The
New is Old and the Old is New
This is another Counselor’s Corner that analyzes broad changes
taking place in the business world, puts these changes in perspective,
and comments on where small business may find new profitable niches.
The subject discussed in the article is the maturing of information
technology.
The initial industry growth, 1990-2000, was basically out of control
during these early years. Emphasis was on making equipment smaller,
more powerful, and faster processing. Suppliers rushed to get product
on the market. It was up to the customer to find the best way to
use the new technology and profit from it. The best example of
this is Microsoft’s Windows Program. Microsoft periodically introduced
new models - each loaded with new technology and options - so the
customer had little choice but to buy the package as designed, and
then fit his or her needs to the program. It is reported that
the average user of Windows 98 uses less than half of the options
offered. Yet the customer had to buy the whole package.
Another example was Intel, who kept coming out with smaller, faster,
more capable chips and thrust them on their customers. The
customers had little choice except to modify their product line
to incorporate the new chip or run the risk of having a product
line judged to be obsolete. It was basically a technology-supplier
driven market and the customer had to fall in line.
When the Wall Street bubble burst over the last three years, the
customer’s role in the market place changed. Customers are only
buying technology that can contribute to their bottom line immediately.
This calls for smaller units of technology designed and packaged
for specific applications. It also demands that these packages
must integrate into existing company-wide hardware systems. This
in turn requires more industry wide standardization.
The net result of all this will be that company information systems
will be a series of building blocks linked together. Each block
will carry a specific part of the load. Any block can be easily
replaced or a new one added at any time. This requires industry
wide standardization. One analyst draws the comparison to the early
days of the railroads in this country. Originally, this country
was blanketed with little railroads, with each having their own
track gauge. This made it impossible to interchange shipments or
equipment between lines. It was not until the standard gauge track
was adopted that the railroad industry could consolidate and interchange
equipment and shipments. Customer needs were filled and the industry
grew. This analyst predicts similar trends in compatibility standardization
will be forced on the suppliers of this technology equipment.
(This explains the title of the article “The Old is New”).
One result of this standardization could be national information
system centers where any customer large or small could connect into
the center to fill their information system needs. In this way,
customers would have access to the latest technology at minimum
capital cost. They would also be able to interchange needs with
suppliers or customers.
Will this happen tomorrow? No, but the pressure is building
for standardization to happen. Still, it could take five to ten
years.
What will all of this mean to the small business world? On one
hand it will mean any business owner will have instant access to
all of the latest technology at the flick of a switch. Also, the
owner will not have to spend a lot of time keeping up with the latest
advances in the industry. On the other hand, profit niches will
remain much the same as exist today. Small and medium size businesses
will continue to need plenty of assistance in how to best solve
or integrate their special problems into the ever changing new technology
world. The giant IBM Corp. is earning nice profits doing this consulting
service assistance. If they can do it with their high overhead,
it means there are lots of opportunities for the little guy with
low overhead and a personal touch.
In summary, the changes in the market discussed here will not slow
the development of new technology reaching the market. It just
means it will come in a different way. Profitable niches will continue
to open, especially in a changing business environment. One has
to be willing to add the ingenuity required to earn their own niche.
The price of progress will be troublesome, but rewarding.
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