person and from people to systems. A common example is the automation of an online application approval process. ©2007 IDC #205437 45 Similar to system-centric integration, BPM suites include business process modeling software, process orchestration, and activity monitoring. However, the degree of system integration and programming is much less intensive. The following are representative vendors and products in this category: ! Adobe LiveCycle ! Autonomy Cardiff LiquidBPM ! BEA Aqualogic BPM Suite ! Global 360 Enterprise BPM Suite ! Lombardi TeamWorks ! Metastorm BPM Suite ! Savvion Business Manager ! TIBCO iProcess Suite Event Processing and Correlation Software Event processing and correlation software is an emerging class of technology that matches events to event patterns in real time. This software is used when a high volume of data must be processed and correlated at low latencies. Applications that are beginning to use this type of software include algorithmic trading, real-time risk management, fraud detection, scheduling optimization, and real-time data normalization. Event processing and correlation software is also called complex event processing (CEP). In addition, stream processing technology is a subset of the category. The following are representative vendors and products in this category: ! AleriLabs Aleri Streaming Platform ! AptSoft Director for CEP ! Coral8 Engine ! Gemstone GemFire Real-Time Events ! Progress Apama ! Streambase Stream Processing Engine ! TIBCO BusinessEvents Message-Oriented Middleware MOM is part of the integration stack and provides a connectivity layer that allows applications to exchange messages without requiring any of them to know anything about each other. Messages are delivered point to point, which includes delivery into 46 #205437 ©2007 IDC a queue or a broadcast to multiple recipients. Guaranteed message delivery is an important attribute of commercial offerings. MOM is a core element of an event-driven architecture and the connectivity layer for applications built on an SOA. Many vendors have MOM products that are based on the Java Message Service (JMS) standard. The following are representative vendors and products in this category: ! Fiorano FioranoMQ ! IBM WebSphere MQ ! Progress SonicMQ ! TIBCO Rendezvous and Enterprise Message Service Transaction Server Middleware Transaction server middleware, also known as transaction processing servers or transaction processing monitors (TPMs) mediate and optimize transaction processing between clients and a mainframe database. TPMs have evolved to the point where they currently can act as application servers for legacy mainframe and client-server applications. The following are representative vendors and products in this category: ! BEA Tuxedo ! IBM CICS Industry-Specific Application Deployment Software Industry-specific application deployment software is simply an ASSP, ISSP, MOM, or transaction server built to support a single industry need (e.g., specifically for banking or telecommunications). Note that although there is no double counting within the functional markets of the software taxonomy, there may be double counting with other market types (see the Other Market Views section) and other IDC research services; in particular, the telecommunications-industry-specific application deployment software recognized in this market is also accounted for under the IDC Network Infrastructure research service. Representative vendors and products include the following: ! Autonomy/Verity/Cardiff Verity MedClaim ! BEA WebLogic Communications Platform ! TIBCO Loan Processing Solutions for Financial Institutions ! Vitria Healthcare BPA Suite Application Deployment Adapters/Connectors Application connectors and adapters are part of the integration stack and are installed on end systems to send data and receive data and instructions from other systems and software. Some adapters and connectors are used in conjunction with add-on software that incorporates in-depth knowledge of application environments. ©2007 IDC #205437 47 Depending on how they are deployed, adapters can perform transformations prior to delivering the data back to the targeted system or can transfer as is. There are different deployment models for adapters. They can fetch or deliver data on request. They can be set to poll to fetch and send new data on a scheduled basis. They also can support an event model in which a data change automatically generates a message that is carried to a target system via a MOM. The target system can vary and includes an event processing and correlation engine, an ESB, a message queue, or an application or other system. Where the architecture of the solution is event driven, connectors are also beginning to be referred to as sensors. Standards-based adapters that facilitate the processing of transactions, such as EDI, SWIFT, FIX, HIPAA, HL7, and other role- or industry-specific activity, is covered in the Information and Data Management Software section. Most deployment vendors, particularly those with ISSPs, have their own collection of adapters. They tend to be bundled into the price of the ISSP and, therefore, are not counted in this category. Representative vendors and products include the following: ! Information Builders IWay Universal Adapter Suite ! TIBCO Adapter family Other Development Tools Other Programmer Development Tools and Utilities The other programmer development tools and utilities market includes standalone edit, compile, and debug utilities; libraries; repositories; software reengineering and transformation tools; standalone GUI builders; report writers used mainly by developers; AI and expert system builders; software development kits; code browsers; graphics toolkits and data/file conversion aids; and program memory and disk management. Additionally, this category includes remote procedure call (RPC) middleware, which is built for an application-to-application interoperability model. Applications make requests by shipping a direct call for the execution. (IDC does not provide detailed functional analysis of this market.) IDC does not analyze the other programmer development tools and utilities collection of miscellaneous products as a separate market but does include the revenue from this "market" in the overall revenue total for completeness of application development and deployment market coverage. Data Access, Analysis, and Delivery Software Data access, analysis, and delivery products are end user–oriented tools for ad hoc data access, analysis, and reporting as well as production reporting. Products in this category are most commonly used by information consumers or power users rather than by professional programmers. Examples include query, reporting, multidimensional analysis, and data mining and statistics tools. The data access, analysis, and delivery markets are defined in the following sections. 48 #205437 ©2007 IDC End-User Query, Reporting, and Analysis Query, reporting, and analysis software includes ad hoc query and multidimensional analysis tools as well as dashboards and production reporting tools. Query and reporting tools are designed specifically to support ad hoc data access and report building by either IT or business users. This category does not include other application development tools that may be used for building reports but are not specifically designed for that purpose. Multidimensional analysis tools include both online analytical processing (OLAP) servers and client-side analysis tools that provide a data management environment used for modeling business problems and analyzing business data. Packaged data marts, which are preconfigured software combining data transformation, management, and access in a single package, usually with business models, are also included in this functional market. The following are representative vendors and products in this market: ! Business Objects (WebIntelligence and Crystal Reports) ! Cognos (ReportNet and PowerPlay) ! Hyperion Solutions (Essbase Analytics and Interactive Reporting) ! Microsoft (SQL Server Analysis and Reporting Services) ! Oracle (10q OLAP, Discoverer) ! SAP (NetWeaver BI, formerly Business Information Warehouse or BW) Advanced Analytics Software Advanced analytics software includes data mining and statistical software (previously called technical data analysis). It uses technologies such as neural networks, rule induction, and clustering, among others, to discover relationships in data and make predictions that are hidden, not apparent, or too complex to be extracted using query, reporting, and multidimensional analysis software. This market also includes technical, econometric, and other mathematics-specific software that provide libraries of statistical algorithms and tests for analyzing data. Although statistics products vary in sophistication, most provide base-level functions such as frequencies, crosstabulation, and chi square. This market also includes a specialized form of statistical software focused on functional areas such as the industrial design of experiments, clinical trial testing, exploratory data analysis, and high-volume and real-time statistical analysis. The following are representative vendors and products in this market: ! IBM (Intelligent Miner) ! Insightful (S-PLUS) ! SAS (Enterprise Miner, SAS/STAT) ! SPSS (Clementine, SPSS) ©2007 IDC #205437 49 Spatial Information Management Software Spatial information management software (also called geographic information system [GIS]) includes tools for data entry/conversion (surveying/COGO, aerial photo rectification, remote sensing, GPS, and others), mapping/spatial query, and business analysis. The following are representative vendors and products in this market: ! Autodesk (Autodesk Map) ! ESRI (ArcInfo) ! Intergraph (GeoMedia) ! MapInfo (MapInfo Professional) System Infrastructure Software Market Definitions System infrastructure software is divided into four primary categories: system and network management software, security, storage software, and system software. These categories are discussed in the following sections. System and Network Management Software System and network management software is used to manage all the computing resources for the end user, small business, workgroup, or enterprise, including systems, applications, and the network infrastructure. This market does not include storage management and other storage software. System and network management software is further segmented into the categories discussed in the following sections. Event Automation Tools Event automation tools automate the response of the systems to nonscheduled system and application events. Included are console automation products, global event management applications, and event-action engines. This category does not include automation of scheduled events. The following are representative vendors and products in this market: ! BMC (PATROL Enterprise Manager) ! CA (Unicenter Automation Point) ! HP (OpenView IT/OPS) ! IBM (Tivoli System Automation for OS/390 and Tivoli Enterprise Console) ! Microsoft (MOM) Job Scheduling Tools Job scheduling tools manage the flow of work on systems. This category includes batch job schedulers and workload balancing applications working at the application (rather than system) level. It does not include workload balancing applications that 50 #205437 ©2007 IDC work at the system level (e.g., high-availability software). The following are representative vendors and products in this market: ! BMC (Control-M) ! CA (CA-7, CA-11, and CA-AutoSys) ! Cybermation ! IBM (Tivoli Workload Scheduler) ! UC4 Output Management Tools Output management tools automate the production, distribution, and management of computer-generated information. Included are printer spoolers, fax servers, output management tools, and applications to manage the dissemination of output. The term output includes not only hardcopy devices such as printers and fax machines but also other destinations such as pagers, email, and Web pages. This category does not include workflow applications or packaged online viewing applications for specific vertical industries. The following are representative vendors and products in this market: ! CA (DISPATCH) ! Captaris Inc. ! HP (OpenView Output Server ! IBM (InfoPrint Manager) Performance Management Software Performance management software is used for capacity planning, performance data collection, performance tracking, and simulation software, as well as service levelmanagement software when applied to systems and applications. It also includes resource accounting software for resource utilization tracking and reporting and ISspecific financial management and planning. The following are representative vendors and products in this market: ! BMC (PATROL and MAINVIEW) ! CA (JARS, MICS, and Unicenter Network and Systems Management [NSM] Systems Performance Option) ! Compuware (Strobe, iStrobe, Vantage) ! HP OpenView (Performance Insight, Glance Plus, MeasureWare) ! IBM Tivoli (Omegamon) ©2007 IDC #205437 51 Change and Configuration Management Software Change and configuration management software provides management of system and peripheral hardware and software assets but not network devices. Software for planning, tracking, and applying system hardware and software changes is also included, as is software distribution, hardware and software discovery and inventory, license management, settings and state management and auditing. The following are representative vendors and products in this market: ! CA (Unicenter Software Delivery and Unicenter Asset Management) ! HP (OpenView Configuration Management Solutions) ! IBM (Tivoli Configuration Manager) ! LANDesk Software, an Avocent Company (LANDesk Management Suite) ! Microsoft (SMS 2003, and System Center Configuration Management) ! Novell (ZENworks) Problem Management Software Problem management software tracks, records, and manages problems related to the IT infrastructure and operations. This category includes IT help desk applications and related problem determination and resolution applications. To the extent that IT Infrastructure Library (ITIL) and IT service management–based solutions help in the resolutions of problems, those functions are included here as well. The following are representative vendors and products in this market: ! BMC (Remedy Help Desk) ! CA (Unicenter Service Desk) ! HP (OpenView Service Desk, OpenView ServiceCenter) Network Management Software Network management software includes solutions for managing the network components of enterprise infrastructures. It includes the two submarkets of network availability and network configuration. Further granularity on the enterprise network management market is available in the IDC Network and Service Management CIS. Continuing coverage of network service provider infrastructure management solutions, including OSS/BSS, is available in the IDC Next-Generation OSS and Billing CIS. The products within network management often and increasingly will integrate with cross-domain infrastructure management tools such as service desks, application management, systems management, and business dashboards across multiple platforms and topologies, including data, voice, video, traditional networks, and wireless networks. Network management includes solutions that manage network availability by collecting and correlating events, service levels, alarms, response times, and performance. It also includes network configuration management products 52 #205437 ©2007 IDC that manage, control, and audit changes to the network infrastructure. However, solutions solely for network service providers are excluded. Representative vendors and products include: ! Alcatel-Lucent (VitalSuite) ! CA (Unicenter Network and Systems Management, eHealth) ! Cisco (CiscoWorks) ! HP (Network Node Manager) ! IBM Tivoli (NetCool) Security The security market includes a wide range of technologies used to improve the security of computers, information systems, Internet communications, networks, and transactions. It is used for confidentiality, integrity, privacy, and assurance. Through the use of security applications, organizations can provide security management, access control, authentication, virus protection, encryption, intrusion detection and prevention, vulnerability assessment, and perimeter defense. All these tools are designed to improve the security of an organization's networking infrastructure and help advance value-added services and capabilities. The security market also includes revenue from security appliances. A security appliance consists of hardware with an integrated, hardened OS, a limited applications set, and no user software installation. Security appliances may also include other features such as security management, policy management, quality of service, load balancing, high availability, and bandwidth management. Identity and Access Management Identity and access management is a comprehensive set of solutions used to identify users in a system (employees, customers, contractors, and so on) and control their access to resources within that system by associating user rights and restrictions with the established identity. Web single sign-on (SSO), Host SSO, user provisioning, advanced authentication, legacy authorization, public key infrastructure (PKI), and directory services are all critical components of identity and access management. Federated identity revenue is also included within the identity and access management market. Federated identity (or federated SSO) is the ability to share a user's log-in and authentication data across different Web sites and applications, both internal and external to the organization, using secure, standards-based protocols. The user is able to sign on to multiple Web sites regardless of the provider or identity domain, and organizations are able to separate employees from external parties to better meet compliance regulations. Many vendors offer specific products to provide this functionality as part of their identity management software suites. The following are representative vendors and products in the identity and access management market: ! CA (eTrust Identity and Access Management Suite) ©2007 IDC #205437 53 ! IBM Tivoli (Tivoli Identity Manager and Tivoli Access Manager) ! Novell (Nsure Identity Manager and eDirectory) ! RSA Security, a division of EMC (ACE Server, Keon, ClearTrust, and SecurID) ! VeriSign (VeriSign PKI) Another significant area of identity and access management is the hardware token market. IDC includes revenue from this category as software revenue included under the appliances operating environment. It comprises several necessary technologies, which IDC has defined as follows: ! Token authentication server (TAS) is a highly configurable authentication server that maintains user information, stores seed key data, and provides the verification of token authentication requests. The TAS passes authentication verification to the specific application. These systems are designed to integrate tightly into the existing network and security identity management architectures. Users can be grouped into configurable profiles with different rule sets governing the access control for each. RADIUS server technology is either built in or provided as an option. ! Authentication client software, usually configured as an agent, is designed to operate within almost every conceivable client or other delivery device within an enterprise, allowing access control for the local desktop as well as network and Web resources. These agents are becoming increasingly versatile and can be used in traditional token technology (i.e., key fob, credit cards, and other software, such as Java applets and software for PDAs and wireless devices). ! Traditional authentication tokens are small hardware devices that allow users to authenticate themselves to the TAS using either one-time passwords or challenge/reply methods. These tokens can come in multiple form factors and do not require additional hardware. One-time password (OTP) or challenge/reply tokens are simple to use and provide a robust authentication method. ! USB authentication tokens are small, key-sized devices that connect to any standards-based USB port and can have smart card chips and embedded software used to perform user authentication and cryptographic functions such as digital signing. USB authentication tokens don't inherently require external server software, as do traditional authentication tokens; instead, they can be utilized by nearly any application that can recognize the token. These tokens may have the same capabilities as smart cards and can be used as smart card replacements. They may be increasingly used within OTP security architectures. ! Software licensing authentication tokens (SLATs) are parallel/serial port tokens or USB keys that authorize the use of software on a particular device. SLATs generally do not require user intervention because the software application is designed to check for the SLAT prior to running the application. SLATs are used to protect against software piracy and to enforce software licensing. 