The Changed Definition of Vertical Technology

It was 1997. Gartner used to publish an annual poster which rated systems integrators/outsourcers by industries, by geographies, by technologies, and other competencies. It was a large wall hanger with many rows and columns, and many analysts, including me, had a say in some of the cells.

One of the firms being rated submitted the same customer reference in their qualifications for the ERP, financial process competency and for the entertainment industry columns. I called the firm and asked them to pick one “view” for the scoring. They insisted they deserved to be given credit for that client on all 3 columns. We went round and round. I asked them Do you not have any royalty, studio accounting or DRM projects to share? They insisted their Oracle GL project for that entertainment client was proof of their industry expertise.

Fast forward 15 years and most vendors still show off their sales to specific industries as proof of their verticalization. There are some that can show specific industry functionality like retail merchandising or utility billing. Even fewer have functionality for newer biotech and countless other “new” industries. As a GE executive told me for The New Polymath

In sector after sector, we find that technology suppliers sometimes lack deep domain knowledge when it comes to vertical technology solutions. That has opened the door for GE Healthcare, GE Transportation and other units to become technology leaders in their markets. We are a multi - billion dollar software and technology company in our own right.

In comparison, it is interesting to read about Ron Johnson’s overhaul strategy at J.C. Penney. His track record – Apple’s wildly successful retail foray over the last decade. In my upcoming book I have repeated examples of how successful. Apple’s fingerprints are all over the Taubman Shopping Centers case study. In the ultimate compliment. Michael Gartenberg at Gartner says “I’ve called Apple the Nordstrom of technology in the past, but now it seems the student has become the master”. 

Apple has similarly reshaped music and mobile service. EBay, via Paypal, has reshaped banking. Amazon continues to revolutionize book publishing. Google and Facebook have reshaped the advertising world.

So, when vendors present to me about verticalization, I am not too impressed about that Oracle or SAP financials project in some industry. I was not impressed in 1997. Much less so in 2012 having seen what the Ron Johnsons can do. The definition of vertical expertise has come a long way.