State of Play: The disruption of the IT market

By Datacom Group CEO, Jonathan Ladd
dcom j ladd 0415 reworked
I don’t think anyone can deny that last year saw a raft of consolidation across the industry, not just locally, but from some of the largest vendors globally. The huge loss of jobs was an unfortunate side-effect.

It will get worse before it gets better. Global Equities Research’s Trip Chowdry expects that by the end of 2016, there will be some 330,000 layoffs globally. That is a mind-bogglingly huge amount, and the only point of reference we can probably compare it to in the history of the tech industry is the dot.com crash in the early 2000s. Several of our key partners have been directly involved, from Symantec and Microsoft, through to HP and VMware.

So what can we learn from this shift, and how will this disruption affect not just the IT industry globally, but in Australia and New Zealand?

Many of these disruptive changes have come from the emergence of Cloud, and ‘as-a-service’ business models. When you’re looking at a modern business environment where companies are looking to cut costs, raise efficiencies and provide better outcomes for customers, a lot of that legacy hardware and software, and the specialists who ran them, has been commoditised. That is, automated, or provided by third parties, often from cheaper, offshore locations.

A lot of frisky young start-ups and small vendors have taken advantage of their larger peers’ inability to adapt to this mindset, outshining them with more agile and flexible solutions, for cheaper, often based around opex rather than the traditional upfront capex expenditures of the past.

Put simply, we are looking at an unprecedented moment in our market where nearly two decades of developed tools are no longer needed as they once were.

What does that mean for our industry?

Part of the big problem for most in the industry, has been juggling private, public and hybrid cloud. Hybrid has been the standout, as that is the ideal platform to combine legacy infrastructure with emerging cloud technologies. But no one size fits all.

Two years ago we moved almost all of global kiwifruit grower Zespri’s apps, including their SAP infrastructure, into Microsoft’s Azure cloud. Supplanting that existing onsite infrastructure to a 95 per cent public Cloud solution. But many businesses cannot make such a clean leap, even if they wanted to.

For an increasing number of our clients we are moving a proportion of their IT workloads to both AWS and Microsoft Azure, as well as to Datacom’s own private cloud, DCS.

The key is to recognise those complexities – there is no one fit for any business. You can’t stick with one vendor and attempt to solve everything – we all have to work together. It’s about the right workload for the right cloud.

I don’t believe there are any vendors that can run off and provide end-to-end automated solutions anymore. We choose to consult, and provide solutions that suit the customer’s focus, rather than trying to force them into a particular box that suits ours, or our vendors’, agenda first.

I think most of the thought leaders in the services market are on our same wavelength. Where we differ is we focus on those more complex deliveries. Yes, you can consult and migrate to cloud, but can you manage the hybrid service once it’s up and running as well? I believe those that can’t are destined to fall by the market’s wayside. This is where our people become so important.

So much of the modern business of IT is now about building those long term, reliable, trust-based relationships with clients. And, the most important aspect of that is our people. We are finding more and more that our customers want that hands-on, continual face to face contact.

In this regard, our reputation, already well established in New Zealand, and our rapid growth as a challenger brand in Australia, has played to our advantage. One thing I keep seeing from our clients is a preference toward localised providers. The feedback we keep getting from our customers is that the aloof, inflexible approach of some of the large multi-nationals, and their historically rigid implementations has declined.

Juggling multiple partners – from the legacy old guard, to startups and up and coming vendors – while simultaneously developing our own IP and bundling the whole package together, has been quite the learning experience for us as a company. We’re glad to have had the support of all our vendor partners and customers from day one.

There’s certainly no shortage of opportunity out there for those that are willing to look at problems from a different angle and provide each client with their tailored solution. Which means that with Cloud you don’t lose that face to face contact, if anything it makes it more important than ever.

Cloud requires a business model reinvention, continuous adaptation, unlocking the power of data. It needs faster information provision leading to better decisions and efficiencies – the horizon is expanding very quickly and we aim to be silhouetted sharply in it.

Further Reading: 
The National Business Review: “Datacom and Zespri deliver a world first in public cloud
Benzinga: “Chowdhry: Major Tech Layoffs Are Coming, Fed’s Dudley Is ‘Clueless’ On Labor Market

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