The twin forces: commoditisation and consumerisation

Working on some content for an appearance next month at the National Housing Federation’s IT in Housing Conference  and have been trying to distill down thoughts on how the world of IT is changing into as few, but coherent, points as possible. There is a plethora of the usual IT buzz-word nonsense in the field, and I want to be able to try and rise above all of the stuff that vendors so often will stick on as a label to make their old products appear new.

For a while, I’ve thought that the shake up in the ways in which so many people now consume technology, and the resulting changes in behaviours and expectations as a result, can be summed up in two words: consumerisation and commoditisation. So here goes with the simple explanations:

Consumerisation is relatively straight forward – it’s the trend by which innovation in technology is lead by products aimed to be sold to people, not corporations. Think smart phones; think tablets; think social networks. All of them technology that was focused at you and I as individuals, not at corporations purchasing in bulk, and that still in many cases the world of business IT struggles to accept as being “proper” technology.

I’ve written before about how, at a conference earlier this year, I had the realisation in a conversation with a chap from a software development company, that “Consumer Grade” and “Enterprise Grade” have seemingly switched their meanings in the past five years. It used to be that the “Consumer Grade” version of something was cut-down, restricted and less powerful than the “Enterprise Grade” equivalent. Today those definitions have often changed places.

Commoditisation is a slightly harder, more economics-y kind of thing. For me, I think it’s best described thus: the process by which a customer can purchase the computing functionality they require directly in measures, rather than having to build the means by which they can generate that computing functionality.

This has a number of outcomes; first of all, increasingly we will find that computing will become something that is paid for like a utility similar to power or water, rather than as the output of capital investment in things like servers. It also means that the focus of what we buy becomes much more around the things that give us value, rather than the tools we need to develop them (think of how many of us buy a mobile phone talk and data contract, and the cost of the phone is wrapped up in those monthly charges.

Further – it also means that we become increasingly unconcerned with the mechanics of how the computing “stuff” is generated; think in these terms across a suite of products that are further and further down the commoditised path: in your PC, do you know the brand and model of the processor? in your smartphone, similarly, do you know the brand and model of its processor? finally, in your car, do you know the make and model of its spark plugs?

Diesel users aside, I’d imagine that there would be a decreasing scale of “yes” in answer to those questions amongst most audiences. Commoditised products generally require less and less understanding and knowledge of how they work as the focus becomes on the valuable output rather than its means of production.

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