5 Technologies Costing You Money In 2017

5 Technologies Costing You Money In 2017
Technology in the hands of businessmen

A few technology areas that should yield some nice returns in 2017 and beyond, suggested by Forbes and based on technology trends research we conduct on an ongoing basis – some technology clusters that should yield solid returns over time. But the same research suggests that there are some areas you might want to avoid.

There are at least five clusters your cash might want to avoid:

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  • Big Software
  • Cloud Providers
  • Hardware Manufacturers
  • Infrastructure Consultancies
  • Enterprise Data Base Vendors

Big Software

I’ve discussed this before: big software is dead. As I said, “who in their right mind would undertake a five-year ERP software implementation project? Depending on whose study you read, the ERP failure rate is anywhere between 50% and 75%.” Big software from vendors like SAP, Oracle, Salesforce, Microsoft and IBM may well see their enterprise software business units shrink. This is because of changing business processes, cloud delivery, cost, complexity, governance and the constant need to digitally transform old business rules, processes and models. There’s also the competition: companies can find lots of incredibly inexpensive alternatives from vendors like Zoho and Zendesk, among many others. Many of these companies will grow – as will the incredibly inexpensive, cloud-based systems that scale and integrate right along with them. In order for big software vendors to survive they must radically change their offerings, service models, delivery strategies – and the management of all of the above as they turn their aircraft carriers around. Can they do it? Or should investors look elsewhere for software returns? Elsewhere is the suggestion here.

Cloud Providers

How many cloud providers can there be? Initially, the world was introduced to a handful of what we called “application service providers,” or ASPs. These were the trailblazers. Over time, cloud hosting and delivery from start-ups began to change the industry. Then the largest vendors began offering cloud services until – to close the loop – even the major software vendors became cloud providers. In the beginning, cloud vendors were mainly software-as-a-service (SaaS) providers, but in a relatively short period of time infrastructure (IaaS) joined the repertoire. Now anyone can rent anything from the cloud. The trend is clear: cloud delivery adoption rates have skyrocketed. We’re now at the stage where CIOs just assume that applications, infrastructure and services will be cloud-based. Cloud delivery is commoditizing and the competitive advantages around cloud delivery are shrinking. Cloud vendor prices will therefore decrease as services increase. Partnerships between software vendors and cloud providers will also change as more and more applications and infrastructure services blur into integrated service models. All of this commoditization, integration and blurring will challenge cloud provider growth and profitability. Be careful.

The hardware industry comes in two forms: consumer products and consumer/business components. This is the classic razor versus razor blade business model. The consumer hardware space will continue to be brutally competitive along two vectors: coolness and cost. The battle for coolness – such as the battle between Apple (Macs) and Microsoft (Surfaces) – will be decided by consumers voting with their money and ultimately by how innovative vendors are. The competition here will remain brutal across the consumer and professional markets. Scale will be increasingly defined around cost and coolness, but scale threatens profitability simply because the competition is so brutal. Exceptions, of course, include truly disruptive hardware (with innovative software) like what the iPod did for the music industry. But these disruption events have become few and far between as more and more vendors race to the profitable bottom of new markets, like what happened to the smart watch and larger wearable product markets. The good news is that all of these consumer and business products rely upon computing and communications hardware. Conclusion? Invest in razor blades – if you must invest here at all.

Infrastructure Consultancies

In the not too distant past, many companies relied on “IT services” companies to define, deploy and support their computing and communications infrastructures. These vendors made a fortune running data centers, architecting networks, building data base management platforms, selling servers and even “fixing” broken devices. They sold infrastructure management software as well. But consultancies that believe that infrastructure service is a still a good business model will continue to loose market share to small software vendors, cloud infrastructure providers and consumerized solutions that used to be “centralized” in “enterprises.” Consultancies that fail to morph into cloud/analytics/intelligent device providers will continue to lose market share. Look no further than the old versus yet-to-be “new” IBM. Older consultancies have a much more difficult time morphing than newer ones. Invest accordingly.

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Enterprise Data Base Vendors

Remember when huge data base management systems from IBM, Microsoft and Oracle ruled the digital world? Most of you probably don’t because you’re not that familiar with the 20th century. But, yes, there was a time when the big three owned DBMS. Things are different now. Data is now distributed and unstructured, and while the old/new DBMSs can handled structured and unstructured data analytics, some companies are not as facile with unstructured data analytics, especially real-time unstructured data analytics as some of their younger competitors who relay on open source software like Hadoop. There’s also the location of data, which is becoming increasingly cross-located, shared and even co-owned. Sensor-generated data will trigger new collection, cleansing, storage and processing methods, tools and techniques, which is why some of the larger vendors are snapping up IOT start-ups. As the old/new DBMS vendors try to cope with big data requirements, they will quickly find that enterprise-wide solutions will likely fail. Even more threatening for traditional vendors is the (digital) intelligence that will extend the meaningfulness of “data,” which will become most valuable through inferences made about pieces – not whole databases kept in data centers under lock and key. So invest in data/information/knowledge analytics vendors that see big data completely differently from the old big three.

You get the idea. Watch business technology trends and place your bets. You may win or lose, but the more trends savvy you are, the better.

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