New “Consumption Models" drive the transformation of the (Software / High Tech)
Industry
By Gad Tobaly Published May 11, 2014 A couple of weeks ago, I had the privilege of addressing students at Yeshiva University's Sy Syms School of Business in NYC. (The Entrepreneurial and Executive Lecture Series can be found at https://yu.edu/syms/kukin-lectures/.) What could I tell these young people about where the software industry is going? Initially, I thought I might reassure them by focusing on why you do not need to live in Silicon Valley to find success in the High Tech Industry. Then, I thought I would tell them write coding was also not a requirement for success in high-tech, and that you don't need to be graduate from Stanford University with a degree in computer science to have a great career in the tech industry. After all, Steve Jobs was not an engineer and didn’t write code. Similarly, serial entrepreneur, Kevin Ryan, is a Yale and INSEAD graduate, founder of Gilt Groupe, MongoDB, and former CEO of DoubleClick, and he is not an engineer, and he's a New Yorker. |
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That made me think I should talk about the rise of the New York start-up scene. Amazingly, NY is now leading Silicon Valley in verticals such as AdTech and FinTech. So I thought I might tell these students some of the posts I've been reading lately about the NY start up scene that were written by VCs like Bessemer Venture Partner's Jeremy Levine and Nick Beim of Venrock (See http://www.nickbeim.com/2014/02/.)
Then it came to me. I would focus on a concept business graduate students must well understand: BUSINESS MODELS.
If you think it through, ultimately, new business models drive the transformation of the Software/High-Tech industry. You don’t need to be an engineer to understand what a business model is. I got my angle.
Then it came to me. I would focus on a concept business graduate students must well understand: BUSINESS MODELS.
If you think it through, ultimately, new business models drive the transformation of the Software/High-Tech industry. You don’t need to be an engineer to understand what a business model is. I got my angle.
Part one – we discussed the basics of the software industry.
A global industry with a market size estimated to USD 350 Billion and growing about 6% per year during 2014-2017 per market intelligence firm IDC. We made the distinction between Applications and Infrastructures as well as software consumed by Consumers vs Businesses. Then we discussed licensing models, essentially Perpetual License vs Subscription (On Premises vs Cloud Based models). I refrained from expanding into Ad based or Revenue share business models.
A global industry with a market size estimated to USD 350 Billion and growing about 6% per year during 2014-2017 per market intelligence firm IDC. We made the distinction between Applications and Infrastructures as well as software consumed by Consumers vs Businesses. Then we discussed licensing models, essentially Perpetual License vs Subscription (On Premises vs Cloud Based models). I refrained from expanding into Ad based or Revenue share business models.
Part two - The lines were blurring between Software,
Services and Hardware.
The Software industry produces easier to use applications, offered as a service on the cloud. Services companies are embedding software to avoid commoditization. Device companies are integrating software and services to provide more value.
One of the best references I found came from PricewaterhouseCoopers Global 100 Software Leaders under the direction of Mark McCaffrey, PwC Global Software Leader (Yes, Mark is based in SF, California!).
The Software industry produces easier to use applications, offered as a service on the cloud. Services companies are embedding software to avoid commoditization. Device companies are integrating software and services to provide more value.
One of the best references I found came from PricewaterhouseCoopers Global 100 Software Leaders under the direction of Mark McCaffrey, PwC Global Software Leader (Yes, Mark is based in SF, California!).
Part three – The Impact of the convergence of
Social, Mobile, Cloud and Big Data.
The technology research firm Gartner calls it the “Nexus of Forces.” We discussed how these secular trends were changing the nature of the business and was enabling new ways of consumption thus ENABLING new BUSINESS MODELS.
The technology research firm Gartner calls it the “Nexus of Forces.” We discussed how these secular trends were changing the nature of the business and was enabling new ways of consumption thus ENABLING new BUSINESS MODELS.
In conclusion, whatever
the industry these business students will engage their career with, I sensed they
naturally understand the “Nexus of Forces” and how these forces enable new
consumption models. They understand how these forces influence the constitution
of the customer base,
sales and profitability models and ecosystems. They understand it. Do we?