Thursday, October 1, 2015

Car Consumption: A Heuristic Model for Information Technology

Think about the way we consume cars and how it has evolved over the last century. It is nothing short of amazing. It is transformational. The IT industry can learn something from the automotive industry, especially when it comes to consumption models. Of course, the IT industry is moving through their transformation faster than the automotive industry, but many of the stages of the transformation in one industry can help us understand changes in the other.

Today, October 1, 2015, is the 107th anniversary of the Ford Model T. It cost $825, which is about $21,000 today. It began a revolution, not just in transportation, but also in manufacturing. In order to bring costs down and make the car more accessible, Henry Ford introduced ground-breaking innovations, like interchangeable parts, continuous flow, division of labor, and waste reduction. Yet, there were no other options to consume a car if you didn't have $825. 


Think about how that consumption model has changed since then. The concept of a taxi has been around since the horse & carriage, but new consumption options emerged with mass-produced technology. People could soon rent a car and drive it themselves. Or if they wanted the benefits of ownership without the same upfront cost, they could lease a car. Today, companies like Uber & Lyft have created disruptive consumption models that change the game again. The transactional unit is no longer a car or a day or a week, and the barrier to enter that transaction as a supplier has also radically changed. Everyone with a car is a potential supplier . . . whether it is own, leased . . . or even rented! And everyone with a piece of technology is a consumer with more options, more control and a different economic model. Wow!

So what does this mean for IT? I don't think we really even know, but I think it is worth considering. We've already seen dramatic changes with cloud offerings for consumers which provide endless email, games, entertainment and productivity apps. Many of them are "free" in terms of financial cost to the consumer, but not in terms of the currency of personal information. These same technologies and consumption models are slowly, but surely making their way to corporate, government, non-profit and all other types of organizations to which we belong. Gone are the days when a company needed to buy expensive hardware and software and build a datacenter to protect it all (think Model T). Technology, even for the largest, most complex enterprises, is available "as a service" paid for paid on usage (think Uber & Lyft). 

The only real hurdles left to cross are ubiquitous access (think of the billions of people still without smart phones) and security. The killer app will be the browser-like interface to all of our technology which has been seamlessly integrated behind the scenes. Everything will be massively and instantly customized (or configured) in real-time based on vast amounts of data. "Suggested" friends or products or services, augmented reality glasses, self-driving cars, and virtualized data centers are merely a glimpse of what is in store for us. There are more ground-breaking innovations happening on a regular basis in IT, just like they did over 100 years ago in the automotive industry. I'm glad to be working at a company that is playing a key role in that transformation. 

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