The time has come where companies need to decide what they want to be, driving unique sales propositions, by customizing they Marketing, PR, and Technology or outsource with the focus on providing commodity (or at risk of being) products! A hackthon in a corporation who is almost fully outsourced is a mere marketing trick, to look good in the media, but it doesn’t provide a unique ability to drive unique digital products at speed. A hackthon in a corporation who is almost fully outsourced is a mere marketing trick, to look good in the media, but it doesn’t provide a unique ability to drive unique digital products at speed.
When consider business strategies and models, there is a new question now: What is the approach to digitization and technology?
The answer will lead to a different operational framework of the company. Select the cage you want to live in!
Once the fundamental approach has been selected and invested in, it is very costly and time consuming to drive an opposing strategy. I have seen small and big companies being driven into bankruptcy in the US, Thailand, or Singapore in their attempts to significantly alter the model.
How competitive do we want to be?
How unique do we want to be?
How much investment is it worth to us?
How much effort and restructuring are we ready to do?
What is commodity for me?
Business Models and the ability for corporates to evolve, are dependent by the technology approach they choose.
Many traditional companies and startups are stumbling through their technology choices, often in reaction to perceived short term needs, causing issues downstream when market pressures are changing. A Board of Directors needs to choose their technology approach, based upon their business model of the company. Changing quadrants as outlined above will take time, possibly many years and has far reaching impact on skills, people, processes, and cost.
Do I want the same digital platforms as others or one others could equally well buy versus a unique technical capability? The answer will allow you to decide the level of differentiation, but also carry dependencies. Acquiring a certain set of tools and services will make you dependent on a delivery model limiting flexibility, cost, and time to market for your organization.
There are further dependencies on hiring and managing talent, revising your decisions, office space, managing and sourcing talents, etc. Typically organization generate a framework for all corporate technology services and breaks down this large questions into segments, to decide in which specific domain the question should be answered how!
Google and Facebook have developed their own servers, perfectly integrating into the operating system, administrative and application layers-‘Data centre health’ with little people involvement. They also adopt and sharing open source and free software, where it is in to the benefit of their own business model – Operating System and Data store technologies benefits of having a bigger community to evolve standard functions creates better quality commodity functions. This approach requires developing internally deep skills and ongoing investment to develop an architecture, a multi-year road map, and understanding the delivery methods. It less the time of size of teams, but the depth one can attract.
Low customization and low vendor quadrant
Are they using technology at all? Is it a bank? Start thinking about your technology adoption! Think about a motorsai driver in a Soi, who might never have thought about a smart phone. Now he can a.) afford it and b.) can use the app to maximize to assign jobs all over the city to him = profits. Technology is key for everyone.
Fully outsourced data centers and applications, such as HR, finance, collaboration, Email, ERP or other business apps (e.g., credit card, OSS, BSS). With in the framework vendors could customized the setup of existing products and services. Clearly, a large portion of the responsibility of operating in budget, time, and quality would relate to the service and product providers the company selected. However, you inherit the properties of each provider you choose. Cost, time to market, and ability to customize is within the framework you decide. AWS can add multiple features to their cloud platform every week.
The vendor scene is also changing.
Innovation happens in open source and communities, vendors are driven towards services and consultants often build capabilities around products. Buy-ecosystems increasingly prices towards commodity, but open source platforms are used for high end skills and vertical products. Both customers and vendors are having the same challenges in sourcing for the skills. Often this model uses commodity services skills. High end and in-depth skills are difficult to integrate in such a model. Managing and delivery products based upon outsourcing or 3rd parodist and services, can be as challenging as in-house deliveries of the such features. These are just different models. In traditional corporates many technology professionals are used to the buy model. In the startup world many technologists are focusing on the custom build model.
I have seen corporates and startups with poor platforms requiring complete rework. Equally I have seen large corporates in the buy model, paying high price and getting low end skills from product and service vendors, in expanding even simple initiatives into annual turn around times. Cloud vendors are breaking out of this paradigm, as they are providing commodity platforms – being the same for everyone – and are increasing quality. Here is a good game for buyer’s need to address commodity products.
Opinions are my own!