The Implications of Consumption Economics for Service Technology Buyers

Next week at Technology Services World Las Vegas, TSIA will be releasing a new book: Consumption Economics: The New Rules of Tech, by J.B. Wood, Thomas Lah, and Todd Hewlin. In preparation for the launch, each of us on the research team have written reports on how Consumption Economics impacts our individual coverage areas. My report, “The Implications of Consumption Economics for Service Technology Buyers: Business Users Driving Cloud Technology Purchases: Caveat Emptor,” will also be available at the conference, but I wanted to pre-publish some thoughts on the topic in my blog today.

Consumption Economics documents the rapidly changing world of technology services as on-premise technology moves to the cloud and as up-front application and user license fees are replaced by micro-transactions. Consumption Economics is a must-read for everyone in the technology services industry, serving as a rallying cry for service leadership to take action now to avoid being classified once again as a “cost center” as the market evolves. As TSIA’s service technology expert, I advise member companies on available technology to improve specific operational, quality, and financial metrics, as well as help companies select the “best fit” vendor for their needs.

Consumption Economics has clear implications for technology buyers, and my accompanying report is an attempt to expand upon the trends and recommendations in the book in regard to services technology; in particular, the enormous responsibility that comes along with technology decisions as buying power shifts from IT to the business user, and how companies are leveraging data analysis tools in early attempts to capitalize on user-level behavioral data, as the book recommends.

In the opening pages of Consumption Economics, the authors outline three unrelated but synergistic drivers that are at the root of the current and future trends in technology services. These same three drivers are also at the root of many trends in tools and technology for the enterprise, including applications and devices in use by education services, professional services, field services, and support services. Those drivers and their resulting trends specifically for technology buyers are:

  1. The global economy tanked. When the U.S. economy had a devastating downturn after 9/11, services were hit hard. Big layoffs impacted the ability of many companies to service customers adequately, and the first major push of service interactions offshore had devastating results to many companies, introducing a new vocabulary to both consumer and enterprise technology customers, such as “accent neutralization.” Most companies learned their lesson, and the most recent downturn in 2008/2009 saw fewer mass layoffs of service technicians and consultants. However, big layoffs in IT meant services management had fewer resources to assist with existing technology, and older platforms for critical tools such as customer relationship management (CRM) and knowledge management (KM) grew hopelessly outdated with no funds for upgrades or replacements. With services budgets frozen due to the economy, organizations that had already been “working smarter, not harder” for a decade were once again under pressure to increase productivity and revenue without impacting quality.
  2. Cloud computing got hot. Clearly, on-demand, cloud, or software as a service (SaaS) technology is becoming available in every single enterprise technology area, across the front and back office. But nowhere has there been as much momentum as in CRM, thanks largely to the poster child for on-demand,, whose low-cost, low-complexity sales force automation (SFA) solution found mass adoption by appealing not to sales managers, but to front-line sales reps—the laggards who kept many on-premise SFA implementations from succeeding. With fewer IT resources available, business users gravitated toward cloud solutions, often picking tools with zero IT involvement. Often sacrificing sophistication for less complexity, the shift to on-demand CRM and related tools has proven risky for larger firms, who ultimately may not receive the intended ROI for the purchase, negating the savings from on-demand.
  3. The iPhone came out. Who knew that a consumer device could serve as such a critical impetus to the adoption of mobile tools for the enterprise? The iPhone, and later the iPad, have had huge impacts on enterprise technology, with end users now able to access content from anywhere, demanding better enterprise search tools and more online tutorials. The sudden popularity of free and low-cost downloadable applications for the iPhone pushed enterprise application vendors to develop new iPhone applications and user interfaces, with Apple calling the shots as to much of the technology platforms (Adobe’s Flash being the most obvious victim). The iPhone may be a consumer device, but it quickly replaced the BlackBerry as the device of choice for corporate employees. The iPad, though not designed as a ruggedized device for field service, is becoming the default device, with innovative vendors creating end-to-end field service applications for the iPad, incorporating video, camera, and GPS capabilities to improve field productivity.

With these issues as a backdrop, my report explores themes included in Consumption Economics and their impact on services technology, as well as highlighting some technology available today to meet some challenges described in the book. Check back next week, the report will be available to download from the TSIA home page.

And as always, thanks for reading!

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2 Comments on “The Implications of Consumption Economics for Service Technology Buyers”

  1. […] a new book: Consumption Economics: The New Rules of Tech, by J.B. Wood, Thomas Lah, and Todd Hewlin.Show original GA_googleAddAttr("AdOpt", "1"); GA_googleAddAttr("Origin", "other"); […]

  2. […] opened the meeting with a discussion of major trends for 2012, including the impacts of Consumption Economics on technology buyers, pending 2012 budget cuts and of course, my favorite topic of the moment, mobile and video (more on […]

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