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Rapid Cloud Growth and the Industry Impact

Public IT cloud services spending will reach $56.6 billion in 2014 and grow to more than $127 billion in 2018, according to a new forecast from International Data Corporation (IDC). This represents a five-year compound annual growth rate (CAGR) of 22.8%, which is about six times the rate of growth for the overall IT market. In 2018, public IT cloud services will account for more than half of worldwide software, server, and storage spending growth.

The above will cause an explosion of software development firms and according to the IDC, 10 times the number of products, services and offerings. What will the true impact of “cloud first” strategies on the software development industry be? What should development firms or those aspiring to become development firms do to survive the coming battles? How can a firm thrive during these pivotal times and become an IT market leader?

The shift in the market is already happening, competition is heating up, personally I believe the fastest, not the strongest will win in this market, assuming the overall idea is good to begin with. This is why I made the decision to move Infinit Consulting into the IP/software development space with 100% commitment and no looking back. We made this Infinit’s wildly important goal, the one thing we could do as a company that would make the biggest impact to our organisation even if everything else remained the same. The entire Infinit team knows that a failure to execute on achieving this goal would likely prove detrimental.

Gaining market share, perhaps even hitting a homerun in this increasingly crowded market prior to the really big battles will be a huge advantage and of the upmost importance. I believe it is likely the same providers that didn’t make the move to managed services and then lagged behind in offering cloud services will fail to make the commitment to change necessary to make this transition; this time it is likely to cost them their business.

I want to be clear, I know there is an obvious need for end user support, of course there is, but I do not believe your average CEO, President or business owner really cares if his or her users are well supported. This has been evidenced to me time and again over the last 20 years of offering some form of an end user support service. This is why as an IT consultant you are a hero; sure there are times when you aren’t so popular but this is typically caused by an inability to deliver and even then it is no where near the same level of stress or difficulty compared to the front lines of an end user support team. One only has to look at IT spend to quickly determine what is important to an enterprise and what is not; in my experience it is rare to find a company that has a proper spend in this area and provides the proper resources, sad but true. Perhaps a topic for another time as I have much to say on this particular subject.

The climate today demands you offer a high value/high impact suite of managed services and in most cases supporting end users does not make that list. The managed services we offer today focus on identifying the pain in the organisation and replacing this pain with joy. These services are a lot more custom and high end, build much tighter relationships with the client and the best part, margins are higher and the customer receives much more value with these types of services.

You see, the very difficult job of supporting and maintaining a network and supporting end users is looked at no differently than the person that wipes your table off at a restaurant or picks up your trash. Rarely do these people get a heart felt thank you and great job; most of the time the only things said are when something goes even the least bit wrong. Some may disagree but after 20 years in this industry I will stick by my guns on this one. What business owners and executives care about are business impacting solutions and services that address a very specific pain point, streamline a process or workflow, provide in depth BI or advanced analytics and generally have an ability to impact the bottom line.

Another thing to keep in mind is there will be added pressure on traditional MSP’s and support providers as the market becomes more and more commoditized. I love Office 365 and MS Cloud Services but the truth is that Office 365, Google Apps and other cloud services greatly reduce the need for your typical IT support provider. Proof again that we will have a software development market that is exploding rapidly over the next 5 years causing all sorts of chaos; chaos that can be harnessed and used to achieve massive growth or, done in correctly, devastating consequences. That outcome, for the moment, is in your hands; change is hard, especially changing behaviors, executing on your goal will take commitment, discipline, accountability and focus from your entire team. Happy to provide ideas on how to achieve the above if anyone is interested, I can at least share my experience.

What are your thoughts on the landscape of the software development industry over the next 4-5 years? What is good, what is bad? What should market leaders watch out for, what should aspiring IT leaders move to capitalize on and how will average companies survive?

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