54 #205437 ©2007 IDC Secure Content and Threat Management The secure content and threat management (SCTM) market highlights the increasing unity between previously dissimilar security disciplines. SCTM products defend against viruses, spyware, spam, hackers, intrusions, and the unauthorized use or disclosure of confidential information. Products in this market are offered as standalone software, software married to dedicated appliances, and hosted software services. Revenue from all of these product offerings are tracked under software to provide a holistic representation of the SCTM product market. SCTM includes four specific product areas, as follows: ! Network security includes enterprise firewall/VPN products, network intrusion detection and prevention products, network antivirus products, unified threat management products, IPSec/SSL VPN products, and network access control products. Example vendors and products in this category include Cisco (Cisco Adaptive Security Appliances), Juniper (Secure Services Gateways), Check Point (VPN-1 NG), Fortinet (FortiGate), IBM (Proventia), Aventail (EX series), and McAfee (IntruShield). ! Endpoint security includes client antivirus products, file/storage server antivirus, client antispyware products, personal firewall products, host intrusion prevention products, file/disk encryption, and endpoint information protection and control products (IPC). Example vendors and products in this category include Symantec (Symantec Antivirus, Norton Antivirus, Symantec Sygate Enterprise), McAfee (McAfee Total Protection, McAfee VirusScan), CA (eTrust Antivirus, eTrust PestPatrol), Cisco (Security Agent) and Check Point (ZoneAlarm); ! Messaging security includes antispam products, mail server antivirus, content filtering, and messaging information protection and control products. Example vendors and products in this category include Secure Computing (IronMail, IronNet), Symantec (Brightmail), IronPort (IronPort C-Series), Vericept (Vericept 360), and Postini (Postini Hosted Email Security); ! Web security includes Web filtering products, Web intrusion prevention products, Web antivirus products, and Web antispyware products. Example vendors and products in this category include Websense (Websense Web Security Suite, Websense Enterprise), Trend Micro (InterScan, VirusWall), Secure Computing (Webwasher, SmartFilter), and SurfControl (SurfControl WebDefense, SurfControl Web Filter). Security and Vulnerability Management Software Security and vulnerability management is a comprehensive set of solutions that focus on allowing organizations to determine, interpret, and improve their risk posture. Products in this market include those that create, monitor, and enforce security policy; determine the configuration, structure, and attributes for a given device; perform assessments and vulnerability scanning; provide vulnerability remediation and patch management; aggregate and correlate security logs; and provide management of various security technologies from a single point of control. The following are representative vendors and products in this market: ©2007 IDC #205437 55 ! ArcSight (ArcSight ESM and ArcSight Compliance) ! McAfee (Foundstone Enterprise and ePolicy Orchestrator) ! PatchLink (PatchLink Update) ! Qualys (QualysGUARD) ! Symantec (Symantec Enterprise Security Management, Symantec Event Manager, and NetRecon) ! Watchfire (AppScan) Other Security Software Other security software covers emerging security functions that do not fit well into an existing category. It also covers some of the underlying security functions, such as encryption tools and algorithms, that are the basis for many security functions found in other software and hardware products. Also included in this category are products that fit a specific need but have yet to become established in the marketplace. Products currently in this category will either grow into their own categories or eventually be incorporated into the other market segments. For 2007, areas covered by other security software include, but are not restricted to, encryption toolkits, file encryption products, database security, storage security, standalone VPN and VPN clients, wireless security, Web services security, and secure operating systems. Note that the products covered here (especially for wireless and Web services) are only those that do not qualify for one of the more established categories. The following are representative vendors and products in this market: ! Certicom (Security Builder) ! EMC (RSA BSAFE) ! Entrust (Secure Transaction Platform) ! Green Hills Software (INTEGRITY) ! Network Appliance (Decru DataFort) ! SafeNet (ProtectDrive, HSM, and HighAssurance Remote) Storage Software Storage software manages and assures the accessibility, availability, and performance of information stored on physical storage media. This category does not include operating systems or subsystems. The storage software secondary market is broken down into eight functional software markets as described in the following sections. 56 #205437 ©2007 IDC Data Protection and Recovery Software Data protection and recovery software is focused on protection, restore, and recovery of data in the event of physical or logical errors. Included within the data protection and recovery market are the submarkets discussed in the following sections. Data Protection Software Data protection software and add-on modules schedule a point-in-time copy of a defined data set to tape, disk, or optical devices and are used to recover part or all of the data set if needed because of logical or physical error or site disaster. Included are library and tape media management tools. Although tape is the most common backup medium, many products support backup to disk, and some take full advantage of the increased recovery performance associated with direct-access disk storage. Backup is often used in conjunction with snapshot and data replication software to improve data protection performance. If using traditional tape backup products, recovering data from a backup set generally requires the initiation of a separate process. Representative vendors and products include the following: ! IBM (Tivoli Storage Manager) ! Symantec (NetBackup) Continuous Data Protection Software Continuous data protection (CDP) software, also referred to as continuous backup, pertains to products that track and save data to disk so that information can be recovered from any point in time, even minutes ago. CDP uses technology to continuously capture updates to data in real time or near real time, offering data recovery in a matter of seconds. CDP systems may be block, file, or application based and can provide fine granularities of restorable objects to highly variable recovery points. Representative vendors and products include the following: ! Atempo (Time Navigator Business Edition) ! IBM (Tivoli CDP for Files) Bare Metal Restore Software This standalone software makes a system-level host image from the operating system up to the file system configuration on tape or disk, which is used for systemlevel recovery of the entire host if needed because of a physical hardware error. Backup products that have a bare metal restore module are included under the data protection software submarket. Representative vendors and products include the following: ! Symantec (LiveState Recovery Manager) Virtual Tape Library Software This software presents a virtualized view of physical tape drives and media to a host, thus emulating traditional tape devices and tape formats and acting like a tape library with the performance of modern disk drives. During a virtual tape library (VTL) ©2007 IDC #205437 57 process, data is deposited onto disk drives just as it would be deposited onto a tape library, only faster. A VTL generally consists of a virtual tape appliance or server and VTL software that emulates traditional tape devices and formats. Representative vendors and products include the following: ! Diligent (VTF Open) ! FalconStor (Virtual Tape Library) Storage Replication Software Storage replication software includes software designed to create image copies of volumes or files via techniques such as clones, mirrors, and snapshots. Replication may be storage system, server, fabric, or appliance based and may occur locally or between remote sites, potentially separated by long distances. Replication and snapshot software is often used in conjunction with backup software to improve data protection performance. This market does not include database replication software that operates at the database, table, or record level. Host Replication Software This software typically resides at the file system or logical volume level within the operating system and makes a point-in-time copy or snapshot of a data set to disk used for disaster recovery, testing, application development, or reporting. In recovery, replication eliminates the intermediary step of a restore process. Representative vendors and products include the following: ! Double-Take Software (Double-Take) ! Symantec (VERITAS Volume Replicator) System and Data Migration Software This block-based or file-based migration software is used to migrate data from one platform to another for system upgrades and technology refreshes, moving the data to a new platform. Representative vendors and products include the following: ! Hitachi (HiCommand Tiered Storage Manager) ! Softek (Transparent Data Migration Facility) Fabric and Appliance-Based Replication Software Fabric-based replication software makes use of intelligent switches and heterogeneous array products to provide block-level replication within the SAN. The intelligent switches have technologies that perform the volume management and replication process and eliminate the overhead on the host while providing any-to-any replication. Also included is software component to appliance-based replication. Representative vendors and products include the following: ! Network Appliance (Topio Data Protection Suite) 58 #205437 ©2007 IDC Array-Based Replication Software This software makes a block-based point-in-time block copy or snapshot of storage to disk used for disaster recovery, testing, application development, reporting, and other uses. Representative vendors and products include the following: ! EMC (Symmetrix Remote Data Facility) ! Network Appliance (SnapMirror) Archive and HSM Software The archive and hierarchical storage management (HSM) software market includes software providing policy-based controls for copying, moving, purging (deleting from primary storage), retaining (in read-only fashion for a defined period), and deleting (deleting from secondary storage) data. Some tools provide for more sophisticated functions such as content-based data management, indexing, and search/retrieval. Email archive products are included in this market. Not included are products that perform database archiving. Archive and HSM Software Archive software creates, based upon a defined policy, a point-in-time copy of a data set or a group of files to be used for backup, transported to an alternate location, or committed to long- or intermediate-term storage. Original copies of the data set may be deleted when the archive is created to free primary storage space, or they may be left in place if frequent access is expected. Once the data set is removed from primary storage, retrieval from the archive generally requires the initiation of a separate process to restore the data to primary storage. Hierarchical storage management software automates, based upon a defined policy, the migration of data among different classes of storage devices and media and automatically recalls files to primary storage when required for application or user access. The storage classes generally represent different levels of storage cost and retrieval performance, and the HSM software controls the placement and retrieval of data to optimize cost and performance according to predefined data use policies. In practice, HSM allows file backup and archiving to be achieved transparently, without requiring that the user be aware of when files are being retrieved from backup storage media. Once appropriate policies have been established, migration among the classes of storage is done automatically in a way that frees users from being aware of storage policies or the details of physical data location. Representative vendors and products include the following: ! EMC (DiskXtender) ! Sun (SAM-FS) Email Archive Software In addition to file-based archive and migration software products, included within the archive and HSM market are specialized email archive software products that integrate with collaborative email systems through APIs to migrate email, based on policy, to a secondary archive. Included in email archiving software are functions for ©2007 IDC #205437 59 email retention and searching. Representative vendors and products include the following: ! Symantec (Enterprise Vault) ! ZANTAZ (Enterprise Archive Solution and Digital Safe) File System Software File system software provides the organization and structure for storing and retrieving data as files, folders, and directories. The software may provide access to storage connected to a local host, or it may allow multiple systems or nodes to appear to access a common file system even though the actual storage devices may be located on another system or node. This software offers a range of capabilities, from simple file access to allowing many systems to read a file, while only one may have update or write access. Distributed and clustered file systems supporting sophisticated intersystem record and file locking capabilities are included as products that provide for WAFS. The file system software functional market includes only file systems that are not included with base operating systems but are instead add-on file systems or file services. Representative vendors and products include the following: ! IBM (SAN File System) ! Polyserve (Matrix Server) Storage Management Software SRM and Heterogeneous SAN Management Software This software is designed for heterogeneous, end-to-end, discovery, topology mapping, capacity, utilization and performance reporting, planning, monitoring, and management. It includes software modules for advanced functions such as storage provisioning, host-level reporting, file-level analytics, application and file system integration, and event management. To qualify as a storage management product, the product must provide for management of a diverse set of storage systems, storage switches, servers, and applications. Device management tools that provide discovery and configuration of single device type or asset are not included. Representative vendors and products include the following: ! EMC (EMC Control Center) ! HP (HP Storage Essentials) Replication Management Software This software is used to control, monitor, and/or schedule the point-in-time copies made by the replication product. It may automate various replication tasks, such as sync, split, mount, and so on. Representative vendors and products include the following: ! EMC (Replication Manager) 60 #205437 ©2007 IDC ! Hitachi (HiCommand Replication Monitor) Other Storage Management Software These applications provide standalone storage management functionality such as predictive change management, performance management, problem management, capacity planning, forecasting, or SLA management. Storage Infrastructure Software Storage infrastructure software includes virtualization and volume management and storage access and path management software. Virtualization and Volume Management Software Virtualization and volume management software enables device and networkindependent management of storage or data. It isolates and abstracts the internal details of storage systems and services and simplifies storage management by masking physical complexities from servers, applications, and other network resources. Such software is frequently used for pooling or aggregating storage or to add new capabilities to available storage resources. Virtualization