Business & Technology Nexus

Dave Stephens on technology and business trends

Archive for October 2009

Commoditization & “High” Technology

with one comment

Is any software company out there truly deserving of being called “high” tech any more? What happens etymologically when upstart high tech companies compete over the span of decades & commoditize space after space after space. At some point shouldn’t we stop associating them with the “high” part of high-tech? And when do software firms in those spaces sink down low enough to be called “low” tech? (If you’re thinking CA, you’re not alone) :)

Wordplay aside, doesn’t it seem like the price of many types of software technology is headed towards zero?

A friend of mine in the venture community argues yes. He summarized his view this way: “It’s really hard to build new software technology and then convince people to ascribe value to it. These days, it’s better to instead use software technology to sell people things they already ascribe value to.”

I’ve been wondering whether there is data to support his point of view. In fact, the first few paragraphs of this post have just been sitting in WordPress while I looked around.

Just today I stumbled across an analysis of SuccessFactors that was worth a quick look. Here is a link to the article, entitled: Success Factors: Going for Break-Even Rather than Revenue Growth?

The assertion the author makes is “Increasingly, it looks like SAAS providers will have a tougher and long winding road to sustainable profits and continuous top-line growth.” I hope it will turn out that newer enterprise software vendors will find a path to profitability through reducing the cost of customer acquisition. But the days of being able to claim “it’s a land grab, take share now & profits later” seem to be drawing to a close in this particular software technology space.

Because the cost of developing software is racing to zero every bit as fast as some markets commoditize, it does seem possible to find nooks and crannies of high margin businesses. But these businesses, it would seem, will be more and more specialized & therefore the prospective markets will likewise be smaller.

There does seem to be another path to profitability besides the choice to serve niche markets: outsourced services.

More on that later.

Written by Dave Stephens

10/29/09 8:14 PM at 8:14 pm

Posted in Opinion

Leaving Coupa

with 2 comments

Well, the news of my separation from Coupa has begun to circulate.

I imagine anytime a founder leaves a company it’s tough. It certainly was for me. But as Steve Jobs once said, if you wake up too many mornings in a row not feeling passionate about what you are working on, you need to change what you are working on!

I continue to have confidence in Coupa, its product, and its mission. I’m very proud of what the company has accomplished over the past few years. I believe in Coupa’s management team, respect Coupa’s investors, and think the Coupa solution is the best on the market for automating and controlling indirect procurement for the mid-market.

As for what’s next for me, it just may be a very long (think Forrest Gump) bike ride. And after that, we shall see..

Written by Dave Stephens

10/3/09 10:11 AM at 10:11 am

Posted in Opinion