Oct 30, 2013
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One of the most powerful outcomes from the rise of the Internet has been the great enabling effect it has on what is now currently possible.
It’s easy to look at industries that have been revolutionised by the Internet to see the impact. Music, media and publishing have all been dramatically and irreversibly changed over the last 15 years.
But something that often isn’t talked about is how the shift of technology innovation and adoption is dramatically moving down to consumers.
In this article I’m going to be looking at how once inaccessible technology is now widely available to the general population, what impact that is having and what opportunities are springing up around it.
It has never been a better time to be part of this industry. Many people believe that we’ve already seen the best days, when in reality, it’s only just beginning.
In 2013, it has never been cheaper and easier to provide sophisticated technology at an affordable price. Just 10 years ago it would of been unthinkable to bring many of the things we take for granted to market.
For example, we now have access to unlimited processing power, storage and 24 / 7 availability through services like AWS. The rise of smartphones has given us the world in our pockets. These devices have sensors, cameras and ubiquitous access to the internet.
One of the great enabling factors is the massive reduction in cost. AWS is billed by usage and so it is extremely easy to provision new servers or kills operating servers as demand rises and falls. The technology in smartphones means that thousands of companies can launch each year without having to worry about building hardware and bringing it to market. This has created an entirely different pricing model and a complete switch in emphasis from hardware to purely software. Software products can be distributed for free through the internet and can be continuously updated without any friction.
Another important trend that has really risen in the last 5 to 10 years has been the consumerisation of the enterprise. This encompasses many aspects, but generally speaking it concerns the design and usability of enterprise software that is deployed in large organisations.
As the Internet has become increasingly ubiquitous and the consumer internet has flowed from early “Web 2.0” to the applification of web and mobiles apps and experiences, enterprise software vendors have experienced pressure to significantly improve their software.
However because the barriers to entry have never been lower, incumbent software companies are losing the low end of the market to new upstarts.
Whilst there has been a lot said about the consumerisation of the enterprise, I think there is a bigger shift occurring in the opposite direction.
It is now possible to bring once unreachable technology to the masses. This means, technology that was once only available to large enterprise organisations can be made available to anyone.
This not only opens up amazing new opportunities for consumer focused products, but it also forces you to reimagine the business model to make it sustainable and compelling. Consumer business models are in complete contrast to the enterprise business models and so, whilst the technology remains the same, the real innovation is how it is brought to market.
The shift from enterprise to consumer is certainly not a new trend as it has been happening for a number of years now. The following three case studies show clearly how it is now possible to bring enterprise technology to the consumer and innovate on the business model.
Whilst the following three opportunities are probably the most obvious examples, I don’t think you would be too pushed to start connecting the dots on how other similar companies are also following the same path.
Google is probably one of the most obvious companies that have brought enterprise technology to consumers. Products such as GMail, Google Maps, Google Docs, Google Calendar, Google Drive amongst many others are all enterprise products that have been brought down to the consumer.
Of course, this is made a lot easier when you have a business model and a monopoly that allows you to print money.
Two of the most significant products to come out from Google that have catalysed this shift are GMail and Google Docs.
Before GMail, consumer email services were terrible, offered little storage and were trapped in large organisations like Microsoft and Yahoo who felt no need to make things better. GMail forced things to change by providing a product that was an order of magnitude better.
Similarly Microsoft have had a complete monopoly over productivity software with their suite of Office applications. However as broadband penetration has increased and browser technology has significantly improved, Google is able to offer cloud versions of these productivity applications for free.
Millions of individuals and companies around the world now have access to a range of products and services that not so long ago were inaccessible to them.
Google really has been a leader in this shift. Whilst Google does offer enterprise versions and paid upgrades for many of it’s products, the majority are all subsidised by adverts. It’s fair to say that Google hasn’t really innovated in the product sense, rather simply moving things into a browser. However, Google has innovated by dropping the high costs and yearly upgrades to become low cost and continuously updating.
The real innovation here is the business model, not the product.
Dropbox and Box are two very interesting companies that have arisen over the last couple of years. Both companies offer a similar suite of seamless cloud storage solutions that enable users to access their files from any computer. Both of these companies really rode the rise of cloud computing to perfection. An interesting twist in the story is both companies, whilst essentially tackling the same problem, attacked the opportunity from two very different sides of the market. Dropbox started off as a pure consumer play, attracting consumers before moving up market to enterprise solutions. Box started out as a pure enterprise play before opening up more to consumers.
