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Software industry: big names may go

Big debate at the Software event tackles emerging power of cognitive systems, regulation and company valuations

At the European Software and Solutions Summit in London in April, IT Europa assembled a group of experts to consider some key questions. First - where will the industry be in a year's time? David Riemenschneider, Senior director, Hampleton: “There will be a transition from data to how machines use data; at the moment there is a human manipulation but machines will do that. It happens to a certain extent today, but machine intelligence is the next big thing.

Rene van Erk, ISVWorld “If you look at what is happening in the industry, a lot of the ideas have been around for some time. The concepts are not changing-but it is getting better- we are getting better at using it, and a lot of AI companies are being bought for their technology. The ease of use on a single cloud platform is exponentially becoming easier. There will be a limited set of winners who will provide intelligence in the future, however.”

The pressures to keep up in the race to use technology productivity are considerable The size of the companies that are failing and will fail can be surprising. coMakeIT CEO Steven ten Napel predicts that next year “we will look back and there will be some big names no longer around”.

There are still some moral issues and decisions to be made in programming, says David Riemenschneider. Get it wrong on things like autonomous vehicles and they are too conservative and won't be used.

Paul MacDonnell, Head of European Policy at the Centre for Data Innovation: “I agree – this changes everything. But there could well be attempts to regulate algorithms; there will be some that are seen as plain wrong, or discriminating.” There are all sorts of potential difficulties in regulation, he warned. Then there are privacy issues – convenience versus confidentiality is the issue, the panel thought.

The discussion then turned to software and contract law, rights and SLAs – will lawyers be replaced by AI systems? Can a robot negotiate? There are a lot of occupations that may go first, the panel thought. The lawyers tend to be the regulators and they tend to be the last to go.

“Legal is about language, says Rene van Erk. Reading financial statements is easy, and a story can be created like this, but contract elements are a lot tougher. Carl Davies - UK CEO Tmaxsoft “The human element is all important and rules can change in a negotiation; quite difficult to programme.

Most professions start doing the basic drudgery tasks – if we replace that with more data-based and cognitive systems. Carl Davies –“Education will need to change, for example there are a lot of change in pharmacy – where the government wants online prescribing, driving retail pharmacies out of business.” Companies like in Google are driving this in interesting ways, the panel thought.

Debate then covered current valuation of technology companies. David Riemenschneider: “There are bubbles and we are probably in one now. Where is the water-line? There are substantial multiples currently, but there is no market for paying $90bn for something like Whatsapp, but they are anomalies. When it comes to valuations, it is what people are willing to pay in a competitive process. As long as the markets stay healthy then valuations will stay up.”

Rene van Erk: “I think it is becoming more of a strategic buyers' market rather than private equity. The balance has shifted in recent years as strategic buyers are willing to pay more, and are able to use leverage to do more. It has to be a conscious decision for sellers as well; the value as part of a strategic buyer is more positive than a private equity business just looking to roll it up.”

David Riemenschneider: “Sometimes a VC deal can create more freedom since they have probably loaded it with debt, but you get to do a deal several times, exit or do several IPOs in a row. VC gives you options, and you can even keep the business. There is a lot of money around currently and VCs are keen to buy as they are getting beaten by the strategic buyers.”