“I would rather compete with Sony than compete in another product category with Microsoft.”
Steve Jobs said that to Time magazine soon after launching the iPod in 2001. It signaled the start of a trend Gartner would later call “consumerization of technology,” or “the growing practice of introducing new technologies into consumer markets prior to industrial markets.”
Of course, it wasn’t just Apple; Google, Facebook, and a wide range of mobile, GPS, gaming, entertainment and social startups all have contributed to the scenario where consumers in many markets have better technologies than corporate employees. It has been a glorious decade for technology consumers.
Individual consumers, that is.
Corporate consumers had less to celebrate. Honest CIOs will tell you it was mostly a “lost decade”. The hangover from poor payback Y2K projects which started the decade blended into just as poor ERP, Sarbanes and other compliance investments. There were few delighted consumers who lined up for blocks like they did for iPhones. Instead there were plenty of disgruntled users and critics like Nick “Does IT matter?” Carr. There is palpable frustration in most executive suites about technology costs and performance.
It’s easy to blame the CIO and corporate IT. But if you add up IT, tech R&D and telecom budgets you see many companies spend 80 to 90% of those budgets with suppliers. And do so with a handful of suppliers – driven by supplier consolidation strategies which worked in many manufacturing markets, but boomeranged in tech. It led to a mismatch where the top 25 global technology vendors now make up more than 60 percent of the volume of the amount spent externally. The top 25 global technology buyers however, barely make up 5 percent of the total spend.
Even as AT&T and HP and Microsoft and other vendors contributed to the consumerization decade, they mostly disappointed on the enterprise front – in innovation and in economics. And they did better than other vendors which did little for consumer markets and delivered even less to the enterprise. Apple and Google can argue they were not given a fair shot in the enterprise – but enough of excuses. It is a new decade!
It is a new decade – one where we all focus on bringing the magic of the last decade to the enterprise. Consumerization gives way to Commercialization of technology. Commercialization as in technology embedded in products to delight customers (and their accountants) and in internal processes to make them far more efficient. Some of that has already been happening. I cataloged several successes in my book last summer – GE, UPS, BP among others - and as I presented on the book tour heard about other success stories. Unfortunately, with dollars skewing towards vendors, their own marketing and media focus has also been more on vendors, less on enterprise success stories. Another thing which will need to change this decade.
Of course, we will need to make adaptations from consumer markets. Mark Zuckerberg of Facebook predicts
“It's about the idea that most applications are going to become social, and most industries are going to be rethought in a way where social design and doing things with your friends is at the core of how these things work.
If the last five years was the ramping up, I think that the next five years are going to be characterized by widespread acknowledgment by other industries that this is the way that stuff should be and will be better.”
Mark is only partially right. Social networks are far more important in B2C than B2B markets (as someone recently told me “cannot expect friends to recommend friends buy our billion dollar industrial equipment”). Even in B2C markets they are only one of many tech agenda items. If you see the excitement around autos it is about smarter uses of sensors, satellites and way beyond social software (like the 10 million lines of code in the Chevy Volt). If you look at healthcare, the big excitement is around predictive, personalized, preventative medicine .
And that is the big aha from the last decade. We have access to a wide palette of technologies – infotech, nanotech, cleantech, biotech. Individual consumers have been exposed to much of that – at amazing price points. There is no reason enterprise tech cannot leverage all of that. The CEO has the right to expect in the boardroom and the product lab and the supply chain what he/she is getting in the home living room. And not have to pay 1000X or even 100x for it.
Commenting on my book, Ben Fried, CIO of Google talked about a return to
“IT’s roots, with the transformative power that comes from putting technology innovation in service to business and society.”
Yes, the roots that I heard plenty about at the start of my tech career three decades ago. There was Max Hopper, father of Sabre at American Airlines. There was Dr. James Cash at Harvard. They were about strategic advantage through technology. Not spending 90% of tech budgets with vendors and praying for strategic advantage. Vendors talking proudly about customers which used technology to advantage, not just bragging about themselves.
It is a new decade – and a good time to return to those roots. Welcome to the commercialization decade!
Cuppa Joe
It is with sadness that I heard this week of the untimely passing of Joe Vales. As Phil Fersht describes he was a powerhouse in outsourcing circles.
But I will especially miss him for our personal relationship. Our paths did not cross when we were both at Price Waterhouse in the 90s, but we made up for it in the past decade. Before I set up my consulting firm, I talked to him and he coached me patiently. Over the years, I quoted him several times on this blog and he interviewed me for his series for HRO magazine titled “Cuppa Joe” which always had wise words on happenings in outsourcing.
He would send kind me emails at every holiday – and an occasional sharp one when he disagreed with something on the blog. But it was always polite and always brightened my day.
What I particularly liked about him was how much of a family man he was. When I invited him to write a guest column for the blog he could have written about any number of outsourcing topics, but he wrote about involving his daughter, Kerry Ann in his advisory business.
As I sit down to coffee this morning I raise my cuppa to Joe, the gentle giant.
January 15, 2011 in People Commentary | Permalink | Comments (2) | TrackBack (0)