The consultants at Booz and Company who publish strategy + business magazine recently ran an article Winning Moves in 12 Industries. The gist of the article is that in 2012 the authors expect companies in various industries to try to develop new capabilities to differentiate themselves. Mainly it is a way for Booz consultants to show off their knowledge in a bunch of different industries.
I was fascinated to see the title and contents in their article about the technology industry: Technology: Digitize the Verticals. Rather than just link to the article, I will repeat it here in its entirety, as it is very short. Note that the highlights are mine:
The combined trends of cloud computing, connectivity, and big data analytics are forcing information and communications technology (ICT) companies, and their customers, to rethink their established ways of doing business. Technology is finally living up to its promise: Industry after industry — healthcare, utilities, transportation, and others — can now change their product offerings, go-to-market strategies, and internal business operations, thanks to emerging IT building blocks. This presents an opportunity for technology companies to become active partners of industry verticals (the value chains of interrelated companies in particular sectors) as they embark on digital transformations.
To take on this role, however, the leading IT companies will need to build new capabilities systems. They must get even better at understanding how each industry vertical conducts its business, where to find opportunities to drive value, and how emerging technologies can help solve the specific challenges each industry vertical faces. They must learn to work collaboratively with customers to build industry-specific solutions that can scale across corporate boundaries. They must provide the security and reliability that no one else can, especially across the span of a supply chain. In short, IT companies must become better at designing new high-touch, customized operating models for new types of customers — the companies embedded in vertical industries, traveling down the digital road.
AUTHOR PROFILES:
- Toshiya Imai is a partner in Tokyo.
- Alex Koster is a principal in Zurich.
- Kenny Kurtzman is a senior partner in Houston.
- Matthew Le Merle is a partner in San Francisco.
- Pierre Peladeau is a partner in Paris.
What the Booz folks are describing, in part, are Industry in the Cloud platforms. They are right that industry after industry is digitizing its operations. I think they see their traditional clients, Information and Communications Technology companies (ICT) contributing to this, but they may be missing the rise of the smaller SaaS companies that exist solely to become the very platform that ties together an industry’s ecosystem.
The same “emerging IT building blocks” that the Booz folks refer to in their article mean that more of these solutions can come from entrepreneurs from these verticals or very small ventures with a mix of IT skills and domain knowledge, rather than from the traditional behemoths that Booz consults to. In vertical after vertical, there’s a relatively small guy trying to make it big by tying together an enormously and complex ecosystem. It is 1999 and 2000 all over again, but this time the capabilities are closer to the hype.
There goes Booz again – unabashedly rustling about softwareplatformconsulting’s intellectual leadership box to pull out a gem!
An interesting question though. Is it, as Booz puts it “the combined trends of cloud computing, connectivity, and big data analytics […] forcing information and communications technology (ICT) companies, and their customers, to rethink their established ways of doing business”? Or rather, individuals’ adoption of technology in their daily lives since the advent, in the latter half of the 2000’s, of the iPhone, Facebook and eHarmony (to name a few) that have created a new zeitgeist or sorts for thinking of how we can get stuff done at work? Maybe the machines don’t scare as much anymore.
Some might say nothing is new under the sun. ‘Cloud’ at some level is a mere recoining of the less friendly-named technology deployments variably labeled “ASP” or “SAAS”, “hosted”, or ‘on-demand’ offerings. Perhaps the “new new” here is the dispersion of technology and adoption into our daily lives and the expectation that if we can do this really cool stuff at home, why can’t we do this cool stuff with work challenges?
If that’s true, by extension, Industry in the Cloud platforms being built now, or on the drawing board, are the effect of a growing recognition by individuals – and investors that support them – that they can bend technology to their will. Insurance is not farming is not upstream oil and gas drilling, but people who work in each know how stuff gets done. And perhaps the rise of “cloud” this time round is a reflection that non-technologists have a growing appreciation for the role and power of technology to help solve their problems.
At some level, Industry in the Cloud might be about people harnessing technology into their mould and not technology imposing its logical dictates on the unthinking work masses. If true, it’s a really cool time to be around because there’s a lot of great work to be done. We’re not even at the bottom of the first inning, and there are plenty of opportunities out there.
I agree that some of the impetus is what consumers see they can do at home, but I tend to believe the technology of development platforms, connectivity, open source has just fundamentally changed the economics of both “trying” things in the enterprise and in developing something worthy of trying as an entrepreneur. I think too little emphasis is place on how the technology has changed the economics.
As long as hosted or ASP meant just spreading out the same old costs across a bundled payment and a bunch of years it was of little interest. But now small groups, divisions, even whole companies can try some of these apps for a fraction of the initial commitment. Technology that does not change the economics is interesting to technologists, but technology that alters start-up costs, fixed costs, or variable costs is a game-changer.