Change is one constant that has characterised the information technology (IT) industry over the last 50 years. This period encapsulates the rich history of modern computing. Another is the ongoing march towards increasing commoditisation in the industry.
Graham Vorster, chief technology officer at Duxbury Networking, looks at the effects of commoditisation and the subsequent impact on the enterprise of the future.
The pace of change in the IT industry has accelerated significantly over the last 10 years. Yesterday`s high value, leading-edge product or service is tomorrow`s commodity item.
This has been encouraged by demands from customers to be able to do more with less, and to do it faster, with increased flexibility, and - most significantly - with less expense.
Technology has always been vulnerable to commoditisation, which means less branding value. But this is more relevant today than ever before.
Now, the cycles of change no longer encourage specialised or custom-designed hardware or software to meet particular business computing needs, since the cost advantage of high volume commodity products has become so compelling.
One size fits all
This "one-size-fits-all" approach has found favour because of the high return on investment (ROI) that users can achieve with standard off-the-shelf components and solutions.
More tailored solutions, once popular because they could be designed to address particular business problems and unique business processes, are now viewed as higher risks from an ROI perspective and are rapidly losing their appeal.
As one industry commentator puts it: "It is as if the nature of the microprocessor, off-the-shelf integrated circuits of standard ingredients and components, ever more specially integrated and arrayed to shorten the processing path and deliver its unique value-add, were now the metaphor for business itself."
Because of commoditisation, it is perhaps hard to readily define the areas in which vendors can add value to commoditised offerings.
True value-add comes not so much from the elements of the solution, but the methods by which these elements are integrated within an organisation to achieve certain business-oriented goals.
Therefore dealers and resellers that traditionally operate at the "nuts and bolts" level of business have to change their value propositions - or otherwise become irrelevant in the greater scheme of things.
For many resellers, this has meant a change in the way they understand the concept of "value-add". Although they may have had their roots in hardware, they now have to come to terms with understanding their customers` business needs and aspirations and provide software options, services, and unique function-specific hardware differentiation to meet them.
Software is key
There seems little doubt that software - and the standards that have been accepted by the IT industry - will be key to realising the business benefits of commoditisation.
For example, TCP/IP, HTTP, HTML and XML among other software standards have created new opportunities for faster system development to drive the growth of distributed applications and services.
In the future, standards will assure organisations that applications developed will have a life that is independent of any hardware or operating system platform, thus enabling longevity without obsolescence or vendor lock-in.
Gain advantage
Customers have traditionally looked for ways to add functionality to their businesses to steel a march on the competition and gain a small advantage.
By addressing this opportunity, resellers can gain markets hare by driving the economics and value proposition of industry standard computing to enterprises of every kind.
One of the industry`s best examples is word processing: in the early days of the late 1970s and early 1980s, organisations went to expert suppliers and paid high prices for specialised word processing systems.
Then word processing solutions began their progress along the road to commoditisation. They went through the intermediate stage where users resisted paying high prices for expertise in supplying and installing word processing, but they would pay for the experience of a reseller who could optimise the package for their needs.
Then price competition set in and buyers began to see word processing as a commodity. This was about the time WordPerfect began to be a standard in most offices, starting with version 5.1 from 1990 onwards. Since then the industry has seen e-mail follow the same trajectory: exotic to high value to commodity.
The future
Previously, one of the greatest benefits of standardisation - and commoditisation - was cost reduction. However, in future automation and added business efficiency will be key.
For example, in future, service providers will be able to handle most of the routine tasks currently performed by an organisation - such as data backups, archiving and security monitoring - remotely.
System management tools will automate the processes and in so doing reduce the total cost of ownership (TCO) of computer systems even further.
Users would no longer have to bear the costs of setting up, configuring and integration to consider. Maintenance, upgrading of hardware and software, and dealing with users` queries will be distant memories.
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