and volume management may be storage system, server, fabric, or appliance based and frequently can occur simultaneously in more than one of these locations. Only software sold as a separate software product or option is included in this market. Representative vendors and products include the following: ! DataCore (SANsymphony) ! IBM (SAN Volume Controller) Access and Path Management Software Access and path management software provides for storage path and access configuration, management, load balancing, and failover on path failure. Only software sold as a separate software product or option is included in the revenue for this market. Representative vendors and products include the following: ! EMC (PowerPath) ! Hitachi (Hitachi Dynamic Link Manager) Storage Device Management Software Storage device management software performs a specific set of functions for a specific, homogeneous brand or class of storage device. Device management software utilities capture basic information on the storage device and tend to support only that device or device family (not a heterogeneous management tool). The functions provided by device management include storage device discovery, configuration, and management, with basic levels of reporting. It includes software used to control the configuration and management of disk devices, storage arrays, and networks as well as the associated utilities, element managers, and agents. This market also includes utilities for low-level disk device functions such as optimization, defragmentation, and compression. Representative vendors and products include the following: ©2007 IDC #205437 61 ! EMC (Symmetrix Manager) ! Hitachi (HiCommand Device Manager) Other Storage Software Other storage software covers storage software functions that do not fit well into an existing category. Also included in this category are products that fit a specific need but have yet to become established in the marketplace. Products currently in this category will either grow into their own categories or eventually be incorporated into the other market segments. Representative vendors and products include the following: ! Sun (StorageTek Virtual Storage Manager) System Software System software is the foundation of software products that collectively operate the hardware on which business applications are built. Market definitions are discussed in the following sections. Operating Systems and Subsystems Operating system and subsystem software includes the machine-level instructions and general-purpose functions that control the operation and use of CPU resources (both centralized and networked). These operating systems quite often also include network services such as Dynamic Host Configuration Protocol (DHCP) for IP address assignment, distributed naming services (DNS) software (which provides a shared database of system resources and access control information), and directory service software (such as Microsoft's Active Directory), as well as other integrated network facilities such as print and file services. Representative vendors and products include the following: ! HP (HP-UX) ! IBM (z/OS, OS/390, i5, OS/400, and AIX) ! Microsoft (Windows XP and Windows Server 2003, as well as older Windows products) ! Novell (Novell SUSE LINUX Enterprise Server and Novell Linux Desktop) ! Red Hat Linux (Red Hat Enterprise Linux AS, Red Hat Enterprise Linux WS, and Red Hat Desktop) ! Sun (Solaris) Clustering and Availability Software Clustering and availability software virtualizes the system services of multiple systems so that they appear in some sense as a single computing resource. This market includes cluster managers and compute farm managers as well as load balancing software that stands between the user request and the processors or systems 62 #205437 ©2007 IDC supporting applications or services. This software determines which processor or system has the most available capacity and routes the workload to that system. Representative vendors and products include the following: ! EMC Legato (Legato Cluster) ! HP (TruCluster and NonStop Cluster) ! IBM (HACMP) ! Platform Computing (LSF) ! Sun (Sun Cluster) Virtual User Interface Software Virtual user interface (VUI) software runs on servers and creates within the operating system a user interface that is virtualized for distribution to a nonnative environment. Terminal emulators, on the other hand, are not included in this category because they run on clients rather than servers. Representative vendors and products include the following: ! Citrix (MetaFrame) ! Microsoft (Terminal Services) ! Sun (Sun Secure Global Desktop Software) ! X-Windows (many vendors) Virtual Machine Software Virtual machine software either uses low-level capabilities offered by certain hardware environments or installs a complete hardware emulation layer using software to support multiple operating environments and the related stacks of applications, application development and deployment software, and system infrastructure software. Each of the client or server operating environments is allowed to believe that it controls the entire machine, but resources are actually allocated on the basis of rules established either at the time of configuration or dynamically by related management software. Thus, operating system software and applications that were previously incompatible can share the same machine. Representative vendors and products include the following: ! EMC (VMware ESX Server) ! IBM (VM) ! Jikes (Research Virtual Machine) ! Microsoft (Virtual PC 2004 and Virtual Server 2005) ! Xen virtual machine monitor (open source) ©2007 IDC #205437 63 Remote Control Software Remote control software is a communications technology enabling one PC to exchange files with and/or take control of another. This may be implemented locally over a LAN or remotely for a point-to-point configuration. Typically, remote control has been effectively used for file transfers and database queries and in management and help desk software environments. This market may also include products to provide remote control of other systems such as servers. In addition, this market includes remote access software and other remote software technologies. Remote access software is communications software residing on and enabling the remote device that is used to establish a connection with a distant computing resource. This software may enable connectivity utilizing remote control, remote node, or related technologies. Representative vendors and products include the following: ! Altiris (Carbon Copy Solution) ! CA (Unicenter Remote Control) ! Danware (NetOp Remote Control) ! IBM Tivoli (IBM Tivoli Remote Control) ! Laplink (Laplink Gold) ! LogMeIn (Remotely Anywhere) ! Netopia (Timbuktu Pro) ! Symantec (pcAnywhere) Other System Software Other system software is infrastructure software for systems and applications (but not storage) that are not otherwise categorized. Such software is used mainly by system programmers and administrators to perform housekeeping functions and to add functions to operating systems that are not otherwise supplied. Examples include fileconversion utilities, screen drivers and fonts, and sort utilities. This category also includes enterprise connectivity software that enables devices to exchange, modify, and/or present host-based network data. Representative vendors and products include the following: ! Adobe (Fonts) ! EMC/Softworks (Catalog Solution) ! IBM (Communications Server and WebSphere Host Integration, WebSphere Edge Server) ! Microsoft (Host Integration Server) ! Symantec (Norton Utilities) 64 #205437 ©2007 IDC Geographic Area Definitions Worldwide revenue is divided by geographic area. Areas defined are Americas, Europe/Middle East/Africa (EMEA), and Asia/Pacific (AP): ! Americas includes the United States and all of its political subdivisions, Canada, and Latin America (Brazil, Venezuela, Argentina, Chile, Colombia, and Mexico). ! EMEA includes Austria, Belgium/Luxembourg, Denmark, France, Finland, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, the United Kingdom, Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, Russia, Slovakia, Slovenia, Egypt, Israel, Saudi Arabia, Turkey, United Arab Emirates, and South Africa. ! AP includes Australia, China (PRC), Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Taiwan, Vietnam, and Thailand. Operating Environment Definitions All software revenue is allocated on the basis of the underlying operating environment. The preferred method is to allocate revenue to operating environments based on where the license revenue is derived (for platform-specific licenses). An alternative method is to allocate revenue based on where the product is run (i.e., based on the percentage of executables on various platforms). Operating environments include the following: ! Mainframe environments include IBM's z/OS, OS/390, VSE, VM, and z/VM that run on IBM zSeries hardware and other single-vendor mainframe operating systems such as those from Unisys, Amdahl, Fujitsu, and Hitachi. Single-vendor, non-Unix supercomputer and massively parallel processor environments are also included in the mainframe category. ! i5 and OS/400 include i5, OS/400, and predecessors that operate aboard IBM 3X, AS/400, and the iSeries family of machines. ! Unix includes all operating systems software that is based on Unix System V, OSF/1, or Berkeley Software Distribution (BSD). This category would include products such as AIX, HP-UX, Irix, SCO Open Server, SCO UnixWare, Solaris, Tru64 Unix, NetBSD, OpenBSD, and other operating systems used primarily aboard RISC-based and Intel architecture–based servers, workstations, minicomputers, and clients that are designed to run the Unix operating system. Unix-based supercomputer and massively parallel processor environments are also included in this category. Operating systems that are based on other kernels are not included even if they have passed the Unix certification test from the Open Group. ! Linux and other open source environments include all operating systems deployed aboard servers, workstations, minicomputers, and clients that are based on Linux or other Unix-like open source operating environments. Typically, ©2007 IDC #205437 65 this software is available both commercially with associated support and maintenance costs and at little or no cost in source code form. Software of this type is usually licensed under the Free Software Foundation's general-purpose license (GPL) or other licensing that encourages free access to the source code to these operating environments. ! Other host/server environments include all other operating systems that are used as either host or server environments aboard server hardware systems. Some examples of operating systems in this category are HP OpenVMS, IBM OS/2, and Novell NetWare, as well as residual revenue associated with discontinued operating systems, such as HP MPE/iX. ! Windows 32 and 64 include all operating systems that support the Win32 APIs and Win64 APIs, including Microsoft's Windows 9x, Windows Me, Windows NT Workstation, all versions of Windows NT Server, Windows 2000 Professional, all versions of Windows 2000 Server, Windows XP Home, Windows XP Tablet PC Edition, Windows XP Media Center Edition, Windows XP Professional, Windows XP 64-Bit Edition, and all editions of Windows Server 2003, including the release 2 (R2) versions. ! Embedded operating environments and related subsystems include commercially available products that incorporate the machine-level instructions and general-purpose functions that control the operation and use of CPU resources in smart, embedded, and limited-function devices. Embedded operating environments may either offer some form of a user interface (graphical, text, voice, or other) or include the required services or APIs to allow developers to build their own interface if so required. These environments generally include defined and documented APIs that can be used by application software, which in turn is created by related application development tools. Embedded operating environment products may include both source code and executable/runtime code, or just executable/runtime code, and may offer either real-time or non-realtime operational characteristics. Real time is defined as the ability for the system to respond in a predetermined time to scheduled or interrupt-driven events. Non– real time is defined as the ability for the system to respond rapidly enough to respond in less than a second to network or user input. Embedded operating environments tracked by IDC might be specialized versions of general-purpose operating systems (such as Linux and Windows XP Embedded), but must be commercially available. Embedded operating environments tracked by IDC include Windows CE, Linux, Palm OS, EPOC, LynxOS, VxWorks, QNX, and Nucleus. Special-purpose embedded operating environments that are not commercially available but are integrated into a commercially available hardware product (e.g., Nintendo GameBoys, industrial control systems, certain automotive control systems, and so forth) are specifically excluded because the operating system is not available exclusive of the underlying hardware product. ! Other single-user operating environments include all other operating systems that are used as client or standalone environments. Some examples of operating systems in this category are 16-bit Windows and DOS (including MS-DOS, PCDOS, and DR-DOS), OS/2, and non-Unix versions of Mac OS (generally Mac OS 9.x and earlier). 66 #205437 ©2007 IDC ! Appliances consist of hardware with an integrated, hardened operating system; a limited applications set; and no user software installation. Appliances differ from pure embedded operating systems in that the operating system used in an appliance is typically a hardware-specific, special-purpose operating system that is not commercially available on a standalone basis from the appliance vendor. However, in some cases, an appliance may be constructed utilizing an embedded operating system that is commercially available from another vendor. Examples of such a configuration include a storage server built using Windows Storage Server 2003, a firewall appliance built upon an embedded version of Windows Server 2003, or a security or networking device built using an embedded version of Linux from (for example) Montavista Software or Red Hat. In most cases, appliance devices integrate operating system application software together with application functionality, security management, policy management, quality of service, load balancing, high availability, and bandwidth management. Like the operating system itself, this layered software is in most cases unique and specific to the appliance — and not commercially available independent from the appliance itself. However, in certain cases, the layered software may be commercially available from the firm that produced the software. For instance, a security or storage appliance based on an embedded version of the Windows operating system may also incorporate certain layered commercial software products from Microsoft. In this context, commercially available operating systems (embedded or general purpose) and commercially available layered software products that are integrated in appliance devices will continue to be tracked in IDC's pure software market segments in addition to being tracked as part of the appliance device. This tracking methodology does not lead to double counting because appliance revenue cannot be combined with pure software revenue due to the differing taxonomical definitions describing these market segments. Other Market Views Although the key benefits of IDC's functional software taxonomy are its mutually exclusive and collectively exhaustive characteristics, the concept of a "market" sometimes requires a view of the function-based Software Market Forecaster data from a different perspective. In addition to the functional, geographic, and operating environment perspectives described above, IDC defines a wide range of other market views, one of which is termed a competitive market. Competitive markets are combinations of whole or fractions of functional markets. Other market views could define a market particular to a channel or represent revenue in subsets of geographic regions. By extension, and in the reality of the IT marketplace, market views other than for functional software markets can include systems and services revenue as well, but for the sake of simplicity, this discussion covers only software competitive markets. Formal Competitive Markets Tracked Table 5 lists IDC's 2007 formal competitive markets. The current competitive markets formally tracked are subsequently sorted and presented by application, development, and deployment software and infrastructure for convenience — in the same order as the functional market descriptions above — but a competitive market does not necessarily derive only from the functional markets in one primary software market. ©2007 IDC #205437 67 T ABLE 5 IDC's Software Competitive Markets, 2007 IDC Competitive Market Name Data warehousing tools and analytic applications Segment or Submarket of Competitive Market • The "build" market • The "buy" market (analytic applications) Enterprise resource planning (ERP) applications Enterprise workplace Mobile enterprise applications Supplier relationship management (SRM) applications Product life-cycle management (PLM) applications Business process automation (BPA) software Embedded database management systems Enterprise metadata technologies IT governance Master data management (MDM) • Applied MDM • MDM Infrastructure software Service oriented architecture (SOA) and Web services • SOA software and submarkets • Web services software submarkets • Service-oriented management (SOM) Legacy integration and analysis software IT asset management software Mobile device management software Mobile middleware and infrastructure software Mobile security software Software distribution Source: IDC, 2007 SOA registry and repository software 68 #205437 ©2007 IDC As mentioned previously, competitive markets are combinations of whole or fractions of functional markets. They are derived mostly by looking at the current or prospective value proposition (e.g., BPA) or usage (e.g., mobile middleware) of the functional markets involved in the competitive market's derivation model. The model is then confirmed by looking at the individual supplier's selling practices vis-à-vis the value proposition or the IT user's practices vis-à-vis usage. In addition to value proposition/usage, competitive market derivations