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The Consumerization of Corp IT

[Above: NASA shows how they use the iPad for launch control. Photo by Andreas Schepers.]

One of the biggest headaches that corporate IT has to deal with these days is “consumerization.” The consumerization of IT happens in two ways. First of all, consumers are using more and more IT in their personal lives. Consumer user-interfaces and product capabilities are in general more advanced than their enterprise equivalents; they employ better interfaces and more advanced data models. They work on mobile devices and are social media enabled. The technology, capabilities, and ease of use or consumer products are causing dissatisfaction with corporate IT infrastructure. Having used MINT.COM to manage their personal finances, users are no longer satisfied with a primitive text-based interface to the SAP financial modeling package at work.

The second way in which IT becomes consumerized is by consumer devices invading the corporate IT network. Inside the enterprise, the IT department makes the decisions about what types of devices and technologies they will purchase and support. But outside the enterprise, users make these decisions for themselves. And, when they find something that they like and that works for them, they bring it to work. The IT department pushes back using arguments like compatibility, data security, and support, but in the end, the users win because the productivity gains from these devices are too great to ignore. Eventually, IT departments adopt the technologies and the vendors adapt the technologies to their new corporate environments.

This happened with cell phones. Enterprises initially ignored cellular technology, then banned the devices fearing loss of control and reduced user productivity. Users did an end-run by purchasing them personally and expensing them. Eventually enterprises created cell phone policies, then company cell phone purchase plans, and cell phone vendors created corporate plans to meet the purchasing and administrative needs of organizations.

It happened with the Macintosh. IT departments didn’t want to support a foreign operating system and incompatible software (especially after they had been slapped in the face with IBM-bashing commercials). But users brought them in anyway. Apple both won and lost that battle, changing the way the world works (their stated goal), but failing to gain market share as PC vendors coopted the visual interface for their own products. Now Apple has another chance with the iPad.

Similar stories could be told about Skype, Facebook, USB drives, and even WiFi. Note that it isn’t just hardware that’s being pulled into the organization. Consumer applications and services like social media are also being coopted for organization use. Is someone on Facebook actually working? Well, yes and no.

There are a couple of reasons why this story keeps repeating itself. First of all, the rate of innovation in consumer IT far exceeds the rate of innovation in enterprise IT. That’s because the risk/reward ratio favors the consumer space. The IT department is a monopoly inside the organization and an oligopoly outside the organization. Their objectives are to create an environment that is safe, secure and reliable at a low cost. They have to support everything they deploy, so innovation is not a priority. Mint.Com, on the other hand, provides personal financial management to over a million users using a cloud-bases SaaS model with an advanced Ajax interface. This is technology that many enterprises are just now evaluating. The Mint.Com development team spent several months designing and iterating the “accounts” page, a luxury that enterprises cannot often afford. But Mint.Com wasn’t going to get to a million users by providing an interface that users could live with, it had to be smart, different and dramatically better.

All of this innovation drives the capabilities of consumer products to improve so fast that consumer markets can’t even absorb all of them. Eventually, consumer products like digital cameras and inkjet printers which were once considered “toys” become so powerful and sophisticated that they break into the professional/enterprise space suddenly and disruptively (Christensen at Harvard describes this phenomenon in his book The Innovator’s Dilemma). This causes enterprises to scramble to absorb and manage these shockwaves.

There can be, however, a good side to all of this. For one thing, IT organizations need to start thinking about user-supplied IT devices like iPads and smartphones as “off-balance sheet assets.” They do have to support these devices to enable them to coexist in their environments, but they don’t have to buy them. They become a platform through which the enterprise can deliver more and better services to their stakeholders, and the benefits are exciting; mobility, productivity, data sharing and collaboration.

Secondly, IT organizations should be challenging their developers to produce applications that behave and feel like the Web 2.0 services that are being delivered to consumers. They should be using use leading edge technologies, newer data models, and creating better user interfaces and experiences. The results will be happier, more productive users that are using these tools to unleash their productivity rather than just functioning as a cog in a well-oiled machine. Great models exist in the consumer space for how to better present data, interact with information, reduce data entry, and anticipate user needs. All they need to do is spend some time on Google or Mint.Com.

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Eight months later, CNN writes about this phenomenon as the bizumer effect. Read their article here.

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About Rick

Rick Scherle is a founder and Senior Managing Partner at Zoe Street.

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