“Survival of the fittest” is a phrase that describe how a species with useful adaptions to the environment are more likely to survive than those with less useful adaptions. In other words I like how Charles Darwin puts it: “It is not the strongest of the species that survive, nor the most intelligent, but rather the one most responsive to change.” In business terms, it is critically important over the next few years that businesses transform or they will struggle – and in some cases will fail completely in a digital business environment.
We are living in a digital era and transforming in this digital age requires speed and a willingness to embrace risk. The business landscape is evolving rapidly due to significant shifts in technology—specifically digital. It is certain these disruptions are more than just a passing trend. Rather, it represents a new business paradigm. IDC refers to this as the “3rd platform” and it is “transforming not just the technology industry; but every industry on the planet.” Long established businesses are discovering that traditional business models are being disrupted and are made obsolete. Of course, business change is never easy which means many will resist transformative forces, particularly if it involves disrupting themselves – and if they don’t change, they will eventually become obsolete.
So, what trends that will continue to disrupt the traditional business landscape? Here are 4 key market trends for 2016:
1. Subscription Economy
Subscription-based and recurring revenue business models are practically in every type of products across the industry. In fact, IDC predicts that by 2019, 40% of software revenues will come from subscription models. Some businesses are starting to dip their toes into the software licensing subscription pool; however, a rare few are jumping in head-first. A great example of this is how Adobe is able to achieve record growth by going all-in. The market is shifting away from perpetual to subscription and pay-per-use models in order to capture recurring revenues and address new market opportunities.
2. Internet of Things (IoT): An Increasingly Connected World
With many advancements in communication and networking, the world is becoming more connected than ever. As a result, IDC cites that by 2020 more than 26 billion IoT devices will flood the market to make our everyday life much simpler. Everything from autonomous cars, smart homes, smart meters, smart cities and more are all possible due to software as the line between the digital and physical world blurs. Skynet may not be too far from science fiction!
3. Virtualization & Cloud
While virtualization and cloud are being used interchangeably, it lays the foundation of modern computing. Only a few technologies have become as fundamental a part of today’s changing landscape, however, the basic value proposition is so easy to grasp: “do more with less.” Both virtualization and cloud computing are responses to the ever increasing need to make the most of computing resources in a cost-effective manner. Virtualization and cloud provide agility and dramatic reduction in cost that all server workloads being virtualized have surpassed over 50% and will reach 86% by 2016 (Gartner).
Every corporation is trying to avoid becoming the next headline in security breaches. According to IDC, the 3rd platform is disrupting industries in areas of virtualization, cloud, mobility, big data and analytics, and the Internet of Things (IoT). Transitioning to the 3rd platform is creating new models of consumption, monetization strategy and operations. With these, security and software protection play a critical role in this business transformation equation; and according to Gartner, worldwide spending on information security will reach $75.4 billion in 2015.
Transformation in the digital age requires speed and a willingness to embrace risk. For those businesses that have managed to meet the demands of the changing landscape, there can be a new and sometimes greater degree of success; for example, take how Adobe is enjoying record revenue growth year-over-year. We are at a critical inflection point and businesses need to plan and adapt to the new market landscape.
These trends represent tremendous opportunities for application producers and intelligent device manufacturers alike – so how can you capitalize on these trends?
You’ll want to partner with a Software Monetization market leader whose core products and services serve as an enabler for the 3rd platform for both software producers and intelligent device manufacturers that can deliver new business & consumption models, intelligent analytics and improve business processes that can help you forge deeper relationships with your customers.
- Subscription Economy: Rethink Your Software Monetization Strategy
- Internet of Things: Internet of Things Resources Page
- Virtualization & Cloud: Extending Your Software Revenue in a Virtual World