TechTransform, July 1, 2002: I hope you're doing well in this astonishing tech resurgence. Why is it astonishing? Because it's so uneven.
The reason, I think, is commoditization. Technology is always vulnerable to commoditization (which means less branding value)... now more than ever.
Here are just a few examples.
The Commoditization of Telecommunications
In George Gilder's March Technology Report, which I will gladly share with you, he remarked: "Not only can [the phone companies] not make money on an open network that does more to empower the users than the owners, no one can."
The very success of the Internet, which is entering another boom with "volume that will dwarf even the fantastical increases of the past five years", is creating a rolling disaster for the large players.
The message: be an efficient commodity provider at the core, or go to the edge and deliver great value to the user.
The Commoditization of Code.
The IT team at a company I advise recently launched a management & training portal for their chain of service outlets. They built it with tools freely available on ASP.net, and they got what they were looking for - it did the job, and it was free.
Of course, when they wanted a small security framework and another level of navigation, the developer wanted $70,000, with no guarantee it would work. Too much money... so the IT team is sweating doing it themselves. Net result for the developer? Core code given away, didn't get the upgrade project either.
Buyers need lots of features. The basic features are now commodities. Reduce the high cost of custom programming - which can make up 80% of the cost of large commerce systems - and you can prosper.
The Commoditization of Design.
There is just no more money in pure web site design. What could once be sold for $50,000 now goes for $5,000.
However, there is real demand for people who know how to build web-based applications. Business processes on the web are flourishing. Making them work well and fast is a challenge, and customers know it.
Developers solving the web-based applications problem are charging top dollar and working overtime. And they are able to throw in creative design as icing on the cake.
Design has been commoditized.
The Commoditization of Integration.
Enterprises desperately want all their applications to talk to each other. In the nineties, they paid billions to consultants like KPMG to link all their applications. Still faced with chaos, they are spending billions more on big solutions from WebMethods, SeeBeyond, Tibco, Vitria and IBM. (News)
You guessed it - new products are able to knit those applications together in simpler, quicker, more tactical ways. These products are being dropped in wherever integration is needed.
The big solutions have their place. But clearly, much of what they do is being commoditized by the simpler solutions.
So... what are you doing to make sure you're not being commoditized?