- Nothing is going to stop consumerization of the enterprise.
- Nothing is going to stop Bring Your Own Device.
- Nothing is going to stop Software-as-a-Service.
- Nothing is going to stop the Cloud.
All those things are just going to keep going: Marc Andreessen.
The above statements come from a lengthy but compelling Tech Crunch interview with Silicon Valley legend and prominent venture capitalist Marc Andreessen who pioneered the Web browser software business when he co-authored one of the first browsers Mosaic and co-founded Netscape during the ‘90s.
Here are the highlights:
Tech consumerization + smart phones
“Today, where the most interesting and advanced new technology now comes out for the consumer first. And then small businesses start to use it. And then medium-size businesses start to use it, and then large businesses start to use it, and then eventually the government starts to use it. But this is a complete change from the way it has always worked,” Andreessen states.
“Now that you have a computer in everybody’s hand, all of a sudden all these barriers — it used to be these barriers to market entry were so big. And now all of a sudden you have got this global market of all these early adopters that have smartphones connected to the Internet, and they can just pick up their things and run with them.
“And of course consumers can make buying decisions much more quickly than businesses can, because for the consumer, they either like it or they don’t, whereas businesses have to go through these long and involved processes.
“And so if you take a typical mainframe or, even these days, PC-based system and you give it to a 22-year-old college graduate, it’s like beaming in products out of the Stone Age. Why would you do that? Why would you force people to use all this old stuff?
“And then that leads to the big thing that’s starting to happen right now, which is this “Bring Your Own Device” movement, where more and more companies are saying, well, basically, if I have to support smartphones and tablets anyway, and my CFO is probably carrying around an iPad and all my new employees are coming in with iPhones, so I have already got to support this stuff, so then I might as well encourage it.”
No easy businesses
“There are no easy businesses in the world other than maybe Google, but other than that, there is no easy business anywhere in the world.”
The democratization of technology
“The best business technology was once only available to the biggest companies.
“If you were a Fortune 500 company with a big IT department, you had a huge advantage over a small business that was trying to compete with you, because you just had so much more budget and staff and professionals and expertise and access to all these big vendors and you could spend tens and millions of dollars on all this stuff.
“So it was very easy for — in the old world it was very easy for big companies to use IT as a weapon against small companies.
“Today all the consumerized enterprise stuff is as easily usable by the small business as it is by the large business. In fact, it’s probably more easily usable by the small business than it is by the large business, because with a small business it’s like you can just use it, like you don’t have to go through a long process, you don’t have to have a lot of meetings, you don’t have to have committees, you don’t have to have all this stuff, you can just start picking up and using it.
“So the best technology for inventory management and for financial planning and for sales-force management and for online marketing can now be used just as easily or more easily by a small business.
“There is an opportunity here for a shift of the balance of power for big businesses to small businesses.
“So market expansion, small business versus big business, what else? Oh, the shift, the other big one, the shift from CAPEX to OPEX. So the shift from buying a lot of servers and databases and software licenses and networking equipment, the shift instead to just renting it all. So, the shift towards cloud services.”
No one should be buying hardware today
Andreessen says none of the companies his VC firm, Andreessen-Horowitz, invests in buys their own technology hardware.
“They buy their laptops and that’s basically it. And increasingly they might not buy their laptops, because their employees will just bring their own devices. But they don’t buy servers. They don’t buy storage devices. They don’t buy any of this stuff; they just rent on AWS (Amazon Web Services). And they don’t buy sales-force automation software, they rent on Salesforce.com.
“Any piece of installed software for which there’s a web or a cloud equivalent I think is in real trouble, and I think that’s just now becoming clear.
“The other thing that’s happened is 2012 seems to be the year of the actual SaaS tipping point, like where big companies are now saying, you know what, it’s fine, like I can do it, I can do Salesforce, I can do Workday. Because there used to be lots of issues around can I trust the security issues or liability issues, and an awful lot of big companies are now saying, “You know what, I am going to save so much money, the service is going to be so much better, and my users are going to be so much happier, more productive. I have got to make this stuff work on iPhones anyway, so I have got to do something new.
“My old software vendors are charging me these huge upgrade and maintenance prices. I can switch to SaaS for less than the cost of the maintenance on the old software.”
“Like, at a certain point it becomes –‘Oh,’ and then on security it’s like, ‘Yeah, I may have concerns about SaaS security, but it turns out I have the concerns about my own internal security anyway’.
“So every one of these companies has had an employee steal a laptop that has 25 million customer records on it, and they are like, ‘Well, okay, if I can’t even lock that down, then why am I that worried about whether somebody is going to break into Salesforce.com?’ And by the way, Salesforce.com has gotten much better at security.
“So there is a bunch of new technologies coming out that are going to make cloud and SaaS even more secure, and I think are going to end up making — I think cloud and SaaS are going to end up being a lot more secure than anything inside the firewall.”
Andreessen sees a rapidly growing market for outsourced employment and he sites start ups such as TaskRabbit, Zaarly, oDesk, RentACoder and Cloudera as leading the charge across a variety of markets.
“If you are starting a new company it’s so obvious that you would want to do most of your marketing on Google and Facebook and Twitter, whereas a lot of the existing companies still haven’t wrapped their heads around that.”
“A lot of companies need to actually educate their customers or their partners, and a lot of that has to happen online.
“Employers are going to have to get a lot more actively involved in making sure that the supply of candidates is actually educated and that they can hire somebody who doesn’t yet know what they need to know and actually educate and train them, and a lot of that is going to happen with the new technology.
“So I think the companies have a real question about how do they develop their workforces, how do they make sure that their employees stay relevant for the purpose of staying inside a company for a longer period of time? And then how do you get the workforce over time to be a lot more flexible and adaptable, so that if you have to lay off a ton of people, or if you have to get out of a line of business, or if you have to expand into a new business, how do you get your current employees to adapt better to that?”