Commoditization

I had a couple of chats with CIO’s this past week. In the first chat we were talking a network refresh, and the comment was made that network and computing hardware were fast becoming commodities. If you have bought any of these recently you know that’s true. What’s not well understood is that the consequences of commoditization will cut on both sides of the transaction. Lots of technology products are sold by high-cost providers who created their businesses in the old times when you could make a profit on hardware: think Cisco, Hewlett-Packard, and even Dell. These providers are all in the throes of changing their business models significantly to cope, which means that they’re getting rid of people and processes. This means that you may buy their hardware, but you’ll find after-sale service and support slimmed down. And you will also start to find that pre-sales support is also slimmed down: you’ll have fewer trained resellers to choose from, because low margins can’t support informed technical help. Or, these parts of the tech market are going the same way as the PC.

The second chat was more of a surprise. That CIO was bemoaning the fact that IT people were also being commoditized or devalued….no longer offered quality salaries or compensation increases. Why? Perhaps because the things that they look after don’t cause many problems. Or, perhaps those juicy and valuable IT functions have gone away, replaced by cloud-based services; managed and developed by high-priced technical help. This leaves the local IT people doing not much more than managing the delivery.

What’s to save those forlorn IT people? Re-orienting themselves away from infrastructure and toward harder local services like security or training. Or waiting until our Internet has real problems and people wonder why their IT has just stopped, and start to take steps to bring important bits back into the organization. BOB