This IDC study identifies the 10 top predictions impacting the software industry in 2008. In the applications market, two overarching trends have emerged: the move to incorporate Web 2.0–like functionality and interaction models into the enterprise and the impact of widespread adoption of SOA standards by software vendors. These two key trends are driving continued change both in the software that is developed and in the buying behavior of enterprise customers. "Consolidation and change continue to impact the overall software market this year," says Michael Fauscette, IDC's vice president of Software Business Solutions. "To ensure healthy growth and remain competitive, vendors and partners must evolve their software and their business models to address customers' needs and find growth opportunities."

In light of these predictions, IDC's Software Business Strategies analysts offer the following essential guidance:

• Customers' buying habits are morphing and moving more toward a "virtual" suite approach to application pairing. In addition, these customers are searching for highly verticalized solutions that solve industry vertical business issues "out of the box." Both of these dynamics are forcing vendors to provide SOA- and business processes–based integrations that span what historically were "core" applications and industry microvertical applications and supporting mixed delivery models that include on-premise, SaaS, and software appliance applications.
• The key to a successful unified communications transformation on the applications level is the ability to access and share data and collaborate effectively across the entire business environment from any access point or device. To get there, suppliers must support an ecosystem approach based on open standards, while end users must move away from proprietary technology as they replace and expand their existing hardware–based solutions.
• Product and market strategies should be aligned around appropriate ecosystems. In the age of SOA, reinventing or maintaining less-than-cutting-edge components does not make sense. Rather, ISVs should consider adopting or integrating mature third-party components (databases, integration middleware, accounting applications, payroll, content management applications, etc.) and focus development on opportunities for competitive differentiation. ISVs can stand out as industry specialists or innovate in terms of new application fields, such as electronic invoicing, advanced spend management, advanced pricing, Web marketing, and talent management. Conversely, the full-stack vendors are in a race to recruit the best ecosystem partners and to build the strongest ecosystem.