“On-demand computing is definitely starting to make some serious inroads in enterprise IT,” says a new TechTarget report. “We believe that within 7 to 10 years, on-demand computing will be the normal mode of operation in most large enterprises, and it will be increasingly popular with medium-sized businesses…We also expect that on-demand computing will force application vendors to radically change their business models away from software licensing to pay-as-you-go or a software-as-services model. Several vendors, notably Salesforce.com, are well positioned to be major players in the future on-demand computing world.”
What’s becoming more and more clear is that utility computing will be a rich vein for entrepreneurs to mine through the next decade. The TechTarget report describes how big IT vendors are gobbling up small firms with utility-related technologies: Sun buying SeeBeyond and Tarantella, IBM buying Meiosys, Cisco buying Topspin, and so on. On the software side, the success of Salesforce.com and other software-as-service newcomers is attracting a slew of new entrants. Most will fail, of course, but the winners will win big.
The standardization and commoditization of IT are spurring consolidation at the top of the market, but in opening the way to a new model of IT supply, the same trends are creating big opportunities for innovative startups. Let the disruption begin.
ADDENDUM: Joe Kraus has an interesting post describing how cheap computing is dramatically reducing the costs of launching a business. Although low entry barriers can be a two-edged sword (as lots of dot-com startups discovered), Kraus’s point is a good one.
Hi Nick,
The days of IT being a ‘sunrise industry’ are over.
IT is now in the commodity space.
To protect IT from going into commmodity space, you have to either:
1) go for proprietary standards
not feasible with open source around
2) innovate more
but is this innovation going to bring in value?
3) expand into new domains
are there any new ones left.
Also the ‘software as a service’ that you are talking of is not a big deal. Service Oriented Architecture has been hyped to the limits by the software companies marketing teams. A service is just an application with a wrapper around it and this wrapper enables other applications to call it
I think the big will get bigger. No space for the smaller ones or entrepreneurs
Regards
KIRAN
Kiran,
I agree with your diagnosis of the IT industry (business IT, not consumer IT), but your contention that there’s no room for entrepreneurs seems wrong to me. Because most of the big players are locked into the old, fragmented supply model (which remains a crucial source of their profit), the door’s open for new players able to provide cheaper, more efficient alternatives built on new technologies. By software-as-a-service, by the way, I was referring to hosted applications, not web services.
Kiran, Nick,
On big will keep getting bigger, you are probably right. Big usually does get bigger. But then again, Google is relative new company that seems to move in the direction of Microsoft’s stronghold, suggesting that even big can at least be nervous by newcomers, albeit only by the ones with really deep pockets. I guess new enterpreneurs really need to focus on taking away some pain, and utility computing seems to be one way of doing that.
I also believe that there is plenty of room to expand into new domains. In fact, this is probably the most exciting time ever to start working in IT. Finally, the complexity of IT is starting to grow to such levels that science comes into play. Today, we are often talking about terrabytes when talking about databases. And yet at the same time, it is possible to have such huge databases in your “garage” startup using affordable hardware (assuming a customer grants you access to its data – sales challenges haven’t change). It seems to me that this is the ideal playing ground for a new generation of enterpreneurs.