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LAS VEGAS—Web 2.0, SAAS (software as a service), global class, consumerization and open source are facilitating disruptions in the high-tech market even as they are becoming vital forces that help businesses compete for new revenue opportunities.
Such was the position taken by three analysts in the opening keynote of the Gartner Web Innovations conference here Sept. 19.
Those vested in the market will have to prepare to make changes in order to keep up with the innovation from rivals or risk going out of business, said Gartner analyst Tom Austin in the introduction of the “Planning for Five Major Mutually Reinforcing Disruptive Discontinuities.”
The relationship between Web 2.0, SAAS, global class, consumerization and open source is complex, with each one amplifying the other in a potentially disruptive fashion. Austin said the five forces can impact the vendor balance of power, kill distribution and business models and create new ones, and create implementation alternatives.
For example, the emergence of interest in blogs, wikis, AJAX, social networks and mashups—the so-called Web 2.0 technologies—has paved the way for thousands of new Web 2.0 businesses. The startups immediately impact the traditional software makers, such as Microsoft and IBM, because customers have more options.
Is the Web 2.0 bubble set to burst?. Click here to read more.
Austin said that while the computer industry used to be structured to turn to one company for one problem, thousands have stepped in to offer their help to companies in need.
Primes examples include Google, eBay and Amazon.com. While these three vendors might hardly be considered startups by some modern wisdom, the three have evolved to become platform vendors, offering software and Web services beyond search and e-commerce, said Gartner analyst David Mitchell Smith.
“When there [are] tens of hundreds of thousands of vendors out there, its no longer an issue of whos the leader,” Austin said. “The best alternative will change. In the end, patterns emerge and new ways of working emerge.”
As for SAAS—hosted software delivered over the Internet—Austin cited data from McKinsey, which found that 61 percent of CIOs said they would invest in SAAS, up from 38 percent in 2006.
But Austin said Gartner believes that “rogue end users,” experimental pioneers willing to risk their own money, are driving the SAAS market, which can have a major impact on the downloaded, behind the firewall and perpetual license model forged by Microsoft and others.
Austin said Salesforce.com owes much of its early success to this user group, and added that new software entrepreneurs who dont go to venture capitalists with a SAAS proposition will probably not get funded.
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“The big vendors are living on software license revenue and annual maintenance fees,” Austin said. “Theyre scared to death of this.” Austin added that by 2012, the markets for workplace SAAS will be growing faster than 30 percent a year, with many segments exceeding 100 percent annual growth.
To that end, Google is forging a path as a “global class,” company scaling up to millions of users by building big server farms and piping applications to users PCs as a departure from Microsoft, IBM and others.
Read more here about Salesforce.coms new SAAS apps.
Consumerization, meanwhile, is creating an “IT civil war” between smaller companies focused on innovation and vendors focused on traditional control and management, said Smith. This theme makes people the center of focus, not devices, enterprise or software.
But consumerization is also daunting because it blurs that line between work time and “your time,” with people expected to be on call even on weekends to complete work tasks.
Finally, Gartner analyst Gene Phifer said open source software is the glue potentially tying all of the disruptive forces together, noting that open source software is used in some companies that dont even realize it.
Moreover, Phifer likened open source to free beer at college. But for those who drink both the beer and the open source, there are upsides and downsides. Low-cost, no-cost is a big benefit, as is not getting locked into a single vendor.
But the bad news is that multiple distributions can lead to administration complexity; vague support contracts leave the burden of updates and compatibility; and shared/diluted resources where “borrowed” administrators can hurt other systems uptime.
Gartner has advice for users looking at these emerging technologies. The main point is to keep an open mind to new technologies so your business doesnt get left behind by its competition.
To read more about challenges in open source, click here.
“For vendors who cant adapt, this could doom their business because its primarily about changes in business models that companies cant transition through,” said Austin.
“But for you as users, if you see this coming and understand it, youre not so constrained by the same kind of business models, so what could be a disruptive continuity that could sink major vendors could just be a wonderful incremental opportunity for you to move forward,” Austin added.
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