2015 Software Industry Crystal Ball

November 2011

For every acquisition by large software companies, five new software companies are being created by employees of the acquired. They are the incubators of new and cutting edge technology (Big Data, Security, Mobile etc).  It is much easier for larger companies to come and buy success and a piece of the market, than risk the burden of failure and using their research dollars on non-core technologies.  The problem is, they continue to focus their marketing and sales dollars on their core technologies.  Our prediction:  Some very exciting new software companies in the next five years and a very robust market.

 

I typically write this article every 2- 3 years to give our assessment of the software industry and an attempt to predict what lies ahead. The highlighted paragraph above was written in 2011 while the country just pulling out of a major recession. I’m happy to report that as we now enter the latter stages of q1 in 2015, it turns out our predictions were fairly accurate.

How rapidly things have changed over the past 4 years. We’ve gone from two widely held notions: The software industry would be solely comprised of Oracle, SAP, IBM and Microsoft, and the notion that the tiny startups created from the “hot sectors” would never survive.  Fast forward to 2015. The 10 employee, heavily VC funded; Big Data, Security, Mobile, PaaS, oriented startups that were founded in 2011/12 are now 200 person companies. These high growth 200 person companies are now building enterprise sales teams by actively recruiting A level talent from the Big 4 that once thought they had monopolized the industry.

 

A few predictions for the next 3 years:

  • The 4 sectors that we mentioned in 2011 will continue to grow rapidly and will fuel the war for the ever shrinking supply of A level sales talent in the software industry. As a result, the industry will finally start hiring talented AE’s and SE’s with less 10 years sales experience, not in junior roles but in senior level AE roles.

 

  • You’ll grow very tired of the acronym “IOT” (internet of things). The technology will change the world, but like “Big Data” phenomenon, many companies will start saying they are an IOT company when they previously sold CRM software.

 

  • That being said, the Internet of Things will be nitro methane for Big Data and Security startups. Since 2013, 650 million new physical objects have come online; 3D printers became a billion dollar market; 10% of automobiles became connected; and the number of Chief Data Officers and Chief Digital Officer positions have doubled. But fasten your seat belts: In 2015, Gartner predicts, all of these things will double again.

 

  • This is the most active tech job market we’ve seen since the late 90’s, but with two very large differentiators. This market is built on solving real business issues, and the startups are more than ideas on a napkin. We predict the market will continue to get stronger for the next 3 years – at least.

 

 

  • The personal periscope app(or PPA), will be created to give people the ability to see while simultaneously walking and using their to conduct highly productive social activities J

 

Okay, so the last prediction was just to keep things on the lighter side, but, sadly, will probably be created. If you’re interested in why the A level Senior AE and SE market is shrinking rapidly, please tune into next month’s HammerLetter.