The Future of IT for Distributors

The next round of innovation in business information technology will be in the tools your middle-level employees use daily, according to technology consultant Geoffrey Moore, speaking at the 2011 Activant Summit. Moore focused on the big disconnect between the worlds of consumer IT and enterprise IT, and what it means for distributors in the near future.

We have become so powerful as users of consumer IT, such as iPhones, Google, Facebook and other tools. Yet we are “lame” as employees and users of enterprise IT when it comes to the power of these amazing innovations, Moore says.

Put another way, the history of business IT has largely been about the development of increasingly powerful systems of record – how to process transactions and data better, faster and cheaper. The real revolution recently has been in the development of consumer systems of engagement, where we now have instant communication, information and networking. Consumer IT is changing the planet, Moore says, because of three key pieces: access (now we have access to anything at anytime), broadband and mobile.

How disruptive would it be, Moore asks, if the same power in consumer IT were put to work in enterprise IT? The answer is not to have the consumer IT innovators develop the business tools. But it is critical for adoption and training purposes to maintain the same user interface as much as legally possible in future systems, Moore says.

Global business dynamics will drive the enterprise IT revolution, he says. Starting two decades ago, outsourcing in developed countries led to globalization, which in turn created new markets but also created low-cost competition. The race was on to commoditization – low cost wins. For distributors and others to compete in this environment, Moore argues, the only way to protect the margin model is to differentiate as specialists. Specialists then invest in their core competencies and in turn outsource necessary supporting activities, creating another level of collaboration and completing the circle of collaboration.

So while the old enterprise IT model was about systems of record that supported hierarchical integrated enterprises, the new model is about business networks of specialized enterprises. And distributors are in the thick of things, Moore says, as they manage multiple relationships at both supply and customer levels of engagement.

“The essence of distribution is relationship management and troubleshooting,” Moore says. “They are truly connective tissue” in our economy. That requires increasingly better communication, coordination and collaboration.

The challenge is how to engage with peers globally. These new collaborative business networks shift the burden from transaction workflows to the middle of organizations, Moore argues, where relationship management and negotiation are the critical levers. Companies need to invest in IT for this middle tier, where employees are negotiating every day, to communicate better and resolve issues quicker.

It’s not about doing away with systems of record – the critical transactional systems needed to run businesses and maintain data. It's adding systems of engagement to create higher levels of business relationships and communication.

Moore suggests asking  three questions:

1. What are your critical moments of truth or engagement? Every strategy is made or broken during these moments, where the company’s investments, skill sets and differentiation shine or not. Moore used an example of a particular airline where customer interaction at the ticket counter defined how the company defined its competitive advantage.
    
2. Who represents your enterprise in these moments, and how are they empowered?
    
3. What system of engagement would make them more powerful, and how quickly can you get it into their hands?