The level of innovation in the tech industry will accelerate over the next 10 years, delivering huge revenue growth, but also severe business model changes.
This is according to John McCarthy, Forrester vice-president, who spoke at yesterday's Forrester briefing at Wanderers Club, in Illovo. He said the integration of mobile apps, 'anything as a service', social media and smart computing is fuelling innovation.
A Forrester survey revealed that within the next 12 months, around 54% of businesses plan to increase the requirement that IT projects need to justify return on investment. Of the CEOs surveyed, 32% said they will freeze IT staff hiring, and 12% will lay off staff.
“Firms are being forced to focus on core competencies and value-added service because of margin pressure,” explained McCarthy. “The poster child for this is Apple. Apple focused on design competencies and elevated a whole ecosystem of partners to manage things that Apple is not focused on.”
He added: “What we are seeing is the perfect storm of technology change. The world is now at an intersection where multiple technologies are coming together. Software players are starting to buy content companies to improve their value proposition. 'Everything as a service' is a combination of standardisation, a shift in innovation and ongoing business pressures that drive a need for change. Software as a service (SaaS) will become a dominant software model.”
McCarthy noted that SaaS will be a $30.5 billion industry by 2015. “The implications on the economy from this technology means a new level of start-ups and acquisitions will start to emerge. Price elasticity and pricing pressure is going to play a role.”
Nate Elliot, Forrester vice-president and principal analyst, concurred with McCarthy, adding that technology changes, particularly in social media, as well as consumer behaviour, will change the way businesses engage with customers and market their brands.
He pointed out that smart mobile devices, social media, pervasive video and cloud computing empowers consumers. Consumers using tools such as Facebook and Twitter now have the upper-hand in influencing how business services should be run, and what services they expect.
“Social media is an important channel for business as it can empower consumers to become broadcasters of information. It enables business to know what its customers' needs are and to help solve business problems.”
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