Yes, you read it right – reduced IT spend…
In case you missed it, there were a couple of conflicting reports released by the IT forecasting gurus Gartner and Forrester a few weeks ago.
According to Gartner, “Worldwide IT spending is on pace to total $3.5 trillion in 2015, a 5.5 percent decline from 2014. Analysts attribute the decline to the rising U.S. dollar. In constant-currency terms, the market is projected to grow 2.5 percent. In Gartner’s previous forecast in April, it had forecast IT spending to decline 1.3 percent in U.S. dollars and grow 3.1 percent in constant currency.”
They further add that the Enterprise Software category will see a decline of 1.2% year to year.
Forrester released their report around the same time, but had a differing view: “…spending on software, tech consulting and systems integration services, and tech staff will grow more rapidly in 2015 and 2016 than spending on tech outsourcing, telecom services, and especially computer and communications equipment. This mixture of strong and weak tech sectors, combined with a hot-and-cold US economy, will lead to moderate growth of 5% to 6% increases in tech budgets in 2015 and 2016. For CIOs, these trends will mean much more work with business partners in shaping and guiding the purchases of BT-related software and less scope devoted to the spending on IT where the CIO traditionally had sole or dominant domain…”
One other interesting trend has been the proliferation of Innovation Centers setup by corporations to understand the impact of emerging technologies on their business models. One recent article talks about 4 in 10 global corporations setting these up to “gain exposure to the latest technologies, vs. striving for a deeper understanding of customers’ needs”.
So what does all this mean for Independent Software Vendors (ISVs), who have been supplying indispensable enterprise software for decades to global corporations? How can they keep their status as paid trusted advisers to their clients?
Here are some ideas which our ISV customers are using successfully to stay meaningful for their customers:
- Research your customers: Yes, some of your customers may be clamoring for a cloud-native version of your application, but first, you need to look at how your customers are using the application across the board, and think of offering a migration path based on your most critical customers. You may find some of your customers are perfectly happy with a maintained, supported current version vs. an abrupt change – which in turn can help them with a reduced Total Cost of Ownership (TCO).
- Research your customers’ data needs: Yes, IoT is here to stay and is supposed to be a $1.7 trillion market by 2020. But are your customers planning to add IoT sensors and data collection devices (or similar disruptive technologies) over the next five years? Does your application support the potential influx of this massive amount of data? As you can see from the graphic above, IoT is of interest to most global corporations – not for IT cost reduction, but for increased information about their customers, which factored with advanced analytics can provide better solutions for their customers. This potential bump in top line revenue can be used to offset the costs incurred for the additional IT spend.
- Embrace open source, cautiously: Yes, your application was written over fifteen years ago, and you want to have cloud-native APIs with the latest NoSQL database, but will your customers pay for the additional cost of refactoring your application? Potentially – if positioned right. One of the biggest benefits of refactoring a legacy application is the potential boost in performance. For example, if you create the new version of the application in layers, taking advantage of virtual operating system layer, a distributed data and storage layer, and cloud-native services such as provisioning, your customers could see a potential boost in performance, which can help them pay for the upgrade.
Adding to all this is the obvious – staying in touch with the advances in technology and offering solutions geared towards the changing IT landscape, while not discounting key areas like security, governance and disaster recovery – which can keep the ISVs still relevant.