The major technology shifts under way -- the move to cloud-based services and reduced importance of the data center, the growth of mobile devices and apps and related decline in use of traditional PCs, and the greater emphasis on big data/analytics rather than traditional analytics -- are having a huge impact on corporate IT.
But what do these shifts mean for key vendors in the industry? Which are most likely to adapt to the changes and even thrive in the rapidly emerging services-based, mobile-crazed environment, and which are in danger of becoming irrelevant? In other words, who can you continue to rely on?
For both IT and business executives, knowing which vendors seem to be moving in the right direction is a key factor in decision making, especially considering that these industry megatrends -- shaping what InfoWorld calls the New IT -- are now fully taking hold.
It's always risky to predict what the future will bring when it comes to assessing companies. The landscape can change in a hurry, particularly in an industry essentially defined by rapid change. But industry experts can look at what the vendors have done so far to come up with a reasonable expectation of where they're going.
Research firm Gartner has predicted that the "nexus of forces" -- including cloud, mobile, and social -- will reach mainstream status in 2014 and create new technology requirements, drive new purchasing and establish new competitive realities. IDC has a similar view it calls the 3rd Wave. Gartner says these forces will drive more than 26 percent of total enterprise software market revenue by 2017, up from 12 percent in 2012.
The shift in technologies and business focus powering this predicted growth will play out largely in four areas: services, cloud, mobile, and big data analytics. This report assesses how the key enterprise vendors are adapting -- or not -- to the changing face of business technology.
- Services: Amazon, AT&T, Dell, Google, IBM, Oracle, Salesforce, SAP, Verizon
- Cloud computing: Amazon, BMC, CA, Dell, EMC VMware, Google, HP, IBM, Salesforce
- Mobile computing: AirWatch, Apple, AT&T, BlackBerry, Citrix, Dell, Good, Google, HTC, IBM, Microsoft, MobileIron, Samsung, Soti, Symantec, Verizon
- Big data analytics: Amazon, Cloudera, IBM, Microsoft, Oracle, SAP
The New IT era: Welcome to the services generation
It's clearly the era of cloud computing and everything as a service, and vendors built for that model or with the ability to adapt will lead the way.
As the market moves to greater consumption of services, companies that can help reduce the friction for their customers are more likely to do well, says Eric Hanselman, chief analyst at 451 Research. "The rewards will only go to those that understand how to make this service model work for their customers," Hanselman says.
With many enterprises looking to move from huge data centers to software as a service and the cloud, vendors that focus their business around services have the best chance of winning, says Greg Meyers, vice president of global IT at bioscience company Biogen Idec. "Google, Amazon.com, Salesforce.com, and IBM come to mind," he says.
These companies already have businesses and profit centers "built around the concept of bundling hardware, software and services, which is what cloud is all about," Meyers says. "I think pure-play software and hardware companies like Oracle, SAP, and Dell might have a tougher time adjusting."
Those latter companies have disincentives to let go of the older sales model of moving software or boxes of hardware, Meyers says. He says a movement toward commoditized components in data centers will drive the hardware market away from branded big-iron companies to cheaper components from Asian manufacturers. As a result, margins will be squeezed for the pure-play hardware and software vendors, so they will need to rely on innovative leaps in technology to stay competitive.
Although it's hard to pick winners in the cloud market, "I wouldn't bet against Amazon or Google for anything," Meyers says. Microsoft is an interesting hybrid, he says. While its bread and butter is still selling software, like the other old-line software companies, Microsoft has shown it's embracing the cloud through offerings such as Office 365.
"Microsoft is somewhere caught in the middle," Meyers says. "But it has a big legacy business in software and are sort of dabbling in the cloud. With the new CEO on board, the first order of business should be determining what kind of company it wants to be."
Microsoft is working hard with the development community to make the transition to the cloud as simple as possible for customers, 451's Hanselman says. "It's made some dramatic missteps, but look at what it's been able to do" with the cloud, he says.
Oracle and other traditional enterprise software providers also have much work to do to make the transition to a service delivery model work well for their customers, and if they fail their customers are likely to abandon them for other service providers, Hanselman says.
One group of companies likely to thrive in the services environment is the large telecoms operators, principally AT&T and Verizon, says Jan Dawson, chief analyst at Jackdaw Research.
"These companies are building a combination of cloud services, connectivity, application performance management, application mobilization, and other capabilities, which are going to be very powerful going forward," Dawson says. "They have established relationships with many large enterprises and already provide ultrareliable infrastructure in the form of networks and to some extent hosting and data center services. As such, they're well positioned to expand incrementally into cloud services."
