How high is up? How wide is very? Nonsense questions? No, not if you’re an inquisitive 5-year-old – or the person who has to decide what your company’s future technology platform and applications will be.
By now, most people in the business world and nearly everyone with high-level responsibilities for their companies’ technology have heard of Gartner’s jaw-dropping survey results show that 70 percent of corporate Chief Information Officers expect to change the technology services and vendors their companies use over the next two to three years. That astounding number is both reflective and predictive of the tectonic shift in business technology that is already well underway yet still very much in its infancy.
What most haven’t yet realized is just how big that shift is going to be – in dollar terms. Mike Brown Jr., general partner at New York-based venture capital firm Bowery Capital, recently predicted publicly that $357 billion in annual corporate spending on technology services will shift over the next decade as businesses move their technology accounts from one vendor or set of vendors to others. If that turns out to be anything close to accurate, that shift will be one of the biggest market share and revenue share shifts in the history of the world.
How high is up, indeed.
What Does the Transition Mean to SMBs
So what does this enormous amount of technological fruit basket turnover mean for you as the owner or manager of a small or midsize business? Don’t make the mistake of thinking it will all blow right over your head. That’s because the new approaches, platforms, and technologies that people like Gartner, Bowery Capital, and others who are watching the transformation closely pretty much all stem from the approach to computing that small and midsize businesses have been pioneering now for a decade.
Big, conventional, multi-faceted and expensive legacy software and technology platforms are being undercut by newer products and services.
But it’s not only because contemporary technologies and services are profoundly cheaper than the conventional offerings from big name companies like Oracle and SAP. Just as important, the host of young companies offering an almost uncountable number of cloud and hybrid-cloud approaches to business computing, are demonstrating every day that their approaches give companies – of all sizes – degrees of flexibility, agility and innovative creativity previously unimagined.
So the still young shift from big legacy computing platforms and software to cloud-based software, platforms and infrastructure is being driven by both price and innovation.
Where the Business Application Market is Headed
For now, the young guns are focused on growing their market and revenue shares more than they are on driving maximum revenues. How effective that approach has been can be deduced from Oracle’s sagging performance over the last three years. Six times in the last 12 quarters the respected giant has reported lower-than-expected revenues, at least based on analysts’ published expectations. And three times in the last 12 quarters that underperformance has extended to Oracles’ reported earnings. And it has Wall Street, tech investors and, one would presume, Oracle’s own managers and board concerned. Its traditional rivals are facing similar challenges as well.
Peter Goldmacher, tech analyst at Cowen & Co., pointed directly to the big main problem underlying the conventional enterprise software companies’ predicament in a recent research note. The quality and versatility of companies pushing new, mostly cloud-based approaches is bringing their product and service offerings to technological parity, he said, but “we believe technology cost is the real issues as … [Oracle and other legacy providers] cannot compete on price without a major … reset.”
Translation: Big guys like Oracle will be extremely hard-put to change the way they do business and compete against the new crop of companies offering more agile, more creative computing approaches at significantly lower costs.
And the rush to cash in on new data capabilities – generally referred to as Big Data – serves only amplify the trend. Gartner has declared that “Digital business in an unstoppable and irresistible catalyst for change – change that will affect the fundamental foundations and baseline assumptions of every business.
What’s a CIO to Do?
That means every CIO of every big company, and every owner or manager of small and midsize businesses who is responsible for the same kind of big decisions for such companies as CIOs are for big companies are wise to thoroughly rethink – with as much forward-looking vision as possible – any remaining links they have to legacy-type technologies.
But small and midsize business leaders typically lack the deep understanding of technology that comes from years of being deeply enmeshed in the world of technology. They do, however, have the advantage of not being so wedded to old approaches that they can see the value of new approaches and their ability to redefine work processes, individual companies and even entire industries.
All they need, in many cases, is a team of expert IT advisors who, like them, have no permanent allegiance to old technologies and old approaches. Such advisors can who can help them evaluate the strengths and weaknesses of competing new technologies in order to transform their businesses rapidly so that they, hopefully, can become more effective and successful competitors.
And that’s definitely not nonsense.