Love thy neighbor’s business

It is 2013, the new year, and it is the season for resolutions, planning and predictions.

The analysts and pundits and magazines are out with their lists of the top 10 and top 20 trends. All of them are interesting and full of knowledge and wisdom, (at least they claim to be).

I am no pundit, nor an analyst, but that does not stop me from doing my own crystal-ball gazing!

I won’t present a long list of top 10 or top 20 trends though. Gartners and IDCs are pretty good at it.

I will call out just one trend that is visible to most of us today. It started a couple of years back and will catch steam even more in 2013.

I call it, for lack of a better phrase, “Love thy neighbor’s business” syndrome.

Whether 2013 will be a year better or worse (than 2012) for IT business is the key question racking everyone. All the companies in the marketplace are trying all possible options. Some to win, some to survive.

In this rush to explore multiple options in the battle of marketplace, companies are rethinking their original models and exploring areas and market spaces which they had consciously stayed away from.

So we are seeing all companies try greener pastures, thinking the “grass is greener on the other side”. Every company is exploring areas which was considered as “different business/not our turf” until now.

For many, exploring the green grass is a desperate move in the hope that it will be the silver bullet that will yield the promised gold, while for a few others it is a conscious, well thought through move to expand their footprint.

So in 2013, it is going to be the year of pendulum swinging to the other side in many ways for many companies. We will see many IT firms take 180 degree about turn and taking aggressive postures on areas they never paid attention to before. They will step on each other’s turf, make it more competitive, and make things messier.

So Product Companies will focus on services business which means revenues from consulting services and professional services and a bigger push on the XaaS model. Hardware companies like Dell, HP, Xerox have already set the agenda for Product companies getting into services in last few years.
As IT budgets stay flat, and companies want to move from capex to opex, focus on licenses and big budget purchase is going down. So companies who forever focused only on licenses and box sales, are now giving greater emphasis to subscriptions sales and revenue from consulting and professional services.

2013 might see big ISVs like SAP and Oracle get into acquisition of consulting and professional services firms. This is over and above the focus on cloud strategy and ISV’s acquiring firms with cloud offerings.

Services companies on the other hand will focus on generating their own IP (which they have desisted from doing for long and focused on building business around IPs created by other companies) and generating services around these IP models.
Pure play services companies like Accenture, CSC, T-Systems, and offshore players like TCS, Wipro, Infosys are all focusing on strengthening their own IP sets in addition to providing professional services around products from established ISVs.

This revenue is still a very negligible portion of their overall revenues so in 2013, so you can expect more focus from services organizations to build their IP assets (or buy them) which will get integrated in the services offered by services firms.

Hardware product companies will continue to make acquisitions of software companies to make their portfolio more integrated (CISCO bought Newscale , Dell bought Quest, Lenovo bought stoneware).
We also have software companies getting into hardware.
MS has already launched surface. Oracle after its acqusition of Sun has launched appliances. Symantec has launched backup appliance already. Google’s nexus brand of smartphone and tablets are causing quite a bit of anxiety to the incumbent players.

The software companies who have already entered into hardware will get deeper into it and those who have not will worry about what they are loosing by staying away, so some will launch hardware products without thinking through and some will acquire a hardware firm.

Companies which have focused on consumer market will focus more on enterprise market (aka Amazon, Google, Apple). We haven’t seen any enterprise focus companies enter into consumer market yet, but with cloud coming in, SMB space will be the next big thing for enterprise focus companies.
Already companies like SAP, Oracle, SAS who earlier always focused on large enterprise are using cloud to crack the SMB market and hoping to make a big dent.

All these moves will threaten incumbent leaders in the existing areas, disrupt alliances and partnerships and shake up the overall eco system even more. Not all these will succeed, in fact most will fail. It would be interesting to watch the few who will succeed.

So whatever happened to the famous theory of core competency suggested by Prahlad and Gary Hamel?

It seems companies have more faith in ancient wisdom of Confucius who said, “Consistency is the virtue of fools (and wise people change their minds as they grow wiser)”.

Would you agree?