During my most recent trip to the US West Coast, I visited a number of technology companies in Silicon Valley and Seattle. The objective of the trip was to get an in-depth update on the latest developments in the IT world ranging from Cloud Computing, Social Networking (for business) and End User Computing.
One of the things that struck during that trip was the obvious divide between 'old' and 'new' technology companies. The difference in approach and objectives were stunningly clear. The old behemoths of the industry are clearly challenged with embracing new technologies quickly while still aiming to make money from the current installed base and their past investments.
A good example of this is the whole concept of cloud computing where newcomers like Amazon AWS have invented new business models to provide maximum flexibility in capacility, utilization and price. Their public cloud is on one side of the spectrum. Older companies like Microsoft, EMC, IBM, HP, CSC and others talk about cloud computing more in terms of private clouds for existing customers (often without offering full flexibility in utlization and thus investment) or 'hybrid cloud'. Their customers' existing services may be able to be move to a cloud environment, but this should come with the flexibility and agility that is required in this area. Current leadtimes of months to set up any kind of environment will be increasingly challenged by customers who think that they can get it quicker elsewhere. Some of the old technology companies offering server virtualization will need to rethink their positioning of the products as well. Their focus should be on how to optimize the offering in the new world rather than trying to sell more of their older services and products.
I'm not arguing here that the new models are without challenges either. Moving your computing to an extreme public cloud environment means that IT departments in companies either will need to acquire technical architecture skills that they have outsourced during the last 10 years, continue to use existing System Integrators to do this for them or use so-called cloud-brokers to take care of both the commercial aspects and the technical architecture and set up. The issue with existing SI's is that they are not set up for this as they are used to operate their own environment and have difficulty moving away from their rather bureaucratic service models. Cloud brokers are found some different areas. AWS cooperates with a number of partners, like Wipro, Tata Consulting Services (TCS) and PWC, who assist customers to establish private cloud based services. An interesting newcomer in the area is Appirio a San Francisco based company focused on providing cloud brokage services. I believe that this is an attractive new area where in other markets, that are slightly behind in the emergence of cloud computing model, entrepreneurs should focus on both the Service Management required to manage IaaS, PaaS or SaaS as well as offering the technical expertise that many manufacturing and service companies have outsourced in the past.
Another interesting area where the old versus new world technology firm battle plays is in Social Networking for business organizations. Microsoft has recently acknowledged that this is a boat they cannot miss and is now focusing on their SharePoint / Lync environment to provide this functionality to existing customers. As this will only be truly available with Windows 8, they might be too late as many organizations are formally or informally embarking on the adoption of Social Networking platforms for business. There is a range of offerings in this space from new companies (Yammer, Jive, Netgator) and older companies (Chatter by Salesforce.com - which interestingly has characteristics of an older technology company in this space - a new to be launced product from Oracle and internal tools from IBM). Based on Service Oriented Architecture, these new platforms are reasonably easy to interface with existing Active Directories or Sharepoint / Documentum type document management tools. Again it will be about the extend to which the old technology companies can adopt the agility and flexibility required to turn this into an attractive value proposition in a very short period of time.
Overall an intriguing battle in a new and quickly developing market. Time will tell who the few winners will be... Enjoy!
Frits de Vroet
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