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Aria Systems 2017 Predictions: Forecast - Mostly Sunny with a High Chance of Usage-based Revenue

VMblog Predictions 2017

Virtualization and Cloud executives share their predictions for 2017.  Read them in this 9th annual VMblog.com series exclusive.

Contributed by Tom Dibble, President & CEO of Aria Systems

2017 Forecast: Mostly Sunny with a High Chance of Usage-based Revenue

As 2016 takes its final bow, let's look at some predictions for what's in store for 2017 and beyond. The forecast is blue-sky opportunities for enterprises that are equipped to take advantage of them.

1. Recurring Revenue is the new business model imperative.

Last year we said all revenue aspires to become recurring revenue. Business models centered around one-time sales will become a thing of the past, and recurring consumption and usage-based models will increase two-fold in popularity.  

We're closer.

At Aria's Monetize 2016 Conference, an analyst from Deloitte noted that an impressive 80% of software vendors will move to consumption models. According to a 2016 Gatepoint research study, merely 11% of respondents (across many industries) said they plan on relying only on one-time sales in the future. These shifts by industry will require significant changes to key business capabilities. Legacy business systems that were built in the on-prem software era were designed for 18 to 24-month product development cycles. They don't have the flexibility to offer seamless purchasing and billing experiences mandatory with consumption-based models.

2. Ownership will be redefined by usage occasions.

The X-Economy (sharing, gig, subscription, App...) has forever changed how we view ownership. With the release of products like Audi on demand, people are embracing alternatives-eschewing the idea of purchasing a car that sits in the driveway every day, to picking up a car whenever they need it, and more importantly, only paying for it when they use it. More than anything, this is a reflection of a millennial ethos that sees less value in the instantly depreciating investment of a traditional car purchase or lease. This is especially acute among urbanites who simply don't need or want a car full time nor do they want to deal with the hassles and costs of DMV, insurance etc. According to The Atlantic, in 2010, adults between the ages of 21 and 34 bought just 27% of all new vehicles sold in America, down from the peak of 38% in 1985. In 2017, car ownership will continue to decline, particularly for millennials. OEMs are starting to see the trend, with both Ford buying vanpool provider Chariot and GM launching its own car sharing program called Maven. Expect this trend of acquisition and investment in car/ride sharing by OEMs to continue.

This will affect other products as well. Enterprises will create more offerings and build elegant account structures that give customers multi-dimensional choice. Customers will pay only how and when they want-versus conforming to constraints and frustrations imposed by the enterprises' outdated billing technologies. Businesses are starting to behave more like consumers in their demands for instant gratification of their needs, and with maximum choice made available to them.

3. Speed is the ultimate accessory.

Speed continues to be top priority with go-to-market plans accelerating 40% through 2020. According to the Robin Report, up until 2008, product development timelines typically measured 14 to 20 months for brands and retail. Now, responding to the new reality where consumers can shop online and find what they want, when they want it, time to market is a top retailer concern. This same time to market urgency is now becoming more pervasive in the B2B world as well per the trend cited above. This overall consumerization of the enterprise had its roots circa 2011 in extending the UI/UX of B2C into B2B use cases, and now we are witnesses to the sequel of this whereby businesses also demand that a supplier's pricing, packaging and flexibility is tailored to their preferences.

4. IoT Security will be front and center in 2017.

The Internet of Everything increases the Risk of Everything. By 2020, it's estimated that there will be more than 26 billion connected devices, and the whole of the Internet of Things (IoT) market when combined with big data will reach over $14 trillion in annual sales. This undoubtedly brings great opportunity for the companies that are protecting those devices. According to VC Chris Kocher: "Vendors will need to invest more in security development and testing (of IoT devices) before deployment and offer assurances, possibly including insurance."  

Cloud vendors also will need to prove their security mettle. As was seen in the October 21st DDoS attacks on DYN, providers need to have redundancy and backup of servers, DNS systems, and every other component that maintains a perpetual dial tone.

5. Enterprise ready gets real.

Along with accelerating go-to-market times, companies will look to solutions across the board that can help them quickly innovate at scale. Yet, you can't just slap an "enterprise-ready" label on your product and call it good. Too many SaaS companies make that mistake - and their customers pay dearly for it when their solutions come up short.

Enterprise ready means employing carrier-grade, industrial-strength hardware and software technologies to meet and exceed the most stringent availability, reliability, security and privacy standards around the globe.   

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About the Author

Tom Dibble is President & CEO of Aria Systems, the top ranked cloud-based monetization platform. Enterprise companies depend on Aria to accelerate time to market and increase flexibility, enabling them to maximize customer value, monetize IoT, and grow recurring revenue through subscription and usage-based offerings.

Tom Dibble 

Published Thursday, December 08, 2016 7:03 AM by David Marshall
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