People still roll their eyes when they hear Marc Benioff talk about “the end of software”. The reality of course is, it took guts and vision for his company to relinquish an existing, established industry sector definition and create a “polymath” which also invested in data centers and application management – across tech sectors that siloed analysts are only now beginning to understand after a decade. You have to give similar credit to other cloud pioneers like NetSuite, Workday and others
Ray Wang and Chirag Mehta advise vendors in 2011 to “Embrace (the cloud), don’t wait, don’t even hesitate”: They ask “Which is worse; cannibalizing your margins or not having margins to cannibalize? Faster time to market and greater customer satisfaction will pay off. The move to cloud ensures a seat at the table for the next generation of computing.”
Their message is especially true for vendors in three traditional tech sectors – Hardware, Outsourcing and Telecom. They will make up the HOT seat next year. The reality is Hardware vendors – HP, IBM, Dell, Sun, Cisco. EMC still want it both ways – and keep pushing private clouds and “virtualization is good enough” to customers and their ability to become sole source infrastructure providers to public clouds. Even as they read the cloud research from over 1,000 organizations recently complied by HfS Research and The Outsourcing Unit at the London School of Economics outsourcers like Cap Gemini, CSC, Accenture, TCS, Wipro (and IBM, HP again) will fight to renew existing data center and application management contracts while also posing as honest “brokers” as customers decide between private and public options. Telecoms like Verizon and Deutsche Telecom will continue to push their multi-year, early cancellation business models on customers and not the variable pricing models clouds increasingly dictate. Nokia, RIM etc will have to become comfortable with their emerging clouds as not just partner ecosystem incubators, but also mobile development platforms for their customers.
Each of them has incredible assets – existing customer relationships and the huge investment capacity clouds call for. Each of them also has an incredible liability – the inability to articulate “It is the end of our sector as we have known it”.