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4 principles that will shape the future of IT

Bernard Golden | March 7, 2016
It’s a software-driven, open source world, and we’re just living in it.

For example, Walmart once leveraged its ability to build and stock giant stores to gain industry competitive advantage. Today, however, it finds expensive real estate strewn across the nation out of step with consumers increasingly shifting to online buying. Even if Walmart wants to move aggressively toward e-commerce, it’s stuck with costly retail infrastructure. More subtle, but worse, is that much of its executive talent is experience in tasks associated with managing large numbers of physical outlets and supply chains attuned to distributing pallets of goods to them. In other words, it has a skills issue as well as a misaligned value chain. 

What we will see over the next decade is akin to the revolution wrought by the emergence of assembly line mass production. Any company that wanted to serve a mass market had to figure out how to automate production; those that couldn’t, or couldn’t raise enough capital to fund the effort dwindled away. 

What is different today is that this software-centric reality will affect every industry and every company. Most are unprepared, and many will fail to make the leap to being a software company. 

2. Open source is eating the technology industry 

Within the overall wrenching restructuring of the economy, it’s easy to overlook the massive change going in the technology industry itself. The shift to a software-centric world should redound to the immense benefit of the big technology firms, but they’re in trouble, too. Instead of reaping the gain of everyone else being forced to focus on technology, big vendors are themselves suffering from the ongoing shift to software. 

The evidence is everywhere: IBM has suffered 15 straight quarters of reduced revenues. Dell and EMC are set for a merger (consolidation is a classic response to an industry in financial trouble). BMC and Informatica have gone through private equity restructurings (another classic response to poor prospects). 

So why is what should be a field of dreams for technology companies turning into a nightmare? The answer is two little words: open source. Simply put, open source is commoditizing the vendor offerings, and vendors are suffering from cost structures misaligned with the new realities of the industry. 

Not only does this directly affect software products, but it also affects hardware (remember, software is eating the world, and that extends to hardware as well). The new mantra is software-defined anything, and by placing open source into commodity hardware, previously-unassailable market positions are now showing reduced growth and even profit drops. 

Open source is proving to be more than a low-cost replacement, however. Technology innovation has shifted decisively to open source, as I wrote about in my most recent blog post. It’s hard to think of an emerging technology area that isn’t based on open source. Obviously, the software-defined hardware trends reflects this. We see open source in other emerging areas as well: distributed NoSQL databases; machine learning, containers and container orchestration. 

 

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