Every company now a software company, continued

Financial services marches into the software business.

In this space, we've talked about the great shift that has been taking place across the business landscape -- that is, every company, no matter how far from tech they may seem -- is evolving into a software company, and by extension, a data company.

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Photo: Joe McKendrick

That widget manufacturer down the street likely has a data center and has developed and maintains a portfolio of its own custom software that keep evolving. Now, it also may be employing services, with a layer of analytics on top, that extends out to its networks of supply chain vendors, business partners, and customers. The company may even be renting out its software-based online services to others in its industry.

Gil Press, managing Partner at gPress, a marketing, publishing, research and education consultancy, talks extensively about this great shift in his latest Forbes post, in which he looks at the rise of financial services companies as developers and sellers of IT services.

Press observes that while a few large vendors -- IBM, Cisco, EMC, Oracle, HP, and a reinvigorated Dell -- still dominate the IT sector, he argues that this model of IT delivery we've know for decades "is on its last legs," and that the industry will soon be dominated by two clusters of companies:

  • Digital natives (e.g., Google, Facebook, Amazon)
  • Large, IT-intensive enterprises (e.g., financial services companies)

The emergence of financial services companies as IT providers is something that has been brewing for some time. Even before the tech onslaught, many large banks have rented out their services (such as check processing) to other institutions as additional sources of revenues. Now, with development of sophisticate digital offerings, these companies are primed to move into new markets.

Press cites some interesting examples -- such as Santander being the first global bank "to offer cloud data storage services to corporate customers," and Bank of America planning "to have 80% of its workloads running on software-defined infrastructure inspired by Web companies."

These enterprises seek "further return--and possibly new sources of revenues--from their large investments in IT," Press observes. They also seek to remain clear of IT vendor lock-in.

It's not just financial services companies that are leveraging their IT assets to branch out into new digital lines of business, of course. Aerospace companies, consulting firms, retailers and even educational institutions are exploring these new universes. Thanks to cloud and service oriented architecture, the lines between software providers and software consumers have blurred, almost to the point in which they are indistinguishable from one another. That means more choice, and a lot more flexibility foe everyone.

(Disclosures: I am also a contributor to Forbes, referenced in this article. Over the past year, I have conducted project work for Oracle and EMC, both mentioned in this article.)