Article | 2016 Internet Software & Services Outlook

Article | 2016 Internet Software & Services Outlook
8th December 2015 Atheneum Team

What crucial trends are driving the industry?

Today’s current environment for all players in the Internet Software and Services ecosystem is being driven by the increased usage of data. The massive global movement toward analytics in industries such as consumer packaged goods to retail marketing have demonstrated that data analytics is no longer something that is isolated to tech companies such as Google or Amazon. The embrace of data analytics is a result of the cloud computer capabilities that were not even available 5 years ago. From start-ups to well-established digital brands such as the Weather Channel, there has been a shift toward leveraging cloud computing to find operational efficiency, decrease costs and enhance analytical capabilities.

With this trend toward more data analytics being driven by the ubiquitous nature of cloud computing today, the internet software and services industry will have to continually adapt toward license or subscription business models that lead to annual or even bi-annual product improvements to meet consumer demand. Consumers will want to see improvements because the switching costs in a cloud based world are not as high as they previously were in an onsite serveror costly IT service environment. Internet software and security companies that are successful in meeting the consumer demands in this new world will be able to succeed since cloud computing has also led to more start-ups being created. The decreased costs to starting a company has led to a global entrepreneurial boon period that presents growth opportunities for the internet software and service industry.

What market segments will experience the most growth and why?

Despite the global movement toward more technology and less person to person interaction, the majority of global business involves selling a product. That product could be an idea, digital product or a product that you can hold in your hands or see. All of these examples still involve identifying a consumer base, understanding what those consumers are looking for and finding ways to sell to them. As cloud computing contributes to the rise of more data analytics, customer relationship management (CRM) and data visualization software will have significant opportunities for global growth.

Customer relationship management software such as Salesforce will become more important for global businesses because they will have to understand their consumer and provide better customer service and support in order to keep or win business. The collection of data will be vital as more systems to track consumers and learn what their preferences in order to to serve them better. Effective tools that can organize and store this data and make it available on all types of devices at any time will be a market segment that has plenty of room for growth over the next 5-10 years as companies re-invest in their internet software and service capabilities.

The result of having more consumer data will make services like SQL even more powerful, but unless the data is collected in combination with data visualization services like Tableau Software, the increased amount of data will not be utilized effectively. Data visualization allows decision making to be made more fast and effective, while also providing regular reporting features that would have required a staff to collect and compile only 10 years ago. Therefore the right data visualization tool has to be a part of the usage of increased data analytics and will thus be another internet software and service segment that will experience significant growth over the next 5-10 years.

What are the key challenges?

With the increased collection of consumer data, and the immense power of data analytics due to cloud computing, there will be more opportunities for hacking and security violation. With more and more data being stored in an interconnected world, companies are still more vulnerable to hacking than they were when they housed their data on-site. The interconnected nature of data could lead to more exposure at a global scale for even the smallest domestic companies. This risk is real, as we have seen with global hackers getting into our highest levels of government, finding and stealing IP and even leading to the increased concerns around global terrorism. The challenge, therefore, is for companies to be able to connect their employees with the latest data, while ensuring that their proprietary data is protected and secure.