Monthly Archives: October 2015

Selling technology – When the race to the bottom collides with the race to the top

Race to the top and to the bottomEveryone wants to do things faster – and cheaper. Free is the new currency for many of us in our personal lives and for the corporate IT organisation and those who supply and support them, the cost of the raw IT commodity is engaged in a frantic Race to the Bottom. Meanwhile, the business owners want to get more from their Digital Assets as they engage in a Race to the Top to achieve more growth and customer retention.

As technology sellers and managers,  business unit owners and end users enjoy the cut and thrust of these two opposing ‘races’ whether it is over the best deal, the best service and the best outcome, compelling and fascinating collision points appear to suggest only the strong will survive.

Engineers are perfecting their science to create smaller and smaller components, that on their own matter little, but when coordinated become an extensible membrane of intelligent ‘umpf’ that can be stretched across an organisation to affect dramatic effect to business insight and corporate DNA value. Inside each of the micro-electronic components that exist in our smartphones today, and sensors that track our every move tomorrow there is a price war where the purchase price ( and production price ) is down in the weeds as the miniaturization production costs are reaching critical mass.

To highlight this ( perhaps a little extremely ) there is something happening called Digital Dust which promises a complete sensor/communication system made of sensors one cubic millimeter in size. Yes one cubic millimeter in size!

Potential uses of this technology expresses perfectly the coming together of the race to the bottom and to the top when you consider the following;

Military planners and strategists using sensor networks such as battlefield surveillance or health care professionals using virtual keyboard sensors: by attaching miniature remotes on each fingernail, and using accelerometers to sense orientation and motion of each fingertip, and communicate this data to a computer in a wristwatch or similar wearable device.Or retail
inventory managers placing miniature sensors on each object in the inventory system (product package, carton, pallet, truck warehouse, internet), each component could “talk” to the next component in the system.

Now whilst Digital Dust may not be something any of us need to think about today, it highlights the IT industry’s march to a component based world that allows us to build computational platforms, grids and infrastructures that give our masters the power they need for their ever hungry applications and i-worker devices.

And its not just the’ tech’ that is immersed in this race to the bottom. Consider the People aspect of delivering a modern IT service.

If I can self-serve myself not only in my ‘kit’ but my software and my interpretation of my data, and have a Plan B if things break, my reliance on a service desk analyst is minimised. And even if I cannot do any of these things due to corporate policy and governance, the very nature of Operating Systems and methods to support and deploy applications and upgrades is making the ‘touch ratio’ also reduce dramatically. Many IT organisations now are out smarting competitors
through rethinking their service delivery models through automation and achieving a lower touch versus cost outcome for their ‘core IT’. At the end of the day the ‘less a user is touched by IT’ and the ‘more the user touches the information they need to be more productive’ the more ‘successful individuals and the corporate will become’.

Furthermore, as legacy platforms and services retire they are being replaced by lower commodity components typically managed by cloud providers that offer a low price point for the usage whilst allowing for the first time some wriggle room for stretched IT departments to step back, reshape their organisation and build a more business orientated shop front to help support the vision for a Digital Business. The clock is ticking for these guys though as the IT shadow relentlessly marches
on, and the internal politics and people re-skilling programmes stutter through their traditional battlegrounds.

The long tail last mile of IT ‘delivery’ still needs the people factor but the race to the bottom is at its keenest here, with the self-installation capability of the components reducing the skills level and the physical face to face ‘desk-side’ visit. Look at how Windows 10 is now ingesting itself onto devices and how the future of corporate App Stores promise more self- service facility. Over time more and more corporate IT units will be looking for the lowest price point to undertake transition work from the old style ‘desk-side’ to the new style ‘self-service’ mode of IT support.

Whilst this race to the bottom is going there is also the race to the top, as organisations use these ‘low cost components’ to build up the value of their Digital Asset.

Analysts talk about the Billions of business available to these who can transform their organisations by becoming Digital and big cheques are being written in search of this holy grail.

Gartner talk about Every Business Unit becoming a Technology Startup citing that in the last two years “.. 650 million new physical objects have come online. 3D printers became a billion dollar market; 10 percent of automobiles became connected; and the number of Chief Data Officers and Chief Digital Officer positions have doubled”. As control shifts away from IT and towards digital business units that are closer to the customer, Gartner highlight that “38% of total IT spend is outside of IT already, with a disproportionate amount in digital, and that by 2017, it will be over 50 percent.”

And here is the killer statistic that underlines how these price wars are changing the engagement approach for all of us.

And the proof is in the pudding.

Look at how much organisations are now spending on exposing value from their digital analytic platforms. They do this because they are now seeing that the rich information insight they can now see from accessing and visualising their data in a smarter way is giving them the competitive edge they need to reduce their operating costs whilst driving innovation and agility into how they build products and service their clients. Look at the retail market. Investments in technology that
can ‘mine’ client data smarter and with more revenue attached is priority number one. And all those ‘low cost’ IT actions that are needed – big data, BI tools, productivity tools, cloud – are all falling into the race to the bottom bucket in terms of acquiring the raw component. Just like Digital Dust!

And all of this is inevitable.

Organisations are realising in super quick time that now they have embarked on a race to the bottom for their core IT commodity assets, they can now focus their attention on the value of their digital differentiating assets. What is now of the uppermost importance is not the per unit acquisition cost of these commodity assets, but the cost of being able to take analog information that is scattered across systems and datacenters, and build insight becomes where investments are now being made. And not just in the search for better decision making and predictive analysis.

And people are becoming the real differentiator as they evolve in new workplace environments, using emerging technologies to collaborate smarter and accessing business insight on their terms.

So as I reflect on this post I consider how the IT world has changed 360 to a world where the most value comes from the least valuable component, and that to remain competitive and relevant having a strategy that can deliver both is fundamental whether you are the IT owner or the IT seller.

I will leave it to Gartner to have the last word, as they estimate that “50 percent of all technology sales people are actively selling direct to business units, not IT departments”.

Perhaps the time is coming that the ‘seller’ needs to broker more of both sides of this race, and not just where they sit comfortably today.

Brummie.

Advertisements