can reflect such market dynamics as the following: ! Underlying standards (e.g., Web services) ! Architecture (e.g., service oriented architecture) ! Technologies being implemented (e.g., master data management [MDM]) ! Other dimensions (e.g., vendor coalitions would be a possible example, although no such competitive market is currently specified) In addition, competitive markets can model two or more of such market-dynamics factors. For example, the definition of the ERP software competitive market is dependent on both its function (i.e., must include accounting and inventory management functionality) and its architecture (must integrate a UI, data set, and logic). IDC has sized and forecast a variety of the other software market views not listed here and will continue to establish views into additional markets orthogonal to, or aggregates of, functional markets based on the evolving nature of the software industry. Almost all of these "other" market analyses are based on demand-side information, such as that obtained from IT user surveys. Contact IDC if you do not see a software market that you need information about. Not Necessarily Mutually Exclusive Note that unlike functional software markets, these other market views — including competitive markets — are not necessarily mutually exclusive. They can be mutually exclusive but, unlike IDC functional software markets, do not have to be by definition. For example, as illustrated in Figure 2, the competitive markets for supplier relationship management (SRM) and BPA software overlap because one of the possible values in SRM is business process automation (but BPA software is not required to enable SRM, and BPA software supports many other value propositions in addition to SRM). To illustrate by product: ! Vignette Process Services is an example of a BPA software product that does not usually enable SRM because it was designed primarily for intraenterprise integration (although almost any software product can be forced fit to do things for which it was not intended). ! Agile Product Record Management is an example of an SRM product that does not depend on BPA software (although the SRM software could certainly interoperate with the BPA software). ©2007 IDC #205437 69 ! AT&T/Sterling Commerce's Gentran Integration Suite product is clearly both BPA software and SRM software. FIGURE 2 Model of Overlapping Competitive Markets Ariba Vignette SRM software Other applications functional markets BPA software Other AD&D/ Infrastructure functional markets AT&T/Sterling Commerce Gentran Source: IDC, 2007 On the other hand, as illustrated in Figure 3, the competitive markets for ERP suites and standalone enterprise applications are — by their own definitions and the meaning of the words — mutually exclusive. Also note that IDC can provide competitive market views that are derived from a single functional market. A competitive market derived from a single functional market (e.g., event automation software used in a particular way in systems management), is called a competitive submarket. Much of the value of this approach stems from the ability to view vendor-based functional market revenue from a usage perspective. Examples of market usage categories include by application (e.g., performance management for email), by industry (e.g., performance management for financial services), and by delivery form (e.g., channels/alliances and service providers of performance management software). The competitive market views defined and researched specifically as part of 2007 subscription research service deliverables follow. 70 #205437 ©2007 IDC FIGURE 3 Model of Mutually Exclusive Competitive Markets Applications functional markets Standalone applications ERP applications Data access, analysis and delivery Other AD&D/infrastructure functional markets Source: IDC, 2007 Applications-Based Competitive Markets Data Warehousing Tools and Analytic Applications The rapid growth and evolution of the data warehousing software market is testimony to the importance that organizations are placing on systems designed for accessing and analyzing data rather than for capturing transactions. IDC defines data warehousing as a process that organizes time-based data coming from multiple applications according to subjects meaningful to the business and driven by the need to inform decision makers. The data warehousing software competitive market encompasses development and deployment that support the design, development, and implementation of data warehouse solutions. IDC divides the data warehousing and analytic applications software market into the build (associated with tools) and buy (associated with applications) markets, which are defined as follows: ! Build market. The tools portion of the data warehousing market includes software for warehouse generation (supporting the extraction, cleansing, transformation, loading, and administration of operational data to the warehouse) and warehouse management (supporting ongoing data management through the use of multiple-user database server software). ! Buy market. The application portion of the data warehousing market includes domain-specific applications that enable organizations to measure and evaluate ©2007 IDC #205437 71 performance to improve efficiency and discover new business opportunities (e.g., forecasting, budgeting, and customer segmentation) out of the box. These analytic applications are different from transactional applications, provide process support for the review and optimization of business operations, and either integrate or access time-oriented data derived from multiple sources. Enterprise Resource Planning Applications In addition to the functional breakdown of the enterprise applications market provided by IDC in multiple subscription research services, IDC divides the total enterprise application market revenue results (the total of the ERM, SCM, O&M, engineering, and CRM secondary markets) and forecasts between integrated ERP and standalone applications. The distinction between the two categories is as follows: ! ERP products are application solutions that could, in theory, automate an entire enterprise and include at least a mix of accounting, inventory management and/or purchase/sales order processing, industry-specific product planning and execution, services-related operations management, or other product-related operations-management modules. (In wholesale distribution, inventory management modules often serve as the industry-specific portion of the solution.) ! By comparison, standalone (so-called best of breed or best of class) applications automate a specific enterprise need (or closely aligned needs) in product planning and execution, accounting, payroll processing, or any other of the more than 20 functional application market areas. ERP products often automate human resource/payroll management and other functions as well. Typically, ERP suites are architected with an integrated set of business rules and metadata, accessing a single data set (logical or physical) from a single, consistent user interface. In the IDC view, ERP suites are limited to neither resource planning nor manufacturing, from which the term ERP comes. The ERP applications market is derived from the following functional areas: contact center, customer service, enterprise asset management, financial accounting, financial performance and strategy management, human capital management, inventory management, logistics, manufacturing, marketing, order management, other back office, payroll, procurement, product information management (PIM), production planning, project and portfolio management (PPM), sales, and services operations management. The percentages of revenue that the ERP market draws from the above functional areas fluctuate every year depending on vendors' capabilities and successes in meeting customer and industry-specific requirements by packaging and implementing appropriate solutions to optimize the biggest business value. Similarly, although standalone applications are often termed best of breed or best of class, IDC does mean to imply that ERP products cannot feature capabilities in a given functional area equal to or better than those found in some standalone applications. (Therefore, who is to say that one or the other is best in class?) Representative vendors and ERP products include SAP's mySAP ERP 2005, Oracle's eBusiness suite (formerly branded Oracle 11), Oracle's PeopleSoft heritage 72 #205437 ©2007 IDC products, and JD Edwards' heritage products, as well as similar products from Activant, Agresso, Cerner, Compiere, Deltek, Epicor, Everest Software, Exact, Fiserv, IDX, IFS, Infor, Intacct, Intuit, Lawson, Made2Manage, McKessonHBOC, Meditech, Microsoft Business Solutions, Misys, NetSuite, QAD, Ramco, Sage, SQL Ledger, Sungard, and others. Standalone enterprise applications include AspenTech process control software, Microsoft Project, and many other non-ERP application products. Enterprise Workplace The enterprise workplace (EW) software market consists of the following: ! A natural, intuitive, adaptive user experience ! The aggregation of interoperable application services determined by user roles and tasks ! The intersection of the above with information supplied by data integration, collaboration, content management, and other related software Enterprise workplace software requires a cohesive server-side platform for resolving possible multiple interfaces that takes advantage of the convergence of services such as collaboration/messaging, search, business intelligence, content management, and rich client-side presentation. Note that the EW market exhibits some similarities to the BPA deployment software market but differs in that the EW market tends to be more centered around a collaborative, user-interface-centric, data-driven value proposition, and the BPA deployment software market tends to be more centered around an ISSP and analysis modeling and design tool process-driven value proposition. The EW software competitive market draws from the following functional markets: ! Collaborative applications (all) ! Content applications (authoring and publishing, content management, and so on) ! Search and discovery applications ! Enterprise portal software ! Enterprise applications Representative vendors and products are still emerging in this market, but early examples from large vendors include Duet for MS Office and SAP, IBM WebSphere Solutions, and Oracle WebCenter. Mobile Enterprise Applications Mobile enterprise applications (MEAs) consist of those packaged enterprise applications designed expressly for mobile and wireless environments. MEAs focus on delivering the critical front-end functionality for mobile workers based on the role of the worker and the subsegment of data that that worker requires from existing backend functionality residing on an internal enterprise IT system or accessed via a ©2007 IDC #205437 73 hosted environment. Such applications include but are not limited to sales force automation (SFA), field force automation (FFA), field service, supply chain management (SCM), services operations management, time and expenses (T&E), logistics, and messaging. Such applications are complementary to mobile middleware and infrastructure software. As part of the MEA solution, vendors may also provide a mobile infrastructure platform and other tools for application modification. Representative vendors include pure-play MEA vendors and large ISVs: ! Dexterra (Applications Framework, Adapter Framework, Intelligent Adapters) ! Oracle (Oracle Mobile Supply Chain, Oracle Mobile Field Service, PeopleSoft Enterprise Mobile Sales, Siebel Handheld, Siebel Wireless) ! SAP (xApp Mobile Time & Travel, xApp Mobile Asset Management) ! Vaultus (Mobile Application Studio) Supplier Relationship Management Applications IDC defines supplier relationship management (SRM) applications as applications designed to boost the competitiveness of a company by automating its sourcing, procurement, and supplier support functions related to direct and indirect materials and all types of services that it needs to purchase to keep its operations and production lines, if applicable, running efficiently. The objective is to build strong partnerships and better relationships with the best-performing suppliers. Supplier relationship management applications typically connect with PLM, SCA, and CRM applications, and with ERP applications on the back end. Supplier relationship management covers the automation of internal and external business processes — from source to supplier self-service and from procure to pay. Components of supplier relationship management applications include: ! Sourcing. This includes auction, reverse auction, supplier qualification, selection and negotiation, supplier self-service (automation of RFx process), and dynamic pricing. Revenue is derived from the procurement, order processing, and services operations management applications software markets within IDC's functional market taxonomy. ! Procurement. This includes indirect and direct materials purchase order processing, services procurement, workflow approval, and content aggregation and management (product catalog uploads and downloads). Revenue is derived from the procurement, order processing, content management, and collaborative software markets within IDC's functional market taxonomy. ! Content and document management applications. These applications include indexing tools, catalog creation and aggregation, content syndication, parametric search, support for different data-type definitions (different flavors of XML), data cleansing and normalization, user rights, and access tools. ! Portal presentation layer. These products allow supplier relationship management vendors to deliver attractive user interfaces, syndicated information 74 #205437 ©2007 IDC that is industry specific, and bundling of other user-management functions for security, authentication, administration, and personalization purposes. ! Contract, analysis, and reporting. These applications provide contract compliance monitoring, supplier performance analytics and reporting, purchasing intelligence, product classification and categorization, scorecard, and monitoring. Revenue is derived from procurement, order management, and business performance management application software markets within IDC's functional market taxonomy. ! Advanced planning scheduling. These applications will be useful for supplier relationship management users to upload or download forecast data to deliver a real-time picture of its supply chain. Revenue is derived primarily from the services operations management applications market within IDC's functional market taxonomy. ! Supplier relationship management accounting. These invoicing and other accounting automation products enable supplier relationship management application users to feed supplier and procurement information directly into backend accounting systems (and even into related financial services applications of the company's financial resource) to generate daily close reports about a company's operations and true spending performance Product Life-Cycle Management Applications PLM is an enterprise software application solution concept that brings together a number of activities required to develop, model, track, manage, and control the products and to manufacture, sell, maintain, and, finally, to retire these products. PLM applications are: ! Actively involved in enabling at least some of the PLM functions described below ! Sold into product-centric environments (i.e., manufacturing and enterprise asset management) ! Integrated to allow for data exchange and collaboration among employees with a range of different responsibilities within the enterprise as well as with outside partners (customers, marketing and sales, outsourced manufacturers, maintenance providers, and so on) To be defined by IDC as a provider of PLM solutions, vendors' enterprise software should offer any of the following core functions: ! Engineering software or some access to it, including mechanical computer-aided design, engineering, and manufacturing (MCAD/CAE/CAM) or at least one of the three, architectural/engineering/construction (AEC), or electronic design automation (EDA) software ! Product information management, which according to IDC's taxonomy has a number of subsegments, among them vaulting, document management, change management, light geometry with view/markup capabilities for visualization ©2007 IDC #205437 75 across the Web, parts libraries, and newly emerging idea management and product-focused environmental compliance management ! Enterprise asset management software for maintenance, repair, and overhaul to track product quality and perform failure analyses ! Project and portfolio management software Beyond these features that form the core of PLM applications, a comprehensive solution should also include: ! Collaboration applications, especially for team collaboration within the enterprise but also with external business partners ! Business performance measurement software to analyze cost efficiencies and search for process improvements In addition, depending on their roles, users should have access to a variety of detailed product information available from the following: ! Accounting and human resources ! Manufacturing resource planning ! Logistics applications such as transportation planning and management and warehousing as well as return logistics ! Retail and wholesale distribution operations management software The PLM applications market includes only the revenue for the core products that are licensed to discrete and process manufacturers, enterprise asset management providers, and architectural/engineering/construction providers. Application Development and Deployment Software Competitive Markets Business Process Automation Software This competitive market looks at software associated with developing and deploying applications that automate business processes. This covers the full spectrum of software that is associated with modern process automation, including: ! User interaction software, including portals and forms ! Data capture software to automate data collection from nondigital forms ! Business process modeling software ! Orchestration or workflow software that moves people, documents, and data through a process ! Rules engine software that automates decision points within a process 76 #205437 ©2007 IDC ! Queuing software that determines who is assigned to a task and sends the task to the appropriate person ! Search software that allows workers within the process