When I reflect my past more than 20 years, I have been fortunate enough to be part of the software industry on a global level. First 10 years I spent in Europe working for software companies and the past 15 years I have lived and worked in the US as entrepreneur helping out software companies both domestically and internationally to expand their business.
I happened to run into a blog entry from TechCrunch by Jon Evans where he reflects on Journalism and how everything has become tech. The reference he makes is to a blog entry with the topic Software is eating the world and is written by Marc Andreessen whom most of us know already from the Netscape time. Marc Andreesseen is co-founder and general partner in a very well known venture capital company Andreeseen Horowitz with investments in many well known companies such as Facebook, Groupon, Twitter and many more…
When you read the article from Andreessen, there are a few things that confirms some of the things that I have pondering on and also telling my software vendor clients in discussions. Software has not only become a necessity, it has become a must even for traditional hardware companies that one would not think that they need to ponder about software. This trend has been going on for a few years and we see this happening in the for example auto industry and what makes things even more exciting is that cloud technology is now part of this formula of success. Some mature industries are using new cloud technologies to achieve competitive edge towards the rest of the industry.
There are software companies such as MetaCase that will benefit of this trend. This software development tools company is the leading domain-specific modeling software company in the world that has very impressive clients working on embedded software solutions in different industries, including mobility and auto industry. The development environment MetaEdit+ enables organizations to create software product lines more effectively and also with higher quality.
Andreessen claims that we are in the midst of a huge and dramatic technological and economic shift where software companies are poised to take over a large part of the economy. It is easy to see this happening for real. Just think about how insurance companies and financial industry are able to use the cloud to execute heavy-duty risk calculations by submitting the request to the cloud and the only question that the cloud will ask is how much time it can take. Following picture shows pretty nicely how a company with pre-existing infrastructure investment (Datacenter) should view when considering a PaaS environment (Platform-as-a-Service) and in the figure we are referring to Windows Azure.
The more capacity is allocated for the calculation, the more it will cost but this cost could easily be justified by opportunities to make more money due to time savings. In the picture above, it is easy to see that there will be a point in time when your own datacenter just does not scale where it needs to scale and that is why solutions/platforms such as Windows Azure will come to the play. This is also why we have to understand that new technologies such as cloud will bring new innovations to the market and this will definitely reflect on the valuations of these companies.
Andreessen gives lots of software related examples from different industries and I have had the luxury to work with many new an innovative (small and large) software companies that are now making this change in a very rapid pace. There will be lots of losers in this game as well. These will be the ones that feel that they already “own” the market and suddenly realize that smaller and more nimble players suddenly take the market and run with it.
The message that I want to send with this blog entry is to really emphasize that ignoring the change that is happening due to multiple factors such as mobility and cloud is probably one of the biggest mistakes that one can make as software leader. I encourage each one of you to do some due diligence in your own operations and answer to this simple question: “ will I still be relevant in 5 years”. If the answer is no, then you might have bigger issues on your hands than just the cloud transformation.
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