Services, not tools—but until when?
In the immediate term, a shift is continuing on the user level from “help me install it” to “build an operating model for me”. My conversations with dozens of industry execs, investors and customers have led me to believe that this is still very much a consultant’s industry: as containers and Kubernetes stretch or fundamentally change engineering, organizational and cultural assumptions underlying the application lifecycle, this requires a wide scope with ample focus on change management, which fits a services model.
Large consulting firms have benefitted from this, with some of them raising impressive investment rounds from venture capital, a sector known for focusing on product companies. Some of the smaller tooling companies are offering services wrapped around their technology. Pure-product companies are biding their time—doubling down on engineering to deepen their product advantage, generating most revenue from SMEs using their SaaS model. (It will be interesting to watch future M&A activity between some of the larger consulting companies, who in general have limited technology IP, and smaller product companies, who have limited/no services scope.)
It is the way of technology almost everywhere: The cloud-native ecosystem will inevitably become more mature and commoditized, with much more of a product focus . Some of us are old enough to remember when building a custom website could cost many hundreds of thousands of dollars, but today you just use Squarespace or Wix templates; we shouldn’t assume anything different for this market. With commoditization in mind, does investing in custom technology around Kubernetes make sense? I would argue that in the medium-long term, IT buyers should look for widely-used, scalable, production-proven solutions, and then make a decision on whether to invest towards in-house operations (open source) or a managed/commercial software model.
The question nobody can honestly claim to have an answer for is, “when will this shift to product happen?”. In the meantime, one group of companies will continue to reap the financial rewards of Kubernetes’ explosive growth, in the same way they have benefited from other open source projects: the handful of mega-public clouds and PaaS giants. Wherever the wind blows, being an industry center of gravity with an API-based platform, like AWS or Azure (or OpenShift, given this week’s news!), has never been more lucrative.
(Originally posted on Forbes.com)