to find related content needed as part of a step in the process ! Data integration, reporting, and monitoring software that integrates data and presents both historical and current information on a screen ! Integration software, which allows the necessary enterprise systems to share data The BPA competitive market contains revenue from a variety of functional markets. The primary ones include application deployment adapters/connectors; analysis, modeling, and design tools (including rules engines); authoring and publishing software; content management; enterprise portals; integration server software platforms (including BPM suites); message-oriented middleware; and search and discovery. Vendors covered in the BPA competitive market include: Adobe, Autonomy, BEA, Global 360, IBM, IDS Scheer, Lombardi, Oracle, Microsoft, TIBCO, and Savvion. Embedded Database Management Systems Embedded DBMSs are DBMSs that are sold to ISVs for inclusion in their software products. They have no visible aspect to the end user, with management functions handled either automatically or through an API so that the client ISV can handle them in the context of normal product operation. They are typically designed and tuned for performance and small footprint rather than flexibility or ease of use (because they have no visible user interface). This competitive market cuts across the RDBMS, PDBMS, and ODBMS functional markets. Representative vendors and products include: ! BTrieve (PDBMS) and Pervasive.SQL (PDBMS) from Pervasive Software ! Caché (PDBMS) from InterSystems ! db4o (ODBMS) from db4objectsfs ! Neologic (ODBMS) from Neologic ! PointBase (RDBMS) from DataMirror ! Progress RDBMS (RDBMS) from Progress Software ! Sybase Adaptive Server Anywhere (RDBMS) from Sybase Embedded DBMS markets are derived as that fraction of DBMS revenue wherein the revenue is realized by indirect sales of runtime licenses through tools or applications in which the technology is embedded, as well as licenses and maintenance agreements for database development systems and tools used by third-party ISVs embedding the DBMS technology in their software products. ©2007 IDC #205437 77 Enterprise Metadata Technologies This competitive market represents the value of revenue derived from the sale of software technology that is designed to model, capture, and maintain IT metadata across all functional software markets. This technology may exist as standalone products or components of other products. When this software is embedded, it is found across a wide range of functional markets. This competitive market includes as a subject the entire metadata definition and management functional submarket, including service registries and repositories. Representative vendors and products include: ! ASG (Rochade) ! BEA (BEA Aqualogic Repository/Flashline) ! CA (AllFusion Repository) ! HP (Mercury/Systinet2) ! IBM/Ascential (MetaStage) ! Informatica (SuperGlue) ! LogicLibrary (Logidex) ! MetaMatrix (MetaBase) ! Microsoft (SQL Server/Meta Data Services) ! Oracle (Stellent) ! Sypherlink (Harvester) ! Unicorn (Unicorn System) ! WebMethods (Infravio) IT Governance IT governance (ITG) involves the exercise of management authority over the IT project and IT program portfolio in coordination with the IT asset portfolio (including systems, infrastructure, and previously deployed applications). IT projects and programs include general-purpose software development and implementation initiatives as well as programs for regulatory compliance. (The term governance used for this market is broader than the common use of the word governance for financial control.) Programs consist of related, interdependent projects required to meet a targeted goal (such as Y2K in the late 1990s or ERP implementations). The ITG software market measures the technologies that implement functional capabilities, processes, and organizational strategies to enable effective collaboration, visibility, and IT portfolio management across groups, including executives, business users, IT developers, and operational staff. ITG technologies are increasingly being incorporated into application life-cycle management (ALM) tool suites. 78 #205437 ©2007 IDC The ITG competitive market draws from the project and portfolio management (PPM) functional market, the automated software quality (ASQ) and software configuration management (SCM) functional markets, and the system and network management software secondary market. Examples of products in this market include CA's Clarity, HP's ITG, IBM's Rational Portfolio Manager, and Compuware's Changepoint. Master Data Management Master data management (MDM) is the set of processes to create and maintain a single view of business entities, such as customers, products, locations, and accounts, that must be shared across applications. These processes are coordinated through a physical or logical hub via policies and procedures for access, update, and overall management of this central resource and its coordination with other participating systems across the enterprise or, in some cases, across enterprises. The master data management competitive software market consists of the sum of competitive markets for MDM infrastructure software and applied MDM: ! MDM infrastructure software supports the processes for establishing and maintaining a policy hub for master data. In the database world, these products may be called enterprise MDM or enterprise dimension managers, reflecting the intent to tackle this issue beyond a single type of master data and beyond a single department, business unit, or application. This category also includes generic data integration tools (such as ETL or data quality) when they are primarily used for maintaining a single view. The content world is also intent on unifying its repositories of information, but refers to these software products as "categorizers," controlled vocabularies, tools for taxonomy building, or machineaided indexing. This software is mapped to the data integration market, but does not include software for data warehousing, business intelligence, or reporting. MDM infrastructure software addresses either or both data and content. Mapped to a subset of IDC's search and discovery functional market, including the set of software applications, tools, and services aimed specifically at creating central knowledge bases (such as categorization tools, taxonomy builders, clustering engines, or entity, concept, and relationship extractors) and software applications, tools, and services for mapping new or existing unstructured information to the content master data or to related structured data. ! Applied MDM software includes the following categories of purpose-built applications for managing specific classes of master data: # Product. Software specifically designed to coordinate, manage, and share product data throughout the product life cycle (The product segment is mapped to product information management [see the IDC software functional market above], excluding ideas management and component information systems.) Customer. Software specifically designed to address the definition and maintenance of a single view of the customer across multiple systems, otherwise known as customer data integration (The customer segment is mapped to customer data integration, a segment of marketing [see the IDC # ©2007 IDC #205437 79 functional market above] including customer data hubs, customer data quality, and related software, but excluding marketing automation and marketing analytic application software.) # Location. Software specifically designed to address the definition and maintenance of base/reference geospatial data for entities that need to be shared across multiple systems (These include objects such as streets, buildings, rivers, and legal/administrative constructs such as state boundaries, oil fields, or stores. The location segment is mapped to spatial information management software [see the IDC functional market above]. Spatial information software that falls within the MDM space includes a portion of standard geographic information system [GIS] and all geocoding. The portion of GIS used for other purposes would not be included, such as software to capture, visualize, or analyze spatial transactions [i.e., events]. Also excluded is the value of the geospatial master data [supplied by vendors such as Navtech and TeleAtlas], a market significantly larger than the market for geospatial MDM software.) Financial accounts. Specialized software designed to enable a consolidation process, developing and maintaining a single, unified chart of accounts mapped to multiple existing financial systems for integrated reporting and performance management (The financial accounts segment is mapped to the financial consolidation application segment of financial performance and strategy management [an IDC functional market]). # The following are representative vendors that offer products to enable MDM: ! Business Objects (FirstLogic) ! Hyperion (Hyperion MDM) ! IBM (IBM WebSphere product center, customer center, ) ! Kalido (Kalido 8M) ! Oracle (Customer Data Hub; Siebel Universal Customer Master) ! SAP (SAP NetWeaver MDM) ! SAS (DataFlux) ! Siperion (Siperion Reference Manager, Siperion Hyb) ! Stratature (Stratature Enterprise Dimension Manager) ! TIBCO (Collaborative Information Manager) 80 #205437 ©2007 IDC Service Oriented Architecture and Web Services Service Oriented Architecture Service oriented architecture (SOA) is a technology and application architecture that promotes the utilization of autonomous application and system "services" abstracted from one another, independent of implementation and state, and designed to be dynamically invoked. Each service provides a function that is self-contained and defined via a published interface made accessible to other services or systems elements, most commonly over a network. Ideally, an SOA should be modular, with separate layers of functional code, process, data, and presentation interfaces. The SOA-driven software market sizing is derived from both a demand- and supplyside perspective, and includes software built with, and intended for consumption in, an SOA construct. Web Services Architecture As a particular instantiation of SOA, Web Services Architecture (WSA) is a distributed computing model using a standardized approach to dynamic component connectivity and interoperability using specific open connectivity standards, including IP and select XML-based standards such as Simple Object Access Protocol (SOAP) and Web Services Description Language (WSDL). Other standards are evolving to meet operational and business requirements and as they mature will become part of the WSA. Web Services Software SM Web services software consists of application development and deployment tools, infrastructure software, and packaged applications that conform to WSA standards. The Web services software market sizing is derived from a robust market model that combines both demand-side and supply-side factors in the adoption and consumption of Web services technology and services. The software may include those products where the primary purpose is to enable some function of the WSA, specific extensions have been implemented for the purpose of working within WSA, or the software is built according to the principles of WSA. Products in many of the software markets tracked by IDC participate in this competitive market. Market sizings are based on varied proportions of all functional software markets that adhere to the following categories: ! Web services–centric software ! Web services–enabled software used for Web services–based solutions ! Software license revenue associated with hosted Web services solutions For both SOA and Web services competitive markets, finer views into specific software submarkets cross all functional markets tracked within the SRG taxonomy, including applications, development, data, deployment, security, and management technologies. ©2007 IDC #205437 81 Many long-established software vendors offer SOA and Web services solutions, with more expected to do so in the future. For most categories of software, this represents an evolution of capabilities, although it has spawned new emergent categories of software. Specialized technologies have emerged to include SOA deployment platforms, including service-specific messaging and runtime management capabilities, service orchestration, service registry and repository technology, composite application design and deployment, service security, service and XML optimization, and more. The following are some representative vendors that offer SOA or Web services enabled and centric products: ! AboveALL Software ! BEA Systems (Aqualogic) ! CapeClear (ESB Platform) ! Cordys (Cordys Platform) ! Epicor ! IBM (WebSphere, Rational, Tivoli) ! Iway (SOA Middleware, Management Suite) ! IONA (Artix) ! HP (Mercury/Systinet/SOA Mgr) ! Oracle (SOA Suite, Fusion) ! Microsoft (Biztalk) ! MindReef (SoapScope) ! Progress (Sonic) ! Salesforce.com ! SAP (NetWeaver) ! SoftwareAG (CrossVision) ! StrikeIron (Web Services Marketplace) ! Sun (Application Platform Suite) ! TIBCO (ActiveMatrix) ! webMethods (Fabric) 82 #205437 ©2007 IDC Service-Oriented Management Service-oriented management (SOM) is a specific SOA and Web services software competitive market that addresses IT operations policy and enforcement at the point of receiving a service request and independent of the technology or network by which the request will be satisfied. In a Web services environment, this involves the interception of messages and the application of system management rules based on the contents of the message header and payload. This technology may involve the use of proxies or agent technologies. The following are some representative vendors that offer products to enable SOM: ! AmberPoint ! Cisco (AON) ! CA (Unicenter Web Services Distributed Management) ! Forum Systems (Sentry) ! HP (OpenView SOA Manager) ! IBM (Tivoli Composite Application Manager ! Itellix (Wisiba) ! Oracle (formerly Oblix CoreSV and CoreID) ! Progress Software (Actional) ! Service Integrity ! SOA Software ! webMethods (Infravio) Legacy Integration and Analysis Software There are a variety of approaches to application modernization and legacy integration solutions in the marketplace. The spectrum of technologies available, from host emulation to code analyses and transformation, continues to evolve. IDC has identified two main classes of solutions that are used to extend or help transform application and integrate code specifically for mainframe-based solutions: ! Legacy adapter and integration software ! Legacy code analysis and optimization software The following are some representative vendors that offer products to enable Legacy integration or analysis and optimization activities: ! Attachmate (Verastream) ! Attunity ©2007 IDC #205437 83 ! GT Software (Ivory) ! IBM (multiple products, including HATS) ! iWay ! Jacada (HostFuse) ! NetManage (OnWeb) ! OpenConnect Systems (soaSolution) ! Progress DataDirect (Shadow RTE) ! Reactivity ! Seagull (LegaSuite) ! SOA Software (SOLA) ! Software AG (Crossvision Legacy Integrator) ! TIBCO (Mainframe Service Suite) ! webMethods (Mainframe) System Infrastructure Software Competitive Markets IT Asset Management Software IT asset management software is typically used for IT hardware or software inventory and corporate IT asset-value management. Functions include: ! Discovery/inventory. Discovery/inventory is the initial discovery of hardware and software within the environment. This discovery includes hardware and software and can include network assets such as routers and switches, as well as servers, desktop, laptop, handheld, and remote devices. The discovered inventory information is maintained in an actionable database. ! License management. License management monitors and controls the total company seats of software for acquiring and managing the company's software and its allocation. ! Software metering. Software metering is the monitoring and control of software licenses for the purpose of determining specific individuals authorized to have access to software, either from a device standpoint or a person standpoint. ! Planning and support. This includes infrastructure planning and support for other primary value-added functions such as IT help desk. Representative vendors and products include the following: ! Centennial Software (Centennial Discovery) 84 #205437 ©2007 IDC ! HP (OpenView AssetCenter) ! Novell (portions of ZENworks) Mobile Device Management Software Mobile device management software consists of software that performs system infrastructure management of mobile devices such as laptops, handhelds, mobile phones, and other converged mobile devices. It includes the asset management, software distribution, and settings and configuration management software necessary to control these devices. Specific functions in addition to core device management functions such as asset management and software distribution include: ! Support for a queued event architecture that manages the exchange of data and executes commands on clients and servers ! Online optimization through compression, checkpoint restart, and bandwidth throttling to better support slow-speed, unreliable WAN links ! Performance of management functions in the background while the user accesses network-based business applications ! Automated offline completion of inventory scans, antivirus scans, and software installations that reduce connection times ! Targeted backups of specific system, application, and data files that enable IS managers to recover or replace lost, damaged, or misconfigured systems In addition to the disconnected environment, many vendors also provide over-air wireless device management directly to servers, particularly for vendors providing solutions beyond laptops for handhelds, pagers, and other devices. Representative vendors and products include the following: ! Intellisync (Mobile Systems Management) ! Novell (ZENworks Handheld Management) ! Sybase iAnywhere (Afaria) Mobile Middleware and Infrastructure Software Mobile middleware and infrastructure software consists of a software platform that includes server and/or client software that either extends the reach of existing IP or other mission-critical applications (including groupware, messaging, CRM, SFA, ERP, host, or other applications) or offers the ability to develop new applications for mobile users leveraging a variety of wireless devices, including laptops, handhelds, interactive pagers, mobile phones, and other converged mobile devices. Mobile middleware may include