Think Tank: Enterprise Technology TailwindsAndrew Steele, an investor at Activant Capital, explains.

[Collection]Since the advent of the smartphone, the first wave of technology winners have been on the consumer tech side. The market capitalizations of Facebook, Amazon, Apple and Google are all larger than the big enterprise software companies (IBM, Oracle, SAP, Salesforce). Similarly, China has seen the growth of Alibaba, Tencent and JD.com. As we look toward the next few years, we believe that the next wave of technology winners — those receiving the lion’s share of funding and generating the strongest returns — will come on the enterprise side driven in part by several key tailwinds: (1) the corporate investment cycle and M&A, (2) business model innovation, (3) shifting focus toward user experience, and (4) consumer technology headwinds. Capital Replacement Cycle and M&A Historically, for large corporations, capital investment as a percentage of depreciation ranges cyclically from 60 to 120 percent. During periods where this relationship is greater than 100 percent, companies are replacing their assets faster than they are using them. Since the 2008 financial crisis, corporate America’s investment rate has been at about 60 percent of depreciation — the bottom of the spend cycle. If history is any measure, companies are likely to accelerate spending back to the 120 percent mark,

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