Cloud Computing and Data Analytics Are Net Job Creators

Some recent articles on technology such as this report from The Economist reawaken the old fear of technological unemployment. SIIA thinks this fear is unfounded. Studies show that technology is a net generator of jobs across the entire economy.

Some evidence of this effect comes from studies of cloud computing. One recent report found that “cloud computing is a powerful catalyst for job creation. Although some lower-skilled jobs will be lost because of the higher automation and efficiencies of the cloud, we expect cloud computing to generate hundreds of thousands of net new jobs in the United States and worldwide…”

The job growth related to cloud computing comes from several sources. Existing cloud companies themselves are hiring new workers and if their growth continues on its current trajectory that could generate almost 472,000 jobs in the United States in the next 5 years. In addition, new cloud companies are expected to enter this rapidly growing market and investments in these startup cloud companies could add another 213,000 jobs.

Cloud services also make it possible for new business to form more easily, since they can rent the computer services they need as they scale up. Moreover, existing businesses can use the savings generated by using less expensive cloud computing services to invest in new lines of business and to expand their operations, thereby generating new jobs needed to provide these additional products and services. Together these cost savings could generate hundreds of thousands of jobs beyond those generated directly by expanding cloud computing companies.

As we pointed out in an earlier blog post on this issue, the growing demand for big data analytics services has created hundreds of thousands of job openings. This demand for data scientists is another example of technological job creation.

Economists have long thought that over the long term and viewed from the point of view of the economy as a whole better technology means more and better jobs. The evidence of the effect of cloud computing and big data on job creation confirms this traditional view.


Mark MacCarthy, Vice President, Public Policy at SIIA, directs SIIA’s public policy initiatives in the areas of intellectual property enforcement, information privacy, cybersecurity, cloud computing and the promotion of educational technology. Follow Mark on Twitter at @Mark_MacCarthy

SIPAlert Daily – 9 steps for new product launches and growth in 2014

In his popular Reflections of a Newsosaur blog yesterday, Alan Mutter wrote of “the abundant population of non-readers in every community represent[ing] a substantial base of potential consumers for the transformative and delightful new products that publishers could bring to market—if they put their minds to it.”

He was talking about newspapers but could easily have been referring to niche publishers. His point was that publishers don’t put enough emphasis on audience development and new product launches. The difference with niche publishers—from newspapers—is that most have made an excellent digital transition. That should pave the way for younger and more diverse audiences. Should.

In March, David Foster, president of Business Valuation Resources, conducted a webinar for SIPA on Nine Essential Steps for Growing New Products in 2013. (It is available to members in the archives. Also check out the other great webinars there.) Here are the key factors he emphasized to help publishers grow their revenue:

1. Does this growth increase your range of price points?

2. Does this strengthen—and not compete with—your current marketing and sales channels?With particular focus on more complex sales distinctions.

3. Does this growth improve your technological “nimbleness”? (Is everyone still on the same, or one, page?)

4. Does this growth improve one of these metrics, and by how much? (Leads, conversions, retention, partners, sponsors, etc.)

5. Does this growth decrease your average time from conception to first revenues? “New product development is a central testing strategy.”

6. Does this growth allow you to accelerate content creation by integrating customer content? Does this growth increase the definition of customer data?

7. Does this growth move you closer to anticipating your customers’ future? Can you add real-time or even predictive modeling to your product?

8. Does this core market growth also align easily with your key secondary markets?

9. Will your sales and marketing leaders be embarrassed to describe how this project fits? Are the sales and marketing resources needed to succeed clear, identifiable, and sensible to an objective outsider?

And a bonus number 10: Does this growth strengthen your management team and governance structure?

The question to ask, based on both Foster and Mutter, is who is charged with creating new products at your business and is he or she or them being given the proper time. And to a lesser extent, are there strong mobile capabilities in the idea?

The famous line—it’s not in my job description—may apply here. Mutter talks about the task of audience building being handed to the circulation manager or marketing department. Instead, he argues that it “is the responsibility of everyone in the building.” Similarly, Foster complimented one company’s new initiative by saying that “each of their managers knows exactly what they’re responsible for.” In addition, his striving for technological nimbleness involves everyone—database, website, IT, financial. They should all be a part of the process, he would argue.

In an article in Sunday’s Washington Post, Jeremy Hutchison-Krupat, assistant professor of business administration at the University of Virginia Darden School of Business, wrote about a phased approach to product development that aims to “reduce uncertainty by noting potential issues with a product early on.” So bad ideas are abandoned and good ideas are improved upon.