the platform, front-end applications, and development tools as sold in a single offering. Mobile middleware and infrastructure software vendors offer such platforms to enterprise customers, wireless operators, device manufacturers, or other channel ©2007 IDC #205437 85 partners. They include pure-play mobile vendors, larger ISV and application providers, and device manufacturers that also provide software solutions. Mobile users, including mobile professionals and mobile field workers, access these enterprise applications through a number of connections, including real-time wireless (through a wireless data network) and wireless LANs/WANs, a synchronization solution, or a combination of both. Mobile middleware and infrastructure software addresses the need to deliver corporate applications specifically to mobile and wireless environments. Representative vendors and products include the following: ! Good Technology (GoodLink and GoodAccess) ! IBM (WebSphere Everyplace Access) ! Intellisync (Intellisync Mobile Suite) ! Nokia (Nokia Business Center) ! Oracle (Application Server Wireless Edition and Oracle Database Lite) ! RIM (BlackBerry Enterprise Server) ! Sybase iAnywhere (M-Business Anywhere and OneBridge) ! Visto (Visto Mobile) Mobile Security Software This competitive market is made up of market data from several functional markets. These include Internet security software, systems management, and mobile middleware. Mobile security software can be defined as software products designed or optimized to provide security specifically for mobile devices, PDAs, and other smart handheld devices. This security function can be in the form of encryption, authentication, authorization, access control, PKI middleware, or firewall protection. A mobile security software solution can incorporate one or more of these approaches. Representative vendors include Nokia, PointSec, Certicom, IBM, Microsoft, Ponte, IBM Tivoli, and NTRU. Software Distribution Software distribution primarily focuses on moving an application or operating environment to a new user location. Functions include packaging, distributing, installing, and updating an application or operating environment. Not included are content management or products such as those for bulk data transfer, mirroring and failover, and distributed file system managers. Representative vendors and products include the following: ! CA (Unicenter Software Delivery) ! HP (OpenView Client Configuration Manager) ! IBM Tivoli (Configuration Manager) 86 #205437 ©2007 IDC ! Microsoft (SMS 2003) ! Symantec (Ghost) FUTURE OUTLOOK The IDC software taxonomy is updated annually to reflect the changing nature of the packaged software marketplace. Also, competitive markets and other views of software markets may be defined, sized, and forecast as required throughout the year. ESSENTIAL GUIDANCE The IDC software taxonomy is used throughout IDC's software research. All software functional market and competitive analysis studies published by IDC are based on this taxonomy. It should be used by readers as a guide to understanding the overall structure of the software marketplace and how IDC organizes its software market studies. LE ARN MORE Related Research ! IDC's Worldwide Services Taxonomy, 2007 (forthcoming) ! IDC's Worldwide Software Pricing and Licensing Taxonomy, 2007 (IDC #205334, January 2007) ! IDC's Worldwide Financial Performance and Strategy Management Analytic Applications Taxonomy, 2007: Reflecting the Evolving Performance Management Landscape (IDC #204766, December 2006) ! IDC's Worldwide Open Source Software Business Models Taxonomy, 2006 (IDC #204547, December 2006) ! IDC's U.S. Vertical Taxonomy, 2006 (IDC #204025, December 2006) ! IDC's Worldwide Network and Service Management Taxonomy, 2006 (IDC #204370, November 2006) ! IDC's Worldwide Software as a Service Taxonomy, 2006 (IDC #34918, February 2006) ! IDC's Software Taxonomy, 2006 (IDC #34863, February 2006) Appendix A: Lexicon The intention of this lexicon section is to define words that are used frequently throughout the IDC software taxonomy but that are not defined within the body of this ©2007 IDC #205437 87 study because they are not markets or submarkets. Questions about the meaning of these words come up frequently because most of these words have multiple meanings in the software market context (e.g., message as in email or instant messaging versus message as in message-oriented middleware). Many even have different additional meaning outside the context of the software market (e.g., client and server as both software artifacts and concepts versus client and server as physical devices). Within the definitions below, words in bold are defined elsewhere in the lexicon; other words in these definitions that anyone has ever indicated to us to be confusing are defined in the relevant market definitions above and are therefore not repeated here. As always, if this does not help, do not hesitate to call or email us. ! Application: An application is code that executes the logical steps necessary to automate a business process, scientific experiment, educational activity, game, personal productivity activity, or other general-purpose function. In theory, the application includes the code to present and/or monitor the machine or user interface, manipulate or compute, and store or present the results. In practice, the term application increasingly refers only to the code that manipulates or computes (called the "logic") because user/machine interface, data storage, printing, and other functions are handled by special-purpose code (servers or "services") that support multiple sets of diverse logic. These other codesets are accounted for in the IDC software taxonomy as portals, database management systems, print servers, and so forth. An application can be packaged and used by from hundreds up to millions of users in exactly the same way, or developed in-house or by a consultant specifically for a single purpose and a single user organization. In the IDC software taxonomy, the term application primarily applies to packaged business applications, software that is "touched" by anyone in an organization or enterprise, in contrast to application development and deployment software (typically only "touched" by a professional developer or highly trained knowledge worker) and infrastructure software (typically only "touched" by a systems administrator or, ideally, never "touched"). ! Architecture: Architecture is a word that has already made one of the leading American English dictionaries to mean (among other things) "the manner in which the components of a computer or computer system are organized and integrated." In the IDC software taxonomy sense, architecture almost always refers to the way that software is organized and integrated by the enterprise using it (e.g., according to the client/server architecture, service oriented architecture, J2EE architecture, and so forth); architectures are not mutually exclusive. ! Asynchronous Java and XML (AJAX): AJAX is a collection of existing technologies that taken together enable the construction of a rich client interface to applications. User interfaces built with AJAX tend to be more intuitive and are able to support a wider variety of data elements and objects when building rich internet applications. ! Best of breed: See point product. 88 #205437 ©2007 IDC ! Business process: The word process in business process means "a series of actions or operations conducing to an end" (although that meaning of process is not even the primary meaning of the word in an English dictionary). Business process is therefore a series of "business" actions or operations conducing to an end. A key concept in the IDC software taxonomy sense of the term is that a business process is made up of multiple steps (and, in turn, multiple business processes can be thought of as "business process sets"). Also, in the IDC software taxonomy there are other types of processes, such as manufacturing processes, IT life-cycle processes, and so forth. ! Client: Client has various meanings throughout IDC research. In the IDC software taxonomy sense, client most commonly refers to a module of packaged or embedded software code, almost always including the user interface but also often including some logic that runs on a desktop or laptop PC or mobile device. Also, from a computer science sense, client means the requesting side of a client/server architectural relationship irrespective of whether the requestor is a user, a device, another server, and so on and irrespective of where it physically resides. ! Collaboration/collaborative: In the IDC software taxonomy sense, collaboration/collaborative is the sharing (communication, coordination, and so on) of information and processes among humans, as in "Collaborative applications enable groups of users to work together by sharing information and processes." Collaboration includes both asynchronous (email, unified messaging, calendaring, team workspace) and real-time (instant messaging, Web conferencing) technologies and processes. ! Components: Components are reusable sets of code, no matter how coarse, but are not intended to stand alone. Components are like modules, but modules often stand alone. In the IDC software taxonomy, a framework dependency, no matter how minimal, is assumed. ! Composite: Composite software is a type of software, primarily applications, that is either packaged or in-house-developed from services or components in multiple tiers with open interfaces and that interoperates (may or may not be based on events). The term prebuilt is often used to modify components in this context to mean that the component is in existence before a "composition process" begins. Composite applications can operate in any kind of componentbased framework, like Java Beans or ActiveX/DCOM. (Note that composite applications are a type of — or subset of — component framework–based applications in that components can be used to build applications other than composite applications but composite applications always contain components.) The term open modifying interfaces is meant to avoid the issue of whether the API is proprietary or nonproprietary, or — if nonproprietary — of whether it is a de jure or de facto standard. (If the components' suppliers publish the interface definitions so that others can "write to them," even if others have to pay a fee or royalty, they are "open." Furthermore: ©2007 IDC #205437 89 # Composite applications can be hierarchical, which means one composite application can be embedded in another composite application (but they do not have to be architected in that way). Composite applications can be made up of several tasks that could be distributed among several logically separate processes located on several physically separate machine resources (but they do not have to be deployed in that way). Packaged composite applications are developed by and available from ISVs, while composite applications can be created by internal or external developers or users for specific combinations of business process in advance or on the fly. # # Any type of data source, structured or unstructured, is supported. Note: The IDC software taxonomy definition of composite does not imply Web services (or any other specific technology) as a requirement, portals (or any specific number or type of "tiers") as a requirement, or the Web Services Architecture (WSA) or any other architecture as a requirement. ! Data: From the mathematical use of the Latin word (data, plural of datum, meaning "given") data is used to describe a set of values assigned to variables in an algebraic equation in order to perform a calculation. In computer terms, data refers to a set of one or more values provided to a computer program in order to carry out some activity. This word, although plural in form, is often used in the singular to refer to a specific set of data. Typically, the word is not used in its singular form; rather, when one refers to a single value, the preferred term is "data point." Data is normally classified in three categories: structured, unstructured, and semistructured: # Structured data is managed and presented to the computer program in a format that has been anticipated by the computer program code, where such a format represents as an ordered set of values of specific types. Data types typically include binary or decimal integer, fixed point or floating point decimal number, logical (Boolean) value or pattern, and character string. Unstructured data is managed and presented to the computer program without a predetermined format, usually as an expanse of settings of variable length, leaving the computer program to progress through that expanse and interpret it. Such data does have a type, however. Unstructured data types typically include text, image, graphic, video, audio, and so on. It should be noted that although unstructured data has no fixed physical format, it generally has a structure that is determined by its content; that structure is discovered by the computer program. Semistructured data is unstructured data that also incorporates structured data, for instance, in an record prefix or index. Such structured data may be # # 90 #205437 ©2007 IDC used to facilitate searching or cataloging the data, or for performing other bulk processing functions. ! Database: A database is a collection of persistent (that is, stored) structured data used by a collection of computer programs, typically an application, and usually shared by multiple programs or components; it may also be acted upon by users through query tools. The database may consist in a number of files having specific record types, the formats of which are incorporated into the program code that uses the data, or it may be stored and controlled by a database management system, which acts as an intermediary between the database and the computer code and users. ! Database management system (DBMS): A DBMS is a collection of one or more computer programs that manages a database. Such management activities include the storage and retrieval of the data and enforcement of any data format and integrity rules and may also include facilities that enforce security rules, provide query and reporting capability, and offer interactive access to multiple processes simultaneously. A DBMS may be relational (that is, applying rules derived from relational data theory including the organizing of data into tables consisting in rows and columns with support for foreign key relationships, and basing access on SQL), but not all DBMSs are relational. ! Digital marketplace: The digital marketplace consists of gateways, hubs and nodes that are linked by the Internet. Ad revenue fuels this new marketplace and ties all the players together as they hand it back and forth to each other. ! Digital media: Digital media is rich media, including audio, video, and image files and technologies (nontext files). ! Distributed computing: Distributed computing is literally computing where any one of the system components or resources is remote from other system resource or components. The term dates to the time-sharing systems of the 1960s; however, because almost all computing — with the possible exception of some academic and classified governmental computing activities — has met that definition since approximately 1990, the meaning has morphed in a very loose and imprecise manner to mean a type of computing different from mainframebased (or host) computing and in which the database and application logic are "distributed" even if only logically. The term distributed computing is often used synonymously with client/server. ! Ecosystems: Ecosystems are the patterns of relationships and interdependencies among IT customers and suppliers around specific technology solutions. ! Embedded: Embedded software is incorporated in limited-function devices and unavailable separate from the device; such products could incorporate machinelevel instructions and general-purpose functions to control the operation and use of processor resources. ! Engine: Engine is often used as a synonym for server or service. ©2007 IDC #205437 91 ! Enterprise application integration (EAI): EAI is literally any connection between packaged or in-house-developed enterprise applications. The term morphed during the 1990s to mean a market for packaged software, freestanding from the applications themselves that enabled such connections within an organization. In the IDC software taxonomy sense, EAI refers to a type of software that is also called A2A to distinguish it from B2B software (B2B software connects applications among organizations); since 2001, EAI has been a submarket of integration server software platform (ISSP) and has not been measured separately by IDC. ! Enterprise information integration (EII): EII is literally any connection between in-house or third-party data sources. The sources are presumed to be structured, but that is not required. ! Enterprise architecture: An enterprise architecture captures the strategic vision of an organization with respect to current and future capabilities supported by IT. An enterprise architecture includes and should address the following domains: business architecture, information architecture, application architecture, and system architecture. ! Enterprise service bus (ESB): An ESB is literally the message-orientedmiddleware (MOM) queue structure that supports the interoperation of services. The IT community has adopted the term more broadly to refer to not only the queue structure but many of the associated services artifacts or modules that attach to the queue, and even the architecture itself; in fact in some cases, ironically, IT suppliers even use the term ESB when no "enterprise services" are involved. In the IDC software taxonomy, the term ESB in its narrowest definition is part of the MOM market and in its broadest definition the functionality is scattered across the software market spectrum. ! Environment: See platform. ! Event: In the IDC software taxonomy, the term event is used in multiple ways (and not just in the complex event processing sense that has evolved in IT marketing since approximately 2002). In the BPA deployment software market definition, we are referring to the fact that a business process is kicked off by an event in the dictionary sense of the word, as opposed to an exception-based or straight-through process kicked off by data. However, the term event should not be considered exclusively related to business processes; an event can be a consumer interaction or even a machine-to-machine nonbusiness interaction. Event in the BPA deployment software market definition is best understood as used in the systems management software and telecommunications senses of the word (the latter appears to be the original source of the term). Event processing within applications may be accomplished using connectors, also called adapters, which allow the events to be filtered or initiated dependent on the fulfillment of a condition, or the event may be a human interaction. 