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DECEMBER 27, 2002 NEWSMAKER Q&A What Will Revive IT Spending Simple applications for everyday things that everyone uses are key to getting the industry going again, says tech expert David Moschella
In his forthcoming book, Customer-Driven IT: How Users Are Shaping Technology Industry Growth (Harvard Business School Press), Moschella argues that advancements in technology that spur growth will be made not by computer makers, software developers, or communications providers but by the people who actually use the gear on a daily basis. Moschella, an author and consultant, says customers will set standards for technology that will determine the widespread use of everything from online advertising to Web-based payment systems. Previously head of worldwide research for IDC, Moschella serves on the Technology Advisory Board of Merrill Lynch. His book will be in stores in February, although early orders can be placed with Amazon.com or his Web site, www.customer-driven-it.com. BusinessWeek Associate Editor Ira Sager recently spoke with Moschella about what will fuel the growth of the high-tech industry. Edited excerpts of their conversation follow: Q: Why are customers in a much better position to influence the direction of technology? A: If you look at the history of the [technology] business, innovations -- from microprocessors to word-processing software -– have always come from the supplier side, the computer companies making these products. But all the applications that have the potential to drive widespread societal use are much more customer issues than supplier ones, such as making online services that work and having people pay their bills or vote online. Q: What applications do you think customers will embrace? A: The things that really drive the market are simple applications that 100% or 90% of the people might use -- advertising, music, bill paying, health care, voting, and shopping. It's very unlikely that it will be something that doesn't have a significant base of activity already. The trick is to get from [the technology] touching 30% of people's lives to touching 90%, like television, radio, and telephones all have done. People often look for really exotic applications like artificial intelligence or robotics. It's almost never these things. It's very simple things that almost everyone can take advantage of that matter -- word processing, Web browsers, or databases. Getting very high levels of acceptance is the key. Q: What role will entrepreneurs and startup companies play? You make the case in your book that they won't be as influential in the future as they have been in the past. A: Historically, it has been entrepreneurs and startups that really push for things to happen. The model where things tend to be driven by startups reverses itself in the customer-driven area because the advantage is with the existing players. A very good example is Orbitz [the online travel service started by the major airline companies]. This model of established players developing a company to drive technology use in their business is one that will be a more important factor than the traditional startup model. Q: What does this mean for the companies that supply technology? A: If you look at the market from a supplier point of view, it has been product-driven -- either hardware or software. Today and increasingly going forward, the supplier business will be services-driven because that's closer to the value that's being created on the customer side. Q: Do you envision technology companies forming more partnerships with customers to address the needs of specific industries? A: That's what needs to happen. As you get into Web services, we have to have standardized terms and languages, guidelines for information exchange, and transaction formats. Those will be heavily industry- specific and will be driven by the customers. Each industry is going to have to establish its own standards. Q: How can customers play a leadership role when they're struggling to cut costs? A: When computers are popular, CEOs invest money in them. When computers don't look like they're doing so well, CEOs don't. Everybody follows the prevailing mood, which is one reason you get such big boom and bust cycles. The business has always run on herd effects. That's why everybody invested in the Internet during the boom and why they're not investing today -- they think that's what you're supposed to do. Today, the herd is negative in the CEO suite, and that's a big problem. Q: What changes that view? A: You need some examples to change that -- examples of industries being transformed by technology and the leading players either benefiting from technology, or even more tellingly, the leading players getting hurt.  Edited by Patricia O'Connell Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | DECEMBER |
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