“Preliminary launch decisions need to balance an ability to showcase a product and enter profitable markets with an ability to learn as much as possible within whatever limited time is available,” Hutchison-Krupat wrote. In his webinar, Foster spoke about “making bets that are big enough to have an upside if they succeed, but not so big that one failure and you can’t do anything else.” It is indeed a balancing act—or perhaps more aptly the Goldilocks approach.

Just the fairy-tale finish I was hoping for.

To subscribe to the SIPAlert Daily, go to the SIIA website.


Ronn LevineRonn Levine began his career as a reporter for The Washington Post and has won numerous writing and publications awards since. Most recently, he spent 12 years at the Newspaper Association of America covering a variety of topics before joining SIPA in 2009 as managing editor. Follow Ronn on Twitter at @SIPAOnline

 

SIIA/OPEXEngine Financial Benchmarking Report Reveals Continued Growth & Changing Face of U.S. Software Industry

Small and mid-sized companies in the U.S. software industry are thriving in the post-recession economy, with software-as-a-service (SaaS) firms consistently experiencing the greatest revenue growth and hiring expectations, according to a study released by the SIIA Software Division today.The 2013 Software & SaaS Financial Benchmarking Industry Report was produced by SIIA partner OPEXEngine, the leading aggregator of financial and operating benchmarks for small- and mid-sized software companies. To complete this seventh annual report, OPEXEngine surveyed several hundred private and public U.S. firms with revenues between $1 million and $450 million.The report finds that the entire small and mid-sized U.S. software industry continues to experience strong growth, however SaaS firms are consistently experiencing the greatest revenue growth and hiring expectations in today’s post-recession economy. According to the study, private SaaS firms experienced average revenue growth of 35 percent in 2012, edging higher than the 30 percent achieved by private software firms. In addition, 2012 revenue growth for private SaaS companies was more than twice that of on-premises software companies. Public SaaS firms averaged 25 percent revenue growth in 2012, but the top quartile had a median of 48 percent growth.

While hiring expectations were also strong for private small and mid-sized firms, SaaS companies demonstrated a slightly more significant commitment to job growth. According to the study, private companies plan  to increase employee headcount in 2013 by an average of 26 percent – continuing a positive hiring trend benchmarked at the same rate last year – with private SaaS companies averaging closer to 30 percent planned growth in headcount for 2013.

The software resurgence continues, with small- and mid-sized software firms exhibiting some of the strongest post-recession growth rates of any sector in the U.S. The study also demonstrates that the face of the industry is shifting, now more than ever, from on-premises firms to SaaS. The greatest gains now unquestionably belong to SaaS firms, which are leading a software industry expansion across the U.S.

OPEXEngine also noted that more companies outside traditional tech centers on the East and West coasts participated in this year’s study. This data allowed OPEXEngine to, for the first time, compare software firms based in the Central and Mountain regions to their counterparts based in Silicon Valley, Boston and elsewhere. The increased participation also offers a strong indication that there is considerable software industry growth taking place in these non-traditional regions.

In comparing software firms in different geographic regions, OPEXEngine found that private West Coast firms experienced an average revenue growth rate of 53 percent in 2012, compared to 30 percent for East Coast firms and 25 percent for those in the Central and Mountain regions.   Venture-backed firms had the highest growth among private firms, regardless of location with median 47 percent revenue growth last year, versus 13 percent for the non-venture backed firms.  Profit metrics, however, were better for Central and Mountain companies than for companies located on the East Coast, but not as strong as profit metrics for West Coast companies.

Key findings from the 2013 Software Benchmarking Industry Report include:

  • Private firms expect to increase headcount by an average of 26 percent.  The biggest hiring increases are expected by firms with revenue under $10 million (35 percent) and between $10 and $20 million (26 percent).
  • Private software firms achieved an average revenue growth rate of 31 percent in 2012, compared to 37 percent in 2011 and 28 percent in 2010.
  • Private companies in the $20-$40 million range had the highest revenue growth rate (median 55 percent), compared to 46 percent in 2011.
  • Public companies under $450M experienced a median revenue growth rate of 22 percent, and expect to increase headcount by an average 20 percent in 2013.
  • Public companies in the top quartile showed a median of 48% revenue growth in 2012 over 2011.
  • Private SaaS companies fared much better than private on-premises software companies, experiencing a median revenue growth rate of 35 percent, compared to 16 percent for on-premises firms.
  • Median revenue growth rates were higher for West Coast companies – 53 percent versus 30 percent for East Coast companies and 25 percent for Central and Mountain companies.
  • West coast private firms utilized the most venture funding, having taken an average of $53.5M, while East firms averaged $37.3M and Mid-West/Mountain region private firms averaged $11.4M venture funding.

