June 5th, 2007
Calling all disruptors: the perfect storm of SOA, SaaS, and open source beckons
I just had the opportunity to check out the World Innovation Forum being held this week in New York, in which Clayton Christensen, Harvard professor and author of The Innovator’s Dilemma and The Innovator’s Solution, talked about the paradox that emerges when new technologies commoditize the marketplace. Namely, that when established companies face a disruptive technology that usurps their market, management tends to get blamed for making the “wrong decisions.” 
However, Christensen points out, more often than not, the besieged executives actually make the right decisions — going after high-end, high-margin opportunities and leaving the low-margin commodity space for newer, disruptive companies. Thus begins a gradual death spiral as they are continually forced upstream.
In essence, once companies are locked into their business models, it’s difficult to move to new paradigms. And the better the management, the greater the lock-in.
Think of Digital Equipment in the 1980s and 90s, as well as Compaq.
Across all product categories, the high-end brands, typically offered as part of well-crafted and expensive interdependent architectures, inevitably will lose out to more modular approaches offered by commoditizers. Ironically, disruptors don’t start off going after the customers of the big established companies — rather, they serve customers who may have never had access to such products.
Think of Salesforce.com — their market consists of small to mid-sized companies that never could afford full-fledged ERP solutions. Or JBoss — serving smaller businesses that could never afford Big SOA middleware solutions.
In fact, Christensen’s analysis of commoditized, modular disruptor gradually creating new markets at the low end and creeping upward provides plenty to ponder within the software market.
As discussed previously in this blog, the combined SOA, Software as a Service, and open source movements will drive the software and application industry to highly modular , building-block, assemble-to-order approach — similar to the disruption Dell incurred on the computer hardware business. Monolithic applications will go away, and replaced with modular, loosely coupled components.
Will there be application “Dells” that will begin to eat the lunch of the SAPs and Oracles of the world? Stay tuned. The SOA/SaaS/open-source combination is a highly potent disruption force, and we ain’t seen nothing yet. As Winston Damarillo put it: “There are opportunities for commercial vendors — as Dell did with hardware — that create an assembly of components into a stack, manage the versions, and deliver it to the customer.”
Sounds like the disruptors are already lining up, and the standardization and interoperability of today’s software is about to create a new class of disruptors.
Joe McKendrick is an author and consultant with deep knowledge and insights regarding trends and developments in the technology industry. See his full profile and disclosure of his industry affiliations.
Subscribe to Service Oriented via Email alerts or RSS.
