Hewlin Todd - B4b: How Technology and Big Data Are Reinventing the Customer-Supplier Relationship

T HE OPERATING MODEL THAT SITS BETWEEN THE COMPANIES WHO supply business technology and the customers who buy it is about to be revolutionized. The proof of this premise is already presenting itself in the financial statements of suppliers from Amazon to Xerox. When the dust settles, neither party in the technology market equation will be untouchedand these days, what part of business isnt about technology?

On August 20, 2011, an editorial appeared in the Wall Street Journal. The headline read Why Software Is Eating the World, and it was written by Silicon Valley legend Marc Andreessen. What Mr. Andreessen had to say was something simple, yet profound: It seemed to him that software, and specifically software run over the Internet, was finally achieving its potential.

As he saw it, this meant that software was playing not only its traditional role of improving the productivity of companies. It was also disrupting and dislocating some of them. It was not stopping there, however. It was now doing unthinkable things such as figuring out how to eat products that used to be physical products. And perhaps most provocative was that this brash and irreverent technology was rapidly jumping its traditional fences. It wasnt just eating the tech industry; it was eating many industries.

Its hard to argue with Andreessens logic. Just look around the world of business today. Its hard to find an industry that is immune to this pesky disruptor. Not too long ago, physical products that were physically distributed dominated the world of business (see ).

FIGURE 1.1 Before the Pesky Disruptor

By this definition of physicality, even the high-tech industry was not truly digital until the last decade. More than half the industrys revenue came from hardwarea physical product that was physically distributed to customers. And although the software that ran on it was truly digital, it was demonstrated on-site by a salesperson and then physically shipped on CDs or sold to consumers in shrink-wrapped boxes at local stores. Everything was that way. You went to a video store to rent movies on CDs. You went into the bank to transfer money. If you wanted your medical records, you went to your doctors office to pick up your files. And then, to really summarize Andreessens point, the software big bang happened.

FIGURE 1.2 How Software Is Eating the World

Dozens of industries have already felt the epic force of the software big bang. Andreessen argues that this is because, for the first time in history, the global economy is becoming truly digitally connected. This includes not only people with devices and companies with computers, but also industrial equipment and machines that talk to one another. This is enabling software and the Internet to play disruptive roles not just in the lives of consumers, but in almost every vertical and horizontal business-to-business (B2B) industry as well.

It is the rise of near-tech. Medical device and telecommunication product providers crossed over years ago from offering mechanical and analog solutions to their business customers. Now, embedded hardware, software, and sensor networks are revolutionizing test and measurement products, ground transportation systems, aerospace, energy, and security systems. Software, robotics, and three-dimensional (3-D) printing have revolutionized manufacturing. Cars are now shipping with sensors and software that not only will automatically bring the cars to a complete stop from cruising speed but will also help the driver keep the car in the center of its lane. Nanotechnology is revolutionizing materials development, and genetic analysis is making the prescribing of individually tailored drugs possible. It is almost harder to point at a segment of B2B thats