Long before the rise of cloud computing, centralisation of file storage has been widely adopted in organisations all over the world. However as the Internet and the increasing number of connected devices we own has risen, it was inevitable that a better solution would come along.
What’s even more interesting is if you think further out into the future of the cloud storage industry, it is not too hard to imagine a world where services like Dropbox or Box become the glue of the Operating System. It seems completely antiquated that you can’t turn on any computer and be presented with your own desktop.
Virtualisation of the enterprise really got off the ground 10 years ago. As the shift from enterprise to consumer continues, it’s only a matter of time before this technology is available to all consumers too.
Evernote is an interesting company because it has largely gone unnoticed by the majority of consumers. However that is not to say that they have not brought a wealth of technology down from the enterprise and in to the hands of consumers.
Evernote has essentially brought two main facets of the technology to consumers, Optical Character Recognition (OCR) and Search.
I think the OCR technology that Evernote has commoditised is fascinating. Consumers can now either scan or photograph any piece of text and have it completely searchable or indexable thanks to Evernote’s free software. Whilst this is probably not going to be life changing for the majority of consumers, it is opening up massive new opportunities for certain users who were previously unable to access this sort of technology.
It wasn’t that long ago that OCR technology was completely inaccessible to the general public. Evernote has simply brought that technology into the hands of consumers, but instead of changing the technology, they have innovated on the business model. It was unthinkable that you would be able to offer this sort of sophisticated technology to millions of people all over the world for free even just a couple of years ago.
The amazing thing about bringing enterprise technology to consumers is, you don’t have to invent anything because the technology is, by definition, already in place.
However, you must be able to transcend industries and business models in order to see how you can take technology and combine it with an emerging opportunity and an innovative new business model in order to sustainably bring access to consumers at a much lower price point.
With that being said, here are the three things that I would look for if you are interested in pursuing this model.
The first thing to do is to find an untouched opportunity that remains stuck in enterprise technology. If Google or a well funded company is already pursuing this opportunity, there is really no point in chasing their coattails. You need to be number one in order to really make this work.
Often you can simply take a feature of a traditional enterprise application and turn that into a product. Whilst many people argue that today’s products are “features not products”, this is a complete misdemeanor. Storage is a feature, search is a feature, OCR is a feature yet they are eating the lunch of existing incumbents who bury that feature in a bloated enterprise application.
Unless you happen to already know of an opportunity worth pursuing, I would advise that you spend time using enterprise software within a large organisation. If you try to find a solution for a problem you don’t know exists, you will end up creating a product that no one wants. Often you have to experience something for yourself before you understand what product to create.
Moving enterprise technology to the consumer is all about focus. If you just remake a piece of enterprise software it is going to be far beyond the needs or requirements of a typical consumer. That is why focusing on a single feature to bring down has much more value than trying to create a clone of an existing piece of software.
It is also important that you have a single clear value proposition. Consumers are very different people than enterprise customers. Consumers will typically understand a product better when it has one clear job. Trying to cram additional features into a consumer product is a recipe for disaster.
As the case studies have shown above, it is the business model that is the innovation, not the technology itself.
Try to find a business model that is in complete contrast to how the technology is currently sold. Typically enterprise software is sold by sales representatives, it has long lead times and cyclical upgrades. This leaves a lot of room to find a completely different business model to pursue.
There are many different ways to monetise a consumer application and so it largely depends on your product and how users are able to get value out of it that will determine the right business model to choose.
Whilst it can be difficult to know which is the best business model to choose, I think the outlier success comes from choosing a contrarian model where people are unwilling to follow initially.
The consumerisation of the enterprise is a really interesting trend, and I really do hope that it continues. Just because software is for the enterprise does not mean that it should be ugly or difficult to use.
However whilst going after enterprise software is interesting, I’m really fascinated by what is possible when you take enterprise technology and bring it to consumers. By giving access to technology that was previously inaccessible, I think there are a number of Blue Ocean opportunities to be discovered.
I really love contrarian business models and doing something that was previously thought of as impossible. Technology and business moves incredibly fast, and so what is impossible today will be an amazing new opportunity tomorrow.
As the world of technology and business continues to evolve, there will be more and more of these opportunities. Enabling forces like the ubiquitous internet, connectivity, unlimited storage and processing power is bringing unprecedented power to the hands of consumers.
And it’s only just beginning.