For enterprise software companies, technologies such as AI, cybersecurity, cloud computing and big data are likely to drive an upgrade cycle. AI will offer buyers improved productivity and insights into their data, while cybersecurity will likely be a minimum investment for next-generation enterprise software. If legacy enterprise software is not updated with new technologies, customer churn and reduced maintenance renewal rates are likely – but companies with a high mix of modern technologies are likely to see stronger demand.
Company specific thoughts:
The companies which are best positioned for this transition are BlackBerry (BB), Kinaxis (KXS.CN) and Shopify (SHOP), which have the highest mix of next-generation technologies in their existing offerings. For example, BB’s QNX platform is positioned as a leading operating system for Advanced Driver Assistance Systems (ADAS) – a precursor to autonomous vehicles. Others such as Sierra Wireless (SWIR), Mitel (MITL) and Enghouse (ENGH.CN) have a high mix of legacy software – and while they are modernizing their portfolios, they could see higher levels of customer churn or reduced maintenance renewal rates in the future.
Technology: Up close
The future will be determined by those who are willing to reinvest, adapt and turn future threats into opportunities.