The New IT era: The data center is built for the cloud
Amazon, on the other hand, is not changing its business model in any way to accommodate customers -- because it doesn't see a need to, Hanselman says. "It's a fairly unique case; there's really only one Amazon in this space today," he says. "If that service works for you, great."
It's not likely that most enterprises can move broadly to an Amazon cloud environment today, he says, but competitors and market watchers count out Amazon at their peril.
Google is hard at work trying to attract enterprise customers, but it's too early to tell how successful the company will be. "As a cloud provider it's done some good things as a first step, such as email," Hanselman says. "But when you start looking at Google Docs and the Apps environment, companies still have a painful transition ahead in moving enterprise document workflow into Google."
Others say Google, along with additional services-focused companies, are in good shape to succeed in enterprise IT. "I believe that Google, Salesforce, and Amazon are very likely to thrive due to their willingness to forge the future without the baggage of the past," says Mike O'Dell, CIO of Pacific Coast Building Products. "Their forward-looking strategy is consistent with the needs of their customers moreso than others'. Moreover, their products align themselves with the next generation of information worker."
Another provider in the cloud market to keep an eye on is IBM. "I've always been impressed at its resources," Hanselman says. But "will it dominate [the cloud or mobile] markets? No."
Traditional IT vendors such as IBM and Hewlett-Packard "have already made major investments in cloud to complement their data center offerings, and both realize the opportunity as well as the threat to traditional licensing models," says Dave Bartoletti, a principal analyst at Forrester Research.
IT executives who've worked with IBM are also confident of the company's ability to adapt, but at the same time they're keeping an eye on newer providers. "IBM has proven time and time again that it will consistently deliver platform and services at strategic levels," says Bill Thirsk, CIO at Marist College. "We also believe the Amazon model of fearlessly entering new markets is here to stay for some time."
EMC VMware has its role and will remain a player in the distributed community, Thirsk says, "but with data sets getting larger, we are seeing a resurgence of big iron from IBM that can out-partition VMware virtual servers at scale and a lower cost. It is not yet a commodity, but it is moving that direction."
Likewise, data center operations vendors such as CA and BMC are likely to face challenges from newer open source management tools popular in the cloud, as well as a new generation of developer-focused operations teams that have no experience with traditional infrastructure management suites, Bartoletti says.
Another longtime IT powerhouse, Dell, needs to find a way to monetize cloud. "Dell has chosen not to enter the public cloud market itself, in favor of working with partners and other cloud service enabling technologies," Bartoletti says. "It will sell software to manage, integrate, and accelerate cloud, and likely build out a services business."
That choice means Dell will not be directly in the public cloud market with a competitive offering and will instead compete with many other management software vendors for the cloud management dollar, Bartoletti says. "Dell also sells hardware to cloud providers -- a sort of cloud arms dealer -- so it will benefit from cloud growth that way," he says. "But [it runs] the risk of being behind the scenes and not seen by buyers as innovators themselves."
The New IT era: It's mobile or bust
Along with the move toward services-based IT is the rapid emergence of mobile technology as a key business resource, and this trend is having a huge impact on major players in the market.
Some see Microsoft as being a key provider in enterprise mobility. "If you're looking for stability, it has plenty of stability," says Ken Dulaney, a vice president at Gartner. "Microsoft has lots of software ties into back-end systems for its Windows Phone and other devices," and many companies today are looking to expand their investment in Microsoft technology rather than make big infrastructure swap-outs, he says.
That includes using Windows-based mobile devices and desktops that basically have the same user interface, Dulaney says. "It doesn't matter how many apps are in the store if the enterprise is buying the device" to justify a Windows environment, he says.
Along with Microsoft, Google and Amazon will play increasingly important roles in the enterprise as they take a stronger focus on mobile applications and services, says Bob O'Donnell, chief analyst at Technalysis Research.
Apple is still seen by some as more of a consumer-driven company than a fully enterprise-focused provider in the mobility market. "Now and then it wanders into enterprise solutions," Dulaney says. "But it's very secretive, so you don't always know what it's going to do. What keeps it strong is its [large] ecosystem."
Despite being best known for offering products popular with consumers, Apple "has succeeded in the enterprise largely without any huge effort on its part," Jackdaw's Dawson says. That's largely because of its popularity with users, who have brought the technology into the workplace, he says.
As a result, Apple now sells as many iOS units as Microsoft does Windows units, and Apple's mobile devices have become the new corporate standard -- displacing BlackBerry and being deployed instead of Windows Phone, Windows RT, and Windows 8, despite IT's fondness for its traditional providers.
Furthermore, Apple has ramped up its sales efforts for the enterprise market, Dawson says, "but it doesn't have broad ambitions beyond providing smartphones and tablets and some basic management in the enterprise," he says. "It will leave the vast majority of the management and mobilization work that needs to be done to specialists and partners."
Samsung is the major supplier of Android-based mobile devices, and for now is trying to assume the enterprise mantle as BlackBerry declines, but its long-term commitment as an enterprise provider must be proven, Dulaney says. "Does it have a comprehensive program to stay in the enterprise?" he says. "I don't see any Android player such as Google, [Google subsidiary] Motorola Mobility, or HTC that's clearly long-term stable yet" as an enterprise mobile vendor, he says. BlackBerry for financial reasons and Nokia as part of Microsoft are also question marks, he says.
Large telecommunications companies such as AT&T and Verizon are providing the connectivity and devices for enterprises' mobile fleets, and as such are in a good spot to help them with mobilizing applications, managing devices, and generally enabling the mobile enterprise, Dawson says.
The telcos "are never going to be as good at core IT as IBM, as cheap for cloud storage as Amazon, or as nimble as Google or Salesforce.com, but they bring a combination of capabilities, an enterprise-grade approach, and an ability to integrate that I believe makes them strong candidates to succeed in the [back-end mobile] space," Dawson says.
The enterprise mobility management (EMM) space has so far been dominated by small niche players or startups. "In an immature market, the likes of Good Technology, [EMC VMware subsidiary] AirWatch, MobileIron, [Citrix Systems subsidiary] Zenprise, [IBM subsidiary] Fiberlink, and Soti have been able to take the lead in terms of features and innovation as they focused purely on the issue of how best to manage and secure data on mobile apps and devices," says Richard Absalom, senior analyst for enterprise mobility at research firm( Ovum.
Now, the market is maturing and some of the bigger IT vendors are taking an interest. "Many have bought directly into it to complement existing endpoint management offerings and those leading niche players are being slowly picked off," Absalom says. "Symantec, LANDesk, Dell, CA, and Oracle, to name a few, have all made significant acquisitions. This consolidation is bound to continue as there are so many vendors in the space."
For example, EMC VMware recently bought AirWatch, Citrix Systems recently bought Zenprise, and IBM recently bought Fiberlink, a sign that major providers see EMM as an important capability to offer enterprises. Before that, Dell bought Kace, Quest Software, SonicWall, and Wyse, and Symantec bought Nukona and Odyssey Software.
The New IT era: It's going to get big in big data
The push to big data and analytics as key IT resources is also causing shifts in the technology market, providing opportunities for companies that have strengths in these areas.
"There is greater attention to big data analytics because of the growing spate of publicized success stories that have crossed over from Internet or classic financial services early adopters to more mainstream enterprises in consumer goods, digital media, and telecomm sectors," says Tony Baer, a principal analyst at Ovum.
Microsoft has steadily demonstrated a focus on making its information management software richer, more scalable, and more cloud-ready, says Merv Adrian, a research vice president at Gartner. "In 2014, Azure will assume its place as a crown jewel in the portfolio as Microsoft's vision of a hybrid world -- emphasizing seamless use of information across on-premise, cloud, and multiple databases and file architectures -- matches up with many organizations' determination to move to new deployment and database alternatives," he says.
Amazon is likely to continue its growth as early adopters expand their footprint, Adrian says. But "if it remains a cloud-only play, traditional mainstream IT organizations will continue to view it as only a partial solution, and it will not become a strategic partner for those organizations until its vision expands," he says. "If it chooses to wait out the lengthy transition to cloud-dominant architectures, its dominant position will have eroded, closing a unique opportunity."
Cloudera has anchored its position as the leading commercializer of the Hadoop stack, Adrian says, and in 2014 the company will seek to expand its market identity to capture a broader array of workloads in the enterprise. "As its competitors continue to ramp up, it will need to ensure that it watches its flanks and sustains growth in its core offerings while it broadens its footprint," he says.
Oracle's significant sales force turnover; its late-to-market scramble to ship an in-memory database after SAP, IBM, and Microsoft; and its continuing hardware "sinkhole" will mean substantial challenges, Adrian says, "even as it opens new fronts against several new competitive targets."
A third-party ecosystem is also emerging, as dozens of new and existing tools providers are introducing data management and security capabilities for Hadoop and other NoSQL platforms that are taken for granted in the data warehousing world, Baer says. "In 2014, watch for new applications to emerge that are designed specifically for big data and emerging platforms such as Hadoop," he says.
The one constant in the IT market is change, and those vendors with a knack for predicting what users will want and where technology will go will clearly be at an advantage.