Friday, June 15, 2012

The Business Opportunity of the Decade

Peter Drucker, the famed management guru, frequently talks about risk (more specifically managing risk) in a business. Per usual, he simplifies into 4 kinds of risk:

1) Risks that you must take
2) Risks that you can afford to take
3) Risks that you cannot afford to take
4) Risks that you cannot afford to not take

I believe the current transformation in Information Technology falls into category 4: its a risk that every organization cannot afford to not take. That fact creates the business opportunity of the decade, for someone or some group of people that decide to capitalize on it.

The Macro View

The current economy is turbulent. Unfortunately, this is a new normal vs. a phase, in my view. With continued QE's, LTRO's, and countless other government programs, there are attempts to keep things afloat. However, the result is increasing unemployment (euro zone now at largest level EVER), stagnating growth (Brazil barely growing??), and an inevitable reduction in global trade/commerce.

When you have this type of environment, the actions for every company are fairly straightforward: spend less, do more with less (employees, tools, etc) and prepare for life in the new normal.


The Transformation

At the same time of the macro picture I paint above, as discussed in this book, we are at the start of the big data era. Let me simplify big data for a moment: this is simply about leveraging technology to do (or not do)things that were never possible before. I think these 'things' fit into 3 categories:

1) New use cases, applications, solutions.
2) Shift 'how' you do existing things, to a more efficient approach/platform
3) Consolidate everything (tasks, employees, IT, offices, spend, vendors, etc)

Interestingly, 90% of the discussions that I have with clients on big data are focused in category 1 (new use cases, solutions, etc). In many cases, this is dream-storming (brainstorming, with a healthy amount of dreaming).

Category 2 and 3 are where I believe the real opportunity lies, given the new normal. However, doing anything in category 2 or 3 is very hard for an organization:

- You have to build a plan to define what, how, when
- You have to have the fortitude to slaughter a massive number of 'sacred cows'
- You have to overcome organizational inertia to take action

These 3 inhibitors to making progress on Categories 2 and 3 are what present the business opportunity of the decade. This can only be done by an external party/partner, due to the inhibitors...and that presents a rich consulting opportunity.

To build a business here, I think the right model is to earn fees as a % of dollars saved. This immediately eliminates the vast majority of large Systems Integrators and Consulting companies, as they cannot afford that model.

I've seen the potential savings with my own eyes. Clients can save 50-70% on many functions, by leveraging this 'next generation middleware'. Who will help them?

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