The 2013 Software & SaaS Financial Benchmarking Industry Report provides extensive financial and operating metrics for U.S.-based companies with 2012 revenues of between $1 million and $450 million. Benchmarks cover key financials, including detailed expense ratios, revenue and profit metrics, geographic break-outs, employee statistics, as well as customer and sales model comparisons. The report also looks specifically at Software-as-a-Service (SaaS) vendors and breaks out all the benchmarks for smaller, private SaaS companies as well as for larger, public, SaaS companies. The 2013 report is the seventh annual benchmarking of the software industry conducted by OPEXEngine.

The 2013 Software & SaaS Financial Benchmarking Industry Report is available for purchase at www.opexengine.com.


Rhianna Collier is VP for the Software Division at SIIA. Follow the Software team on Twitter at @SIIASoftware.

SIIA’s Deciphering Finance to Offer CPE credits

SIIA’s Deciphering Finance event has been approved to offer up to 6 hours of Continuing Professional Education credits.  During this one day forum on Dec. 4 in Cambridge, MA, finance executives will gain insight that will help them think more strategically, enhance the performance of their finance teams, and maximize the performance of their companies. In addition, attendees can earn CPE credits while increasing their knowledge of emerging finance trends.

The below sessions are approved for CPE credits:

  • Using Cloud Financials to Grow Without Hiring
  • Fireside Chat – How to Align with your CEO for Strategic Growth
  • Critical Metrics That Drive Software and SaaS Success
  • Navigating the Risk Landscape
  • Taming Revenue Recognition Complexity to Ensure Compliance
  • Practical Approaches for Growth

CPE Credits are based on a 50 minute hour = 1 credit

Prerequisites: No advanced preparation is required prior to attending this event

Program Level: Basic

Delivery Method: Group-Live

SIIA thanks sponsor Grant Thornton for leading the CPE Credit program at Deciphering Finance.

 

About SIIA

SIIA is the leading association representing the software and digital content industries. SIIA represents approximately 800 member companies worldwide that develop software and digital information content.  Information technology (IT) and software security are critical issues to SIIA’s members, many of whom strive to develop safe, secure and state-of the-art products that effectively serve their commercial and government customers alike, while protecting their intellectual property. The SIIA Software Division provides a forum for companies developing the applications, services, infrastructure and tools that are driving the software and services industry forward. For further information, visit www.siia.net/software.


Grant Thornton LLP is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.learningmarket.org

5 Reasons the Recession was Good for Enterprise Mobility

With most pundits having declared that the tech recession is over in corporate IT spending (click here for Forrester’s case or check out Cisco’s latest results), I thought that it would be good to reflect on the impact of the recession on the enterprise mobility market. Largely the recession has been very challenging for many businesses and individuals. But, in my opinion, there have been some sustentative positives for enterprise mobility from this pause in growth. These positives primarily stem from either an increased pace of innovation and a refocus of IT resources on some critical, but taken for granted areas of mobile computing.

1. Taking Inventory

Most IT shops stopped all but essential capital spending in 2009 and aimed their freed up human capital to find even further savings. In the arena of mobile computing, the first step was creating a solid inventory and analysis of mobile assets. Given that the future is more mobile and less office bound, this intelligence will be critical to managing and securing the overall business. So, the naval gazing of the recession period has helped businesses realize that yesterday’s solutions to desktop management and security need to be updated for the increasingly mobile landscape.

2. Timely Cloud Cover

The recession has brought cost effectiveness into nearly all decisions in our personal lives and certainly every decision by IT executives. While in years past, achieving lower costs would have to be solved by vendor negotiations, headcount reductions, searching for scale, and consolidating operations, in 2009, the vendor community brought real technical innovation to the table in the form of proven and effective cloud computing and software-as-a-service solutions.

There is an emerging set of cloud-based, mobility management platforms that can manage all of a business’ remote and virtual assets, as if they were still attached to traditional LANs. More so, this class of solution helps solve the visibility gap identified above, but providing reliable and accurate inventory and assessment of mobile devices anywhere, anytime on the corporate network or on the public Internet cloud.

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