Consumerization

Not to be confused with consumerism.

Consumerization is the reorientation of product and service designs to focus on (and market to) the end user as an individual consumer, in contrast with an earlier era of only organization-oriented offerings (designed solely for business-to-business or business-to-government sales). The emergence of the individual consumer as the primary driver of product and service design is most commonly associated with the IT industry, as large business and government organizations dominated the early decades of computer usage and development. Thus the microcomputer revolution, in which electronic computing moved from exclusively enterprise and government use to include personal computing, is the cardinal example of consumerization. But many technology-based products, such as calculators and mobile phones, have also had their origins in business markets, and only over time did they become dominated by high-volume consumer usage, as these products commoditized and prices fell.

Both hardware and software may be consumerized; an example of enterprