Top three factors affecting your software spend in 2017

What challenges these factors present to enterprises, and what impact they may have on your business?

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There is something special about the beginning of a new year, slates are wiped, figures are reset, and suddenly, we are working toward new goals, developing new features, and designing new methods for improving productivity, reducing spend, and staying happy. The new year is a good opportunity to look forward, both from a business and a personal perspective, to pre-empt the shifts and transformations on the horizon, to be able to manage change effectively. 

So, here are my top three predictions on the factors affecting software spend in 2017, what challenges they present to enterprises, and what impact they may have on your business, your CIO, IT managers, and SAM experts as you work together to optimise IT spend. 

1. Continued adoption of IaaS/SaaS – all in for the cloud

We have been talking about cloud adoption for over a decade, waiting for cloud to go mass market. I believe that 2017 will witness a significant upswing in the uptake of cloud services, a trend that I see continuing until 2020.

This year, cloud will pass the critical point of maturity. The innovators and early adopters have already proven the underlying technologies, vendors have undergone sufficient iterations to appeal to the mainstream, and now the market is ripe for the early majority to make the shift.

Vendors like Amazon, Microsoft, Salesforce.com and Adobe have proven the value of anything-as-a-service – IaaS, PaaS, SaaS – some with record financial results. Paving the way for other vendors and building market uptake. 

Adobe achieved record annual revenue of USD 5.85 billion in fiscal year 2016 , representing 22 per cent year-over-year growth. 

In its third quarter release Salesforce announced an exceptional quarter, with year-over-year revenue growth of 25 per cent in dollars and 27 per cent in constant currency. 

IAAS

While the benefits of IaaS are clear, there is a price to pay. The cost of IaaS can quickly spiral out of control as it is easy to forget about virtualised services, servers can be left running, feedback loops can cause repetitive downloading, and expensive software can be left idling on forgotten machines. 

In 2017, I believe that enterprises will adopt a cloud-first strategy for primary enterprise infrastructure, with only niche industries choosing on-premise as the preferred solution. And I believe that the software-asset-management industry will be highly influential in providing the necessary insight and control to manage spend.

SAAS

This market is now at a tipping point and uptake will continue to accelerate throughout 2017. The early majority will start to make the move this year bringing adoption over 50 per cent within the next couple of years. Many organisations have yet to adopt, so there is time to take advantage of the incentives vendors will continue to offer to move customers over to their cloud SaaS solutions. 

From a compliance perspective, Microsoft, for example, has so far been lenient with customers that are licensed for Office 365 but who continue to use older versions. As mainstream adoption takes place, we can expect that to change and for Microsoft to clamp down on unlicensed use of legacy Office products. I think other vendors are equally likely to ignore legacy usage during the transition period. 

All in for the cloud

Whatever cloud office system, SaaS solution, or IaaS you deploy within your organisation, return on investment relies on rapid deployment as well as control – and that requires a holistic view of all installations rather than relying on the individual administrative consoles provided by each vendor. Only with intelligent and consolidated data from IaaS/SaaS installations can spend be optimised.

2. Merging worlds and increasing abstraction 

As technologies mature and global digital transformation deepens, the level of software abstraction and consolidation within IT will rise. New technologies leverage existing assets and at the same time promote cross-platform, cross-vendor, collaboration. 

In 2017, I see vendor connectivity accelerating at the same time as we gain deeper abstraction through this connectivity. We can expect deeper system co-operation, in which business and cost insight delivered by one discipline can be leveraged by others. We can expect to move closer to a single-pane-of-glass. 

The IT journey

What has happened, on the IT journey from mainframe to cloud is ever-increasing abstraction of details, and ever-increasing system inter-connectivity, which has in turn enabled business users to make decisions on a higher level and with enriched data. IT consolidation has led to a degree of connectivity among disciplines and from a software asset management perspective, our closest cousins include workflow automation (ITOM), services (ITSM) and cost control (ITFM).

Specifically, the consolidation of these disciplines brings together four core business functions – compliance, automation, services, and cost control – enabling organisations to manage risk. 

System convergence is not new, software connectors have been around in one form or another for decades, but as cloud adoption accelerates they have achieved an elevated significance. What was once a technical enabler, is today a staple of software development, facilitating the creation of platform and vendor independent business workflows. 

Perhaps the greatest benefit of consolidation is the avoidance of vendor lock-in. But at the ground level it reduces, and will eventually remove the need for manually connecting systems. Workflows can be built across multiple systems, from multiple vendors, across business units and corporate functions. 

System consolidation breaks down silos. By leveraging data and integrating tools, the walls and barriers that exist between business units, group functions, vendors, and technologies will diminish. And finally, consolidation enables decision-making with an enriched data set and cost transparency.

3. Tech-savvy demanding users

In 2017, I envisage enterprises focusing on user satisfaction, not just in terms of providing employees with the tools that they need to be productive, but to embed flexibility in the way services and tools are delivered. Empowering business units to take IT decisions will be critical.

The abstraction from detail the cloud provides enables business users to construct data centers, build and maintain new services by chaining functionality, and apply on-the-fly adaptations. The cloud has empowered business users directly from their desktops.

Technology is no longer confined to the IT department, tech is embedded into the fabric of our lives. The modern smartphone has more computing power than the mainframes of the 1970s. According to Ericsson, global mobile subscriptions reached 7.5 billion in 2016, up from 5.3 billion in 2010 . In the same period, the number of applications available in Google Play has risen from 30,000 to 2.4 million (September 2016) . The modern workforce is tech savvy, capable of managing their own IT resources, and accustomed to instant resolution of need – if functionality isn’t available from one source, then download it from another. 

The reliance on digital technology in our private lives and ever-rising performance and flexibility of personal computing technology outstripping standard corporate approved devices and software, are two of the factors contributing to the bring-your-own-device (BYOD) movement. Today we are moving into a new generation of BYOD. Any perceived slowness in service delivery causes users to circumvent the approved IT practices that safeguard enterprises from license compliance, overspend, and security risks.  

Conclusion

Cloud adoption, consumerisation of IT, and shifting user behavior are profoundly disruptive forces, affecting both business and IT operations. Control and power over technology decisions is shifting from IT to business units.

The trend lines are clear. Spend is shifting from IT to the business. Embracing this shift though astute distribution of control to maintain visibility is a sure-fire way to maximise the benefit of cloud technologies, automation, and consolidation; avoiding costly software audits, virtualisation sprawl, and uncontrolled device usage. Forward thinking IT leaders will use 2017 to embrace the trends affecting software spend and transform their role from control to enablement. 

Peter Bjorkman, CTO, Snow Software
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