In a previous posting entitled How To Make Sense of the IT Market, I introduced a conceptual diagram that I use to provide a rough overview of the IT market. It consists of five layers: the computer and networking hardware layer, then the operational software layer, then the development software layer, then applications layer and finally the services layer. All of these layers are real and distinct. They correspond to groups of technologies, except for the services layer that binds them all together.

On the left of the diagram is an arrow pointing downwards which denotes the buying pattern of the IT user. Given that the prices are reasonable, the IT buyer would prefer simply to buy a service rather than implement anything. Why? Because:

1. The procurement process is far simpler (normally it can be op. ex. rather than cap. ex.)
2. The implementation process is far simpler.
3. Better value for money (cost)
4. Faster to implement (time to market or time to usage)

If we travel down through the layers the kinds of advantage persist. So that if software is not available as a service, the  buyer will prefer to buy a ready-built application to run in their own environment, because of simplicity, cost and speed. If that’s not possible then the buyer will opt for a suitable development environment and organize for the application to be built. At that point in time, the choice of development platform will likely be determined by in-house standards which will in turn determine the infrastructure software and hardware technology employed. So there are ultimately 3 options:

1. Buy as a service
2. Buy as a software package
3. Build

The arrow rising up, indicates a different dynamic, which is innovation or disruption in the IT market. Disruption is driven by market swings and by innovation.  So let’s imagine that in 1990 you had built a system running on Digital hardware under VMS. It was a very sensible choice back in the day, but after Digital was gobbled up by Compaq, which was, in turn, consumed by HP, the Digital technology line atrophied. Digital & VMS were usurped by Unix and Windows and that was disruptive for everything running under VMS, because it would either have to be replaced or migrate.

But even if that had not happened…

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