Introducing the technology bell curve
As one of my roles, I have to plan the company’s internal staff training program. This means knowing what technologies we’re working with now, what technologies we will likely be working with in the near future, and understanding the proportions of each. By “proportions”, I mean the size of each market, the amount of competition in that market, and whether it will likely get bigger or smaller in the immediate future. To help me communicate this to other members of my team I use a tool that I call “the technological bell curve”.
In Crossing the Chasm, the author proposes a “Technology Adoption Lifecycle”, represented by a bell-shaped curve, that describes the chronology of when companies adopt technologies. My curve is shaped in a similar manner and covers some of the same area, but it has a different focus.
One reason that I use this tool is that our industry is dominated by fads and their fanboys. These people push a technology because it is new, or different, or simply because they like it. The technology then gets adopted because business technology consumers don’t want to be the last one on or off the bus, though years later they are then stuck with a maintenance agreement that costs more than the economy of a moderately sized developing nation (Cue Tuxedo Application server). In a consulting business, it is important to focus on something beyond “I like Python” and to get developers to think about not only what customers need, but what you will be able to sustain in terms of repeat business and staff training. When the case is made in terms of competition and opportunity size, even the most passionate lover of a particular technology will usually give in to the finer points of self-betterment by material acquisition. The ones that don’t, are probably the kind of techno-hippies you don’t want implementing a business application anyhow.
The Axes and the curve
The curve maps a relationship between two factors. The first, measured on the Y-axis, is the opportunity, or how many clients are likely to buy professional services (consulting, training, support) for a given technology. The second, on the X-axis, reflects competition, or how many vendors provide said services. Competition is directly correlated to time: new or upcoming technologies (the “future”) occupy the far right of the curve, with little opportunity and little competition, while older technologies (the “past”) occupy the far left, with little opportunity but a maximum of competition. Current, mainstream technologies (the “present”) sit in the middle of the curve, and have a moderate amount of competition but a maximum of opportunity.
Technologies can be understood to enter the curve on the right, when they first appear, then to proceed to the center where they are most in demand by clients, and finally to fall off to the left as they age out of mainstream adoption.
The “Technology Adoption Lifecycle” in Crossing the Chasm uses very different categories due to a very different focus. Whereas that curve is meant to simply describe waxing and waning of technologies’ popularity, my curve is geared toward identifying business opportunity. Because I don’t really care which technologies win, but only the size of the opportunity and the competition, my categories are different. My categories are:
- Boutique / Beta - the 1-4 man shop working out of their garage can bet on what is shiny and new and immature. On one hand, there isn’t much competition. On the other hand, there is relatively little demand. As the technology progresses along the curve they’ll hit a sweet spot where they can bill whatever they want. That is just about the time they’ll start betting on a new horse or start to mature beyond a Boutique shop. There was a day when my company could play in this game: we had lower overhead. But success moved us further along the curve. The important thing to remember is that these technologies are a risk. Many won’t make it. If you can fit everyone who is a bona fide expert on a technology into small movie theater then it is a Boutique technology.
- Specialty / Trends - once there are keynote deployments of a technology to reference and it gets its own “expo” conference (as opposed to “world”), it will become a specialty for companies like mine and a trend for the overall industry. There will usually be at least a couple VC-funded vendors in the area; IBM will start to add it to WebSphere or a related product. And Oracle will probably figure out how to buy one of the players. However, there still won’t be a lot of people who have “done that” yet, which means that there isn’t much competition yet but there will be soon. These technologies are still a risk; the question is, are they compelling enough to replace entrenched legacy technologies?
- Cash Cows - these are mature technologies. These pay the bills. There is a lot of opportunity but also lots of competition. In our industry, even with a fair amount of competition, the bill rates and opportunity are still high (except in years ending in 0 or 1, unless there is a pop song or movie about the following year).
- Offshored - these are technologies that are so mature and so well understood that while there is a lot of competition, there is a not much opportunity. They usually border on obsolete. For these technologies, there are probably ways to do these things with fewer people and better “maintainability”. There are lots of existing deployments—the adoption is probably wider than the Cash Cows, though there isn’t as much new money going into these projects. However, these technologies also require a lot more maintenance. You don’t want to invest in these technologies unless you’re already there.
- Obsolete - these border on being similar to a Boutique in themselves. Instead of trying to get customers to adopt these, you look for firms who still have them or specific industries for which these technologies are still dominant. Work in this area is dominated by folks close to retirement or who came back into the industry. There may be a pretty good supply of talent for these, but that talent often has a “take it or leave it” attitude which drives the bill rates up. And while bill rates may sometimes be high, most often the result is a feast-then-famine situation.
The economics of each position on the curve causes the corresponding business models to differ widely. Boutique shops, for example, spend a lot of time, but not money, on market education: this means telling everyone and their brother how cool a technology is. A shop working more with trend technologies will spend more time and some money demonstrating their expertise in the technology. A Cash Cow technology, on the other hand, is dominated by headhunter firms masquerading as professional services firms and professional services firms that are focused on “projects”, training, and short gigs like fault remediation and performance tuning. Generally firms focusing on Cash Cow technologies will differentiate as much by their focus on specific business verticals (i.e Retail, Medical, Financial) as by the specific technologies they use. Offshore firms—which, it should be noted, needn’t actually be “offshore”, though the market makes this often the case—tend to rely more on traditional marketing and sales, as well as (unfortunately) good ol’ spam and mass-mailing. I’ve only incidental exposure to the Obsolete market, but I assume they rely on traditional sales and marketing and networking.
While this curve reflects my own way of looking at the world of technology through a purely Ayn Rand-meets-hedonistic-pursuit-of-wealth point of view, I guarantee I’m not alone in the thought process. When you’re hiring a firm to work on a project, even if they specialize in the general area, you may sometimes be surprised at which areas they jump into with both feet and which areas they seem to be holding something back. If your favorite firm isn’t a Boutique shop, for instance, and you start talking about some great new technology that you think they’ll be really excited about, they may actually be thinking, “Great, another ‘one off’ that we’ll use on this project and probably never again.” On the other hand, most firms also won’t be excited about working on a large all-JSP or all-PHP legacy app for which there is no one that understands how it works.
The purpose of the technological bell curve is to decide where a technology fits in the market and whether it is worth pursuing now or not. Two main characteristics of the market drive the behavior of the players: the size of the opportunity and the amount of competition. Correlated to the relationship of these characteristics is the the timeline for the technology. Understanding how these factors relate to each other is essential for firms like mine to best decide where to focus their resources.