Today, in the opening plenary session at TSW conference in Las Vegas, I made the argument that the high tech business models we have optimized over the past twenty years are perhaps the most profitable business models around.
Oil companies like ExxonMobil and high margin lingerie makers like Victoria Secrets clearly have profitable business models. Yet, those business models pale in comparison to the profits generated by a well oiled enterprise technology business model. In the keynote, I shared the graph below which compares the operating profits of Oracle and Cisco to those of ExxonMobil, The Limited (the parent company of Victoria Secrets), and retailer Amazon.com.
Mature tech companies are generating profits that far exceed most industries. At TSIA, we believe this business model will be changing dramatically in the next three to five years. We outlined these changes in Consumption Economics. But for now, tech companies (and their service organizations) should employ every practical tactic possible to defend the existing business models as long as possible. The profits from the current model will be sorely needed to fund the painful transitions ahead.
In the keynote, I outlined tactics that Professional Services, Education Services, and Field/Support organizations can pursue today to help defend the current margin structures of these businesses. To be clear, I am not suggesting service leaders put their head in the sand regarding the pending changes that will be impacting the industry. I am encouraging service leaders to be aggressive and creative in creating runway for the changes that will be required to occur in almost every tech business I have ever benchmarked.
The next three days in Vegas will be a fantastic opportunity to grab and gather every trick and tactic being employed in the industry. Take advantage of the opportunity! Engage with your peers. Engage with the TSIA Research staff. Engage with herd of TSIA partners in the Tech Expo. All of these folks have insight. And one of them may provide that one tidbit that helps you defend that beautiful tech business model you currently have.