Business Model Disruption

In the wake of Oracle’s missed quarter I have seen the words ‘business model” bandied a few times. My reaction: we ain’t seen nothing yet.  As Don Tapscott summarizes succinctly  “There are two kinds of business models: those that have been disrupted by technology, and those that have yet to be”

One of my elite attributes in the next book is being “Malleable” – with business model innovation (BMI). So many technology enabled models like “freemium”,”as a service” “from bottom of pyramid” are being tried in many industries.

The story of Apple becomes even more fascinating when you look from a BMI perspective. It popularized music by the MP3 unit and is evolving us into Music by Matching with iCloud at $ 25 a year. It has moved eBooks to an agency pricing model, away from the $ 9.99 standard Amazon had established (personal opinion as an author: Variable pricing adds complexity to a consumer’s decision. Would like to see pricing settle but you have to admire Apple for challenging the Amazon stronghold around books).  It positioned Smartphones away from the planned device obsolescence model carriers like because they can lock consumers into one long term contract after another with a small subsidy on a cheap new device.

Don’t extrapolate Apple to the rest of the tech industry, though. Enterprise tech vendors are BMI laggards for the most part. Amortize software maintenance over number of calls to their contact center and it may easily be $ 20,000 a call. A roaming call from staff visiting E. Europe may be at $ 4 a minute. Your storage may be fully costed at $ 2.50 a gb a month. A deskside PC visit by your outsourcer may cost you $ 500. Your printer likely needs ink which costs over $ 5,000 a gallon.

Pick any SAP, IBM, HP, EMC, ACCN, VZ, any BPO shop at random and see how many of those scenarios apply. They are ripe for BMI. Actually BMD as in Disruption.

Like I said, we ain’t seen nothing yet.

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CEO of Deal Architect, a top advisory boutique recognized in The Black Book of Outsourcing, author of a widely praised book on technology enabled innovation, The New Polymath, prolific blogger, writing about technology-enabled innovation at New Florence, New Renaissance and about waste in technology at Deal Architect.  Previously Analyst  at Gartner, Partner with PwC Consulting. Keynoted at many business and technology conferences and has been quoted in the Wall Street Journal, BusinessWeek, The Financial Times, CIO Magazine, and other executive and technology publications.