92 #205437 ©2007 IDC In the definition of event automation in the taxonomy section, it is by definition something unscheduled. In the term event-driven architecture (EDA), event means a change to the state of the system according to the structure by which that structure is managed. If that system is message based, then it could mean the reception of a message. If the system is data based, it could mean a change to a data value for which an event type has been defined. An event may result in the emission of a message to be handled by some component or service (an event handler), or it may result in direct action by the detecting agent (which could be a DBMS, or a stored procedure, or a message systems "listener"). Complex event processing (CEP) is subset of event-driven architecture that monitors real-time event flows in search of complex, multipart activities. ! Framework: The term framework tends to be loosely used in the IT industry. To some in the development world, frameworks are code bases that provide a unified structure with underlying support functionality and set guidelines; in this usage, application development tools are built on top of application frameworks that follow architectures such as Microsoft .NET and Java 2 Enterprise Edition (J2EE). In the deployment world, a framework is a type of integration server software platform (ISSP) as defined in the software taxonomy (see above) where the framework provides intelligent routing, message filtering, and transformation (i.e., it is sort of an ESB on steroids) tied to either events or data. (But in the case of a composite application framework, it is an event by the definition of composite application.) A framework does not provide the execution environment for the components themselves but simply the abstraction of that environment. (The execution environment for the components is in the software on which the framework rests, which could be another type of application deployment software such as an application server, a packaged application, or underlying infrastructure software such as an operating system.) ! Feature: A feature is a characteristic of software typically acting as a market differentiator (as opposed to a function). ! Information worker: Information workers are workers whose primary job is to create, manage, search for, interact with, or use information. IDC believes that information workers fill in the gaps in end-to-end business processes such as order to cash or procure to pay. ! Integration: Integration is another one of those all-encompassing terms, like distributed computing, that are so broad and so pervasive as to no longer be useful in defining or modeling IT market sizes or trends. In the IDC software taxonomy, almost all software applications, tools, and infrastructure include integration of some type among their data, logic, and interaction code and among the various physical layers of a computing system/network as represented in the ISO 901/OSI seven-layer model. The term is also widely used relative to other IT technologies such as systems, storage, and telecommunications. ©2007 IDC #205437 93 ! Legacy application architectures: Legacy application architectures are older systems, many of which were developed for mainframe and midrange computers, that persist in many enterprises. Organizations may seek to extend their value, integrate them with newer Web-based systems, or opt to displace them and adopt new solutions. ! Life cycle: In the IDC software taxonomy sense, life cycle refers primarily to the chronology of an application's development and deployment. Known as the IT life cycle, it can be managed in much the same way as business process sets (and, in fact, often the same technology — modelers, content tools, rules engines, and so on — are used). However, as with integration, the term is also used elsewhere in IDC research extensively. ! Long tail: Long tail is the part of a market that is not addressed by major sales or major media — small sales, but a lot of them. ! Master data: IDC refers to two general classes of data used by applications: reference data and transactional data. Transactional data is data created and managed during business transactions and is related to specific business processes. Transactional data is typically created at the beginning of a business process and destroyed or archived at its end. Examples of transaction data include orders, trouble tickets, inventory items (created when something enters the inventory, removed when it is shipped out), and so on. Reference data is data that describes facts about the business that are referenced during the course of business, but have no specific process-determined point of termination. Examples include customers, products, employees, and so on. Such things are removed and archived, but occasionally, and not as a matter of course. Master data is reference data that has been identified as data representing key facts of the enterprise. Master data must be unambiguous. It must be available to all who are authorized to see it; it must reliably reflect the true facts of the enterprise; and its access, including insertion, alteration, reading, and removal, must be controlled and recorded for auditing purposes. Reference data is often managed as master data for legal compliance or general corporate governance reasons. ! Master data management (MDM): MDM is the set of processes to create and maintain a single view of business entities that need to be shared across applications, such as customers, products, locations, or accounts. This includes the policies and procedures for access, update, and overall management of this data (usually through a physical or logical hub) and its coordination with other participating applications across the enterprise or, in some cases, across enterprises. The management of master data may include its compilation from various application databases, control of its access, synchronization of master data with data in various application databases, auditing of access to master data, and archiving of master data regarding things that are no longer an active part of the business. Master data management software includes a subset of data integration software, data security and auditing software, end-user query and reporting software, and some products that are specific to the task of master data management. 94 #205437 ©2007 IDC ! Message/messaging: This primarily refers to any form of software or servicesbased asynchronous or real-time connectivity. By custom, in the IDC software taxonomy, message (as in message oriented) typically refers to connectivity among systems or among components or resources within systems, while messaging (as in email or instant messaging) refers to connectivity between individuals or groups. Technically both work the same way in that they post and or publish and the recipient or subscriber receives whenever convenient (while whatever else is going on proceeds, not dependent upon a response, or at least the timeliness of the response). ! Metadata: This term is usually used to refer to data about data. More generally, metadata is data about any aspect of a computer system, including hardware and software that is used to define, manage, and control computer hardware and software. Metadata about data includes data that tells computer programs and database management systems about the location and format of data, data that tells users about the meaning of data, data that is used to insert data definition statements in program code, and so on. Metadata also refers to data that is used by data integration software to merge, or transform, data. Other kinds of metadata include: # Modeling and design metadata, which describes models of data and processes Control metadata, which governs the operation of network and operating systems Catalogs, including user catalogs, system catalogs, and other catalogs that drive system operations and security Mapping and routing metadata, which governs the ways that messaging and intermediary services map, transform, and route service requests and other messages # # # ! Metadata management: Metadata management is the practice of and technologies for managing the information that defines an application or any system infrastructure or computing asset and its intended behavior (includes both traditional and SOA-based registry/repository technologies) ! Middleware: Middleware was formerly defined in IDC's software taxonomy as independent system software, services, and runtime environments that distributed software of all sorts. The term has become so broadly and imprecisely used in the IT industry that it is no longer defined as a market by IDC (see application deployment software in the functional market taxonomy). ! Module/modular: This is a functional subset of packaged software that is typically not sold separately but which typically stands alone technically (also see components). ! Object: An object is a very specific type of component that follows the de facto and de jure standards associated with object-oriented programming and architectures. ©2007 IDC #205437 95 ! On demand: On demand is software built for one-to-many delivery over the Web (it is not deployed in-house), where customers share the same public infrastructure and typically employ a subscription or ad-supported licensing model. (See also Software as a Service.) ! Platform: See framework. ! Point product: A point product is a piece of software designed for a single function or very limited set of functions that is sold separately, as opposed to a suite. ! Portfolio management software: Portfolio management software is solutions that automate and optimize the initiating, planning/scheduling, allocation, monitoring, and measuring of activities and resources required to complete projects. ! Procedure: In common software market usage, procedure refers to the opposite of object. Historically, procedures are the "computational orders" that John von Neumann and others theorized about in the mid-1940s, instructions that could be stored along with data and therefore repeated without having to be hardwired into a special-purpose computing device or recreated each time a function was to be automated in a general-purpose computing device. This theory is considered the principle that spawned the information technology era. ! Process: See business process; there can also be scientific, educational, etc., processes. ! Product: A product is simply what an IT technology supplier sells; it is not limited to just software (e.g., a system or a service offering can be a product) but is something with a predefined definition and price. ! Professional services automation: Professional services automation refers to enterprise solutions targeted around the process of managing people, projects, and the overall business in organizations that deliver professional services. ! Pure-play: This term is often associated with a software supplier that markets a product that competes in only one or two functional markets. ! Real time: Real time is the ability for a solution or system to respond in a predetermined time to scheduled activities or interrupt-driven events. Often involves a "live" session for nearly instantaneous information exchanges (opposite is asynchronous). ! Server: Server has various meanings. In the IDC software taxonomy sense, it is typically a module of or even a disaggregated service within a packaged software product. Servers almost always provide application logic or other services (especially database management) that run apart from a desktop PC. Also, more accurately, server means the serving side of a client/server relationship irrespective of whether the server is desktop PC based, resident on another server, transient, etc. 96 #205437 ©2007 IDC ! Server workload: Other research groups within IDC offer measurements of annual hardware systems sales based on server software workload. There is no explicit relationship between the server workload taxonomy and the software taxonomy, but it is possible to devise a rough mapping by comparing the naming. The major issue in comparing the two is that the server workload measurement includes an estimate of both packaged and in-house or consultant-written (i.e., not packaged) application software, whereas all software categorized by the software taxonomy is packaged. Finally, the software taxonomy includes some types of software (e.g., operating systems) not categorized in the server workload taxonomy. ! Service: Other than solution and integration, there is probably no word in the software taxonomy with more meanings than service. In the software taxonomy sense, service typically refers to a codeset that performs a set of limited tasks, such as checking identity, controlling access, and so forth, that can be used in many computational situations. Often — but not always — the idea of "contract" or service-level agreement is included. Increasingly, "higher order" software such as packaged applications and applications deployment software is being decomposed into services to eliminate redundancy in such tasks as reconciling charts of accounts (in multiple types of accounting software) or synchronizing application server software (e.g., across multiple physical servers). Note that there are certainly many references to service throughout this document where the meaning of the word is more conventional (that is, meaning the opposite of product). Even when this is the case, there is the potential for confusion; for example, maintenance services are included in the definition of software revenue but professional services such as for training or implementation are not. ! Service oriented architecture (SOA): An distributed IP-based computing architecture that leverages autonomous system and application services that are dynamically invoked. ! Software as a service (SaaS): SaaS is the ongoing support of applications whose core value is to alleviate the maintenance, daily technical operation, and support of software. These applications are delivered over the Internet and are managed at a central location versus each customer's site. ! Suite: A suite is the combination of software products, modules, or services to provide a more complete set of software functionality and to eliminate redundant activity. Often, the combination is accomplished in an integrated computer science sense, and just as often the combination is purely on paper in a marketing sense. A suite is the opposite of a best of breed or point product. ! Solution: When not obviously used in its English language sense, solution means a combination of systems, software, and services as defined by IDC in its multiple taxonomies. Given its multiple confusing meanings, it is not used very often in the IDC software taxonomy. ©2007 IDC #205437 97 ! Standard: Standards are de facto or de jure definitions of industry-specific data sources, languages, protocols, application programming interfaces, data structures, and so forth. Primarily, standards support IT software portability, but there are many other uses. The term applies throughout IDC research as well. Note that an architecture can be standardized but does not have to be; also note that IT suppliers are not adverse to calling products or features of their products standard when they are not. ! Tool: A tool is software used by professional developers; in the IDC software market taxonomy sense, tools is the short version for the application development and deployment primary market. In general, almost all types of software have tools built in. ! Transaction: A transaction is a coherent unit of processing that typically has to come to completion before some other processing can continue; the opposite of message. ! User: Typically, a user is a person who interacts with a single specific computing infrastructure on a daily basis, as opposed to a professional developer or systems administrator. ! Virtualization: Virtualization is the process of logically removing physical or other limitations in a given set of technologies (that is, virtual memory is not truly unlimited and free from the restraints of the size of RAM but other storage media are manipulated by the operating software to make overall memory appear unlimited). In the IDC software taxonomy sense, virtualization refers to a six-layer model involving 16 individual types of functional software that as a whole hides the complexity and limitations of lower-order technology (system, network and storage resources, infrastructure software) from users and professional developers. ! Web 2.0: Web 2.0 is the new Internet, which is characterized by communities, long tail, and interactive media. ! Web services: By IDC's definition, Web services are Internet technology–based machine-to-machine services (in the computer science sense of that word) that are based on what IDC calls the Web Services Architecture (WSA). The WSA is a standardized approach to dynamic component connectivity and interoperability that relies on self-describing components that interoperate at runtime and open connectivity standards including Internet Protocol (IP), Simple Object Access Protocol (SOAP), and Web Services Description Language (WSDL). Other standards, such as eXtensible Markup Language (XML), are evolving to meet operational and business process semantic requirements and, as they mature, will become part of the WSA. ! Workflow: Although there can be other types of workflows in addition to business process workflows, theorists use the term workflow to describe all types of business process flows; in common usage it has come to refer primarily to human-centric rather than straight-through flows. 