Four of the Top 5 spenders on R&D are also public cloud providers (Amazon, Google, Microsoft, and Apple), . The focus of most enterprises these days—cloud, cloud, and more cloud—is why current innovation focuses on the cloud, especially the public cloud platforms.
Of course, Bloomberg’s data doesn’t dinstiguish between cloud-specific R&D and other R&D. However, it’s easy to draw the conclusion that most R&D dollars flow to the cloud, both at large tech companies and venture-funded startups.
This is very much like the change in direction of technology companies when the web became popular in the late 1990s. Then, all the innovation and money focused on the cool new platform of the web. Today, that cool new platform is cloud computing.
However, as a former CTO of four technology companies, I do know this:
- Money that’s spent on new platforms, such as the public cloud, is not spent on new features and functions of existing on-premises technology the vendors may also sell. While this applies specifically to the public cloud providers, the innovation focus also shifts for mid-size and small technology companies that provide a lot of technology you use in the enterprise today.
- When a specific product offering develops a real or perceived lack of innovation, most enterprises will move to technology where the real or perceived innovation does occur. If you don’t see any new features and functions from your on-premises technology providers, you’ll likely search out new paths to innovation. In most cases, that search will lead to the public cloud.
This creates something of a forced march to new technology, based on enterprise IT following the innovation and thus R&D spending. You can see this forced march right now with security technology: The most innovative security technology is being built for the cloud. The waterfall effect is that cloud platforms are typically better secured, and most breaches still occur on-premises.
I’m not a fan of these forced marches to new platforms, with their resulting lack of focus on maintenance for existing platforms. However, vendors and companies will continue to experience a Pavlov’s-dog response to current technology trends and hype—and you really can’t blame them. It’s almost impossible to be all things to all people. For example, the leading innovator of new technology is rarely the ongoing improver of current technology.
In this market, fortune typically favors the bold.