OpenStack, Mobile, Amazon and the Tech Rust Belt on the Horizon

By Eric Lundquist  |  Posted 2013-04-24

The big disruption of the enterprise technology industry is upon us. The Wall Street Journal recently had an article titled "Technology's Rust Belt Takes Shape" that included a chart of disrupters and the disrupteds based on year-to-year revenue gains or losses. The numbers put some substance behind what I've seen in my travels and interviews over the last couple weeks.

The disrupters (think Facebook, Google,, Amazon) would be the first to champion the big change in enterprise computing and happy to be included in the winner's list. And those poor disrupted (think IBM, HP, Dell, Microsoft) would be less than pleased to be stuck in the loser category.

But while lists of winners and losers are fun to read, the idea that something big and fundamental is going on in the business and in particular the enterprise space should be taken seriously. I'd argue the hallmarks of that change are around the rapid rush to standardization of the enterprise hardware and software stack, cloud computing moving from interesting to necessary, and mobility becoming the first goal of business applications rather than an add-on.

The power of the enterprise stack was evident at the recent OpenStack conference in Portland, Ore. While there are strong competitors to the very young OpenStack initiative (like Amazon and CloudStack), the value for CIOs to consider their tech infrastructure as an integrated set of cloud-enabled components is compelling.

Developers are keen to learn the new skills and languages required to assure job prospects and to get involved in the next big thing. Vendors shifting from proprietary approaches or the costly solution of selling the past are going to be on pause while corporate technologists decide if they can fulfill their computing needs without expensive consulting contracts. The idea that your corporate technology stack should mimic and be compatible with public cloud infrastructures is a game changer.

With Amazon and Microsoft now in a cloud price war, one of the outcomes of cloud computing will be a lowering of the cost of enterprise software throughout the industry. You can argue endlessly about whether it is better to keep your computing in-house or rent it from the cloud, but the transparency of cloud-based pricing gives CIOs negotiation ammunition never before available. 

Software contracts in the enterprise are famous for being inscrutable. The cloud pricing model of being able to clearly see what you are paying for (not always, but it is getting better) is good news for customers and difficult news for vendors that like to bury charges in pages of jargon. Where initiatives such as OpenStack give corporate technology execs the ability to build their own cloud, public cloud pricing gives them the ability to negotiate for cloudlike prices for their existing software.

The mobile-first movement is clearly upending vendors who treated mobile as an adjunct rather than the primary focus of corporate applications. In a day spent at the Demo Mobile conference, the smartphone emerged as the central controller of new apps ranging from health care to drone choreography. As Chris Preimesberger illustrates in an article on 10 innovative companies found at Demo Mobile, the innovation is driven by putting mobility clearly at the center of the software development world.

Technology investment continues to grow (Gartner says IT investment will grow 4.2 percent to $3.7 trillion in 2013). Yet we've seen Oracle and IBM blame their sales organizations for recent misses. What's up? I'm guessing you are seeing a shift away from big spending with big vendors to a range of strategic investments internally, with startups and with cloud subscriptions. The rust belt might seem sort of a harsh jibe right now, but it may also be a harbinger of things to come.

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