How To Make Sense of the IT Market

Clearly there are different ways of looking at the IT Market. This (illustrated in the diagram below) is one way and it helps to clarify some of the forces that impact the market and the way that the market evolves.

First look at the stack in the center of the diagram. You can think of these as technology layers. First there is the computer and networking hardware. Laid over that is the operational software, not just the operating system but all the management software and networking software that enables software to run. The layer above that is the development software with which other software, particularly business applications, are built. In this I include all database software and middleware which constitute development software components. Above that is the layer of business applications that actually do useful things for the business. This includes office software as well as Financials, HR, CRM, etc. Finally we have services, which are distinct from applications in that you neither know nor care how something is achieved, only that it is done. For example FedEx is a service, and so is Google (in respect of search). The reason that the cloud is illustrated at the top of the stack is that nowadays IT services are delivered from the cloud.

The Buying Impulse

IT buyers naturally buy from the top of the stack downwards, as indicated by the downward arrow. Obviously price is an important element, but there is a natural preference for the buyer to buy something as a service rather than to buy an application and do it themselves. The advantages are obvious; you get started quicker and you have to expend less effort. This is why IT services delivered from the cloud will eventually dominate commercial IT. Naturally, it will take a while for organizations to gain confidence in cloud-delivered services, but it will happen.

But if there is no service that is appropriate, then the buyer will seek out applications that could be used to do whatever needs to be done. There’s more work involved since the application has to be implemented and changes may have to be made or extensions added to provide the needed functionality. However if there is no application that comes anywhere near satisfying the requirement then the buyer will choose to develop the capability themselves which could involve the purchase of new development software. Now the required capability will probably take even longer to deliver. The development software used and the nature of the application that will be built will determine the infrastructure software and hardware that the eventual application is implemented on.

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