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Summary:

GigaOM’s Structure event this week reminds me of the well-documented relationship between economic crises and technological innovation: Hard times bring out the best in entrepreneurs, precipitating a creative destruction that resets the technology infrastructure and transforms business. From my vantage point here in the Silicon Valley, […]

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GigaOM’s Structure event this week reminds me of the well-documented relationship between economic crises and technological innovation: Hard times bring out the best in entrepreneurs, precipitating a creative destruction that resets the technology infrastructure and transforms business.

From my vantage point here in the Silicon Valley, I have seen many technology-induced disruptions, starting with the semiconductor revolution that gave the region its name. Microprocessors gave rise to PCs, which were then leveraged with networks, client/server architectures and the Internet.

But as massive as these changes were, they are being dwarfed by the disruptive forces of mobile and cloud computing occurring today.

While most industries continue to struggle, the Silicon Valley and other high-tech oases represented at Structure are building the innovation engine that will drive all sectors of the economy into recovery. It’s a unique culture, a startup ecosystem fostering companies that are dynamic, elastic, expandable, virtual and uninhibited. Unlike many big public companies that are currently paralyzed by uncertainty – sitting on record cash reserves as they slowly move through the quarter-to-quarter grind – today’s startups can react almost in real time, adapting and creating on an ad hoc basis.

Opportunities in high-tech are expanding exponentially, as witnessed by the range of technologies on the agenda at this year’s Structure. Trends that catch my eye include an expansion of the software-as-a-service model to everything-as-a-service; and a broader definition of mobility.

Everything as a service 

As economic uncertainty continues, enterprises are less willing to risk investments in big software installations. It is simpler and cheaper to buy software on tap as a service. Upgrades are less disruptive, too, because they happen much more incrementally.

Businesses are even willing to give up features, trading off SaaS solution depth for simplicity and flexibility. The majority of features in those big, expensive software implementations never got used, anyway.

This SaaS model has proven so effective that it is rapidly expanding beyond software applications. Companies are now embracing infrastructure as a service (IaaS) solutions for data storage, provisioning, orchestration, billing systems and the like.

Similarly, big data as a service (BDaaS) solutions are emerging as a cloud-based alternative for businesses that are buried in mountains of unstructured data. Storage space is rented from the service provider, whose resident experts handle the data management. Now all that data can be leveraged to make better business decisions.

Redefining mobility 

Smartphones and tablets have been spreading like wildfire and are changing assumptions about user interfaces and content displays. However, the kind of mobility enterprises increasingly want extends far beyond these portable devices.

Ideally, businesses would like to see their premise- and cloud-based computing resources as one virtual system, and then be able to pick and choose where various components go. It should be simple to move a service from one provider to another, or to bring it in-house, in order to better leverage available expertise or take advantage of better pricing.

Complete virtualization of cloud services has moved beyond being a goal. However, enterprises are asking for higher granularity of mobility as applied to virtualization.

Agile software development

The agile software development method has been streamlining traditional software development significantly for years. Moving agile software development into the cloud produces some big synergies by enabling additional levels of automation.

Development tools for the SaaS environment have been slow to emerge, perhaps because it is already relatively simple to add features to SaaS-based software. However, as more tools appear, they will further accelerate the migration to SaaS solutions.

Other developments of interest include open source cloud development, analytics tools and identity and access management.

Conclusion

Economic uncertainty is turning enterprises from buyers to renters as they implement technology. It is also driving technological innovation. These factors are combining to reset the information technology infrastructure and thus lay the foundation for economic recovery.

I would love your thoughts on other trends, as well as the best questions I should ask the 11 startup companies who will be presenting at the Structure LaunchPad competition. Please send me your ideas via Twitter at @mattdhoward.

Matt Howard is a general partner at Norwest Venture Partners (NVP), where he invests in mobile and wireless, cloud, big data, security, rich media, networking and storage sectors. He currently serves on the boards of Avere Systems, Blue Jeans Network, ConteXtream, Hadapt, MobileIron, Pertino Networks, Retrevo and Summit Microelectronics. He blogs at NVP Blog.

Image courtesy of Flickr user LifeSupercharger.

  1. Matt, nice thoughts…a question coming to mind is that of ecosystem development. Big box companies always kept ecosystem partners (ISVs, IHVs, SIs, etc) as a key piece of the value chain, this seems to be an after thought for SaaS companies. Is this a smart?

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    1. Latif, interesting perspective. It seems like most SAAS companies try to be self-contained. Some SAAS providers offer nearly an instant-on/instant-off value proposition. Some SAAS companies need/desire an ISV relationship. For example, some marketing automation companies have a mash-up with Webex. I do think having strong relationships with ISVs/SIs/OEMs can make a huge difference.

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