It is that time of year again, when the TSIA research team huddles, discusses, debates, and then documents our research agenda for the upcoming year. This past year, TSIA published the book Consumption Economics: The New Rules of Tech. This book was written to clearly document how traditional technology markets are changing. The book identifies several key trends that are forcing companies to alter their service strategies. These are the same trends that are heavily influencing the agenda of the TSIA research team:
- Cloud Computing: This is the ongoing trend of hardware and software capabilities migrating from local locations to centralized locations. These centralized, “clouds” can easily be accessed from anywhere. This migration began over a decade ago with software as a service models (Saas), but has continued to expand to now include infrastructure as a service (Iaas) offerings like Amazon.com’s storage offerings and platform as a service (Paas) offerings like salesforce.com’s AppExchange.
- Consumption Based Pricing Models: This is the trend where customers pay only for the technology they are consuming, instead of investing in capacity that they will grow into. This pricing model is presenting itself in everything from storage, services, software features, and even processor features that can be turned on well after the initial purchase. This new pricing model changes the revenue streams for technology providers.
- Consumption Analytics: In the world of consumption economics, technology companies must understand what product capabilities customers are actually consuming (or not consuming). This responsibility is also falling to the services organization. How can technology companies better track actual customer usage behaviors? What new revenue generating offers can service organizations create based on this data?
- New Go to Market Models: Historically, product companies have leveraged a go to market model that leads with product functionality and leans on partner capabilities. In a post cloud/utility landscape, “product features” will weigh much less than “service features” in the decision process of customers. This means product providers will have to transform their selling motion to truly be services led. For a majority of product companies, this is not a minor transition.
- Mobility Computing: Mobility computing is where the access to IT capabilities no longer occurs through traditional desktop machines that are loaded with processing power, memory, storage, and are tethered to the corporate network. Instead, users expect to access IT capabilities from any location and from a myriad of devices, large and small. TSIA partner PWC has observed that companies need to migrate from “email cultures” to “app cultures.” If you stop to think about that simple concept, the ramifications are immense. The explosion of smart mobile devices and “apps” is forcing technology solution providers to rethink everything from solution design to security to price points for solutions.
- Social Media: This is the phenomenon of communities leveraging technology platforms to share experiences and insights. For technology providers, social media is not about high school friends reconnecting on Facebook. Social media is connecting customer communities in ways that technology providers cannot control. This trend is forcing tech companies to rethink strategies related to user communities, support models, and knowledge bases.
- Rise of New Major Markets: Finally, it is very clear that as the world emerges from the most recent global recession, some of the greatest economic opportunities will not be represented by the traditional tech stronghold markets of North America and Europe. China, India, and Brazil are but three examples where overall economic growth is expected to far outpace that of the U.S. and Europe. Historically, technology companies have taken products and services optimized for North America, and migrated those offerings to other markets. To maximize growth opportunities, tech providers will need to launch their new products and services with the new major markets in mind—from the beginning.
A majority of these shifts in market dynamics are not new from last year. However, they are requiring tech companies to revisit how they will we pursue target markets. How does a tech company go to market with cloud applications? What is the role of partners if customers now purchase subscriptions from product companies directly? And what does the business model for a product company look like when customers are not willing to spend significant amounts of upfront cash on licenses and maintenance contracts?
The TSIA research team has vetted these trends with the Advisory Boards for each service line TSIA supports. But I am very curious how you see these trends influencing your service business in 2012. Which one of these trends will have the GREATEST impact on your service business next year? Take a second and vote below. I’ll publish the results right after the holidays.