One guide to IT's future is to see where venture capitalists are putting their money. So I went and asked one.
Alex Rosen, a general partner at Sprout Group (founded in 1969 and one of the older venture groups), told me recently, "I don't think there are any great segments in IT right now."
Rosen notes that many investors who were once looking to imaginative IT vendors to make them fortunes have come up short; that was so 1990s. Now, successful IT investments are the result of focusing on companies that offer tangible, near-term tactical business solutions.
The more complex business becomes, the more companies need IT to sort out that complexity, says Rosen. But they don't want to get sucked into technology paradigm shifts or grand implementation visions.
For example, companies selecting storage management software demand quick results and require deployments in a couple of days, not months. Yet even with fast storage management implementations, IT providers need to articulate long-term product road maps offering customers things such as capacity planning and utilization-rate technology.
Rosen says that for IT vendors' products to be effective, they must resonate with a customer's needs now and down the road.
Rosen also sees the vertical solutions market as potentially lucrative to venture capitalists like himself. "Many IT firms [have] tried to offer generic products," he says. "But it just doesn't work."
Industries such as financial services and energy are using sector-specific risk-management applications. "Anything that helps companies get a closer connection between their IT infrastructure and business users is getting a real look," Rosen says.
Also, IT vendors have to speak the language of their customers. If they're not familiar with the way you do business or your industry, chances are you're in for a headache.
Perhaps the biggest trend Rosen sees is the need to do something with all the data being generated.
The first step was getting ERP and CRM systems to even work, says Rosen. Once that was accomplished, companies had to store the new information in the correct data models and then had to have the right applications on top of those systems. Those business intelligence packages are new and costly and often not aligned with the business process.
That's where Rosen sees the biggest chance for IT-related investment success. "IT buyers and their CFOs are savvier then ever," he says. "Now is a good time for IT to solve their day-to-day business problems."
And maybe for venture capitalists to begin to make money all over again.
Pimm Fox is a freelance writer in San Francisco.