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New technologies changing many firms' business models

New technologies changing many firms' business models

The rapid evolution of new software models such as cloud computing and open-source database applications is causing huge disruption in the IT industry, leading to major challenges for many of the world's biggest firms as they seek to keep up with the shifting environment.

Earlier this month, for instance, IBM reported much weaker than expected revenue, with the company putting much of the blame for this on poor performance by its sales team. Chief executive of the company Virginia Rometty said: "We did not achieve all of our goals in the period."

However, it was observed by the Wall Street Journal that the organisation's problems may be more to do with issues such as the rise of cloud computing - something IBM and other enterprises like it are not well-equipped to migrate to.

Ed Anderson, an analyst with technology research firm Gartner, told the publication: "Their biggest challenge is they live in a world of legacy business models."

His viewpoint was echoed by Rick Sherlund, managing director at Nomura Securities, who explained many companies now want to get out of what he referred to as the "construction" business - in other words, building and deploying their own software and hardware systems, which can often be a time-consuming and expensive process.

Instead, there is an increasing demand for renting software and computer systems in the cloud. The deals involved with this business model are smaller and therefore require much less capital investment, while they are also faster to implement and offer greater flexibility to businesses.

Not being locked into a single solution for the entire lifespan of a deployment may be something that is a particularly high priority at the current time, as many enterprises are seeing their needs evolve rapidly.

Open-source database applications could also be of great interest to many firms, as they can now offer an extremely high level of performance comparable to closed-source alternatives, but are frequently much cheaper to implement.

As for IBM, the Wall Street Journal noted it is responding to this by "trying to refresh its technology by purchasing more modern software and moving aggressively to the cloud and other growth areas such as mobile computing".


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