98 #205437 ©2007 IDC Appendix B: IDC's Software Market Forecast and Analysis Methodology The purpose of this appendix is to provide an overview of the methodology employed by IDC's software analysts for collecting, analyzing, and reporting revenue data for the categories defined by the software taxonomy. IDC's industry analysts have been measuring and forecasting IT markets for more than 40 years. IDC's software industry analysts have been delivering analysis and prognostications for packaged software markets for more than 25 years. The market forecast and analysis methodology incorporates information from five different but interrelated sources, as follows: ! Reported and observed trends and financial activity. This includes reported revenue data for public companies. ! IDC's Software Census interviews. IDC interviews all significant market participants to determine product revenue, revenue demographics, pricing, and other relevant information. ! Product briefings, press releases, and other publicly available information. IDC's software analysts around the world meet with hundreds of software vendors each year. These briefings provide an opportunity to review current and future business and product strategies, revenue, shipments, customer bases, target markets, and other key product and competitive information. ! Vendor financial statements and related filings. Although many software vendors are privately held and choose to limit financial disclosures, information from publicly held companies provides a significant benchmark for assessing informal market estimates from private companies. IDC also builds detailed information related to private companies through in-depth analyst relationships and maintains an extensive library of financial and corporate information focused on the IT industry. We further maintain detailed revenue by product area model on more than 1,000 worldwide vendors. ! IDC demand-side research. This includes thousands of interviews with business users of software solutions annually and provides a powerful fifth perspective for assessing competitive performance and market dynamics. IDC's user strategy databases offer a compelling and consistent time-series view of industry trends and developments. Direct conversations with technology buyers provide an invaluable complement to the broader survey-based results. Ultimately, the data presented in IDC's studies and Software Market Forecaster (SMF) pivot tables represents our best estimates based on the above data sources as well as reported and observed activity by vendors and further modeling of data that we believe to be true to fill in any information gaps. ©2007 IDC #205437 99 Company Revenue Modeling ! Public company revenue models tie to SEC-reported revenue or other legal public agencies outside the United States (at least at the total company level and often at more granular levels when available). ! Geographic region and operating environment distribution percentages are generally obtained from companies at the primary market level and prorated to individual markets. However, for large companies that have wide variations in geographic and/or operating environment allocations across different markets, these allocations are maintained at the secondary or functional market level whenever that level of detail can be obtained. Revenue Recognition Software companies and other companies with software revenue vary in the manner in which they recognize revenue from packaged software sales for reporting purposes, although U.S. public companies are constrained by U.S. accounting practice standards. This is important because IDC's revenue information for companies and for software markets is based on recognized revenue as defined in U.S. practice rather than on bookings, which is another measure. (In the case of private companies, IDC assumes they are using standards that are similar to public companies for their internal accounting.) For accounting purposes, what matters is revenue, and this is what IDC uses as its metric for the software industry. One reason is that there is a reasonably consistent set of methodologies for determining what is revenue and what is not. These methodologies hinge on the issue of how bookings become "recognized" as revenue. In general, IDC bases its reporting of, and forecasts for, the software market based on revenue as defined by GAAP (to the extent that this is possible for non-U.S. companies). The first requirement for the recognition of revenue for accounting purposes is whether the actual payment has been received (either directly from the customer or from a distributor or other agent) or whether a contract has been received that obligates the buyer to future payment. Once the booking has been deemed to be recognizable, the issue becomes one of how much may be recognized immediately and how much must or may be deferred and recognized in future periods. There are three basic methods of recognizing revenue: immediate recognition, deferred recognition, and subscription revenue. Immediate Recognition Under this method, a company immediately recognizes all the value of a customer's purchase of software. In this case, a booking is turned almost immediately into recognized revenue. If a limited-term license is booked and there are no other contingencies or future deliverables (such as technical support) under the terms, then the total booking may also be recognized immediately. 100 #205437 ©2007 IDC Deferred Recognition In practice, it is usual to negotiate mainframe and other large enterprise contracts as limited-term contracts with software "maintenance" and support provisions. Maintenance in the software sense means the right to "bug fixes," minor updates, and functionality improvements (what are called "point releases"), among other things. Here, the software company typically records the total value of the booking of a new or renewed long-term software right-to-use contract by amortizing the part associated with software maintenance over the life of the contract and then recognizing the remainder as immediate revenue. A company may choose to report revenue recognized in the period as a total or may choose to break it out as license revenue versus maintenance revenue. Alternatively, a company may choose to report maintenance revenue together with revenue from other services, such as consulting services and implementation services, as one services figure. IDC attempts to determine in its data collection process the portion for license and for software maintenance. Subscription Revenue An alternative method of licensing software is via a subscription. In this case, the customer agrees to pay on a month-by-month basis (or some other period plan). Because the cancellation clauses of such contracts typically have a fairly small advance-notice requirement (usually between 30 and 90 days), there is no assurance of future revenue; therefore, revenue may be recognized only as it is billed under the terms of the contract. In all instances, IDC's software research reports revenue as it is recognized regardless of the specific method a company uses for revenue recognition. Mergers and Acquisitions: "Backstreaming" To provide a true depiction of market (as opposed to individual vendor) changes over time, we "backstream" revenue when a company is acquired. That is, historical reports show revenue for the combined companies for previous years — independent of when the acquisition actually occurred. The specific rules for backstreaming are as follows: ! Revenue is backstreamed only when an entire company is acquired, not just a product line(s). ! Backstreaming occurs in the first full calendar year following the completion of a merger or acquisition. ! Backstreaming is performed for three years of history. Calendar Versus Fiscal Years All IDC software vendor revenue data is reported for calendar years regardless of the reporting cycles or fiscal years of specific vendors. ©2007 IDC #205437 101 Treatment of Exchange Rates IDC's software worldwide market sizing, vendor shares, and forecasts are published in U.S. dollars. For historical data, worldwide revenue models are based on information from company headquarters: ! For those companies that report in U.S. dollars (the majority of those in IDC's SMF database), we do not attempt to determine the currency conversion methodologies utilized internally by the vendor; we just use the reported revenue in U.S. dollars. ! For companies that report in other currencies, we use the average annual exchange rate to calculate revenue in terms of U.S. dollars. ! As a general rule, we do not restate previous years' revenue to account for exchange rate fluctuations (i.e., prior year revenue is "as reported" for that year). In some instances, regional or country-level studies do restate previous-year market size data (but not vendor shares) in market forecast tables for growth rate comparison purposes. Annual forecasts are created using a constant exchange rate from the prior historical year (e.g., 2007–2011 forecasts use the average 2006 exchange rates). This approach provides a consistent picture of real growth most nearly aligned to growth in local currencies. For a more thorough discussion of the impact of exchange rates on IDC revenue models and forecasts. Allocating Revenue to Geographic Regions IDC attempts to allocate revenue to the region where the software is deployed/used, not, for example, where a contract is signed. However, we are highly dependent on company headquarters' reported (or supplied) regional revenue recognition data. IDC regional analyst guidance is factored into revenue allocation models to provide additional detail as available. Allocating Revenue to Operating Environments The preferred method is to allocate revenue to operating environments based on where the license revenue is derived (for platform-specific licenses). An alternative method is to allocate revenue based on where the product is run (i.e., based on the percentage of executables on various platforms). Historical Data Reporting ! A maximum of three years of historical revenue data is reported (including backstreaming). Additional historical data may be available on request, but backstreaming of vendor revenue and taxonomy changes makes time-series comparisons difficult and may require custom data compilation and analysis by IDC. ! The "best" data for a given year is found in the study/SMF pivot table with the latest publication date including the year in question. 102 #205437 ©2007 IDC ! Taxonomy changes are backstreamed (three years); historical years in current reports are stated in terms of the current taxonomy. ! From time to time, we revise historical (prior years) revenue numbers for a company. This may occur because: # # A company restates its revenue or revenue allocation We obtain better information about a company, often from input from IDC's regional analysts Determination of "Other" IDC's SMF database contains revenue data for more than 1,000 vendors. Although we believe we have included nearly all of the largest vendors, there are certainly a significant number of other software suppliers about which we do not have information. IDC estimates the aggregate revenue for these "other" vendors for each functional market to provide a complete revenue picture of the overall packaged software marketplace: ! "Other" represents IDC's estimate of the difference between the explicitly identified vendors' revenue and the total revenue for the market. ! "Other" is largely composed of relatively small vendors, but there is no guarantee that IDC has tracked all companies larger than the smallest shown in a study or pivot table. ! The size of "other" (in terms of percentage of the total market revenue) varies significantly by market but is generally larger for small, emerging markets than it is for more mature markets. Figure 4 illustrates the process for estimating the size of "other." The yellow (or light) rectangles represent the number of known vendors by revenue range in the market. The heavy line denotes the analyst's conceptualization of the "market profile." This is often, but not always, an exponential curve (i.e., there are an increasingly smaller number of vendors as the revenue per vendor increases). The blue (or dark) rectangles are the difference between the known vendors and the profile curve and represent the estimated number of unknown (or "other") vendors by revenue range. The estimated aggregate size of "other" for a market is then calculated by multiplying the number of estimated unknown vendors by the midpoint of the revenue size range. ©2007 IDC #205437 103 FIGURE 4 "Other" Company Estimation Model 5 (Number of companies) 4 3 2 1 0 <$1.0M $1.0– 9.9M $10.0– 19.9M $20.0– 99.9M $100.0– 250.0M >$250.0M Other companies Known companies Source: IDC, 2007 "When a Product Becomes a Feature" A common phenomenon in the software industry is for new technologies to first appear on the market as standalone, unique products. Over time, these products often begin to become functions/features of more inclusive products or suites of products. If and when the market for the standalone products disappears — or at least becomes insignificantly small — IDC would no longer track the market separately. An example would be GUI builders, which are now incorporated into almost all modern development environments and tools. However, an issue of how to track revenue arises during a transition phase when a specific function/feature is marketed both as a standalone product by some vendors and at the same time as an inseparable feature of a larger product or suite by the same or other vendors. In this case, there is no defined generic IDC policy; market dynamics and customer interest dictate how IDC models the market(s). Therefore, the definitions for, and published studies on, specific functional and competitive markets denote how the issue of "when a product becomes a feature" is addressed. Forecast Methodology ! Software market forecasting begins with the formulation of global and regional macroeconomic assumptions that are then analyzed to determine how they apply to specific market segments. In addition, assumptions about specific market-level drivers and inhibitors are developed. 104 #205437 ©2007 IDC ! All company revenue models and market forecasts are generated and maintained in a central database. The "forecast base" is the vendor historical revenue models by market, geographical region, and operating environment. ! Annual growth rates are determined for each market by geographic region (bottom up) by IDC's regional analysts. Regional forecasts may be at the primary, secondary, or functional market level depending on granularity of research in a particular region. Also, regional analysts factor country-level inputs into the regional forecasts where available. ! IDC's worldwide analysts compile the regional data and are responsible for the overall forecast. ! Operating environment forecasts are performed on a worldwide basis and are a distribution of revenue (i.e., total market forecasts are not changed by operating environment forecasts). ! Annual forecasts are reviewed and updated as required throughout the year. Updated forecasts for functional markets are published quarterly via the Software Market Forecaster pivot tables. Competitive Market Maps Important note: Care must be taken to avoid confusing the Competitive Market Map tool described in this section with competitive markets described elsewhere in the taxonomy. The Competitive Market Map is an analysis tool that is used for competitive analysis of functional markets. The Competitive Market Map is an IDC tool for evaluating the competitive position of software vendors in an increasingly complex market. The goal of the Competitive Market Map is to present a quantitative software vendor comparison tool based on IDC's rigorous software taxonomy and the depth and breath of software market data collected and analyzed by IDC. The Competitive Market Map is a tool that permits quantitative competitive analysis based on four variables: vendor revenue, momentum, reliance, and diversity. The metrics used are defined as follows. ! Vendor revenue. The size of the bubble is determined by the size of the vendor's revenue in the selected market(s) relative to all the other vendors included in the selection for the selected year. All bubbles are normalized in a particular graph. ! Momentum. On the y-axis, momentum is calculated as the product of the vendor's growth rate and the vendor's annual revenue in the selected market in the selected year relative to the previous year. Momentum = (growth rate from year 1 to year 2) x (revenue in year 2) ©2007 IDC #205437 105 ! Reliance. This is the ratio of a vendor's revenue in the selected market to that vendor's total revenue in the domain in the selected year. The color of the bubble shows the range of the ratio with: # # # # White: 0% < reliance <= 25% Yellow: 25% < reliance <= 50% Orange: 50% < reliance <= 75% Red: 75% < reliance <=100% ! Diversity. Diversity (on the x-axis) is a measure of the breadth and depth of product offerings within a single market dimension. Diversity is weighted by the importance of each individual market segment among all segments along the selected dimension. Given a market dimension: Diversityk = Where: # # Share(k,j) is the share of vendor k in market segment j Wj is the share of market segment j among all segments along the selected dimension Σ market segments j Wj * (1 - (1/10 share(k,j) ) ), for all vendors, k Thus, a company with a given share in all segments will have a greater diversity than a vendor with the same share in fewer segments. A company with a minimal share in all market segments along a dimension will have less diversity than a vendor with greater shares in all the segments. Also, vendors with a given share in a large market segment will have a larger diversity that a vendor with the same share in a smaller market segment. Diversity is thus proportional to: # # # The number of market segments in which a vendor participates The vendor's share in each of the segment The relative size of each of the segments in which the vendor participates Figure 5 is an example of a Competitive Market Map. 106 #205437 ©2007 IDC FIGURE 5 Sample Competitive Market Map <25% 7 6 5 4 <50% <75% <100% Reliance <-Momentum-> 3 2 1 0 0 -1 -2 5 10 15 20 25 30 35 <-Diversity-> Source: IDC, 2007 Copyright Notice This IDC research document was published as part of an IDC continuous intelligence service, providing written research, analyst interactions, telebriefings, and conferences. Visit www.idc.com to learn more about IDC subscription and consulting services. To view a list of IDC offices worldwide, visit www.idc.com/offices. Please contact the IDC Hotline at 800.343.4952, ext. 7988 (or +1.508.988.7988) or [email protected] for information on applying the price of this document toward the purchase of an IDC service or for information on additional copies or Web rights. Copyright 2007 IDC. Reproduction is forbidden unless authorized. All rights reserved. Published Under Services: Software Overview ©2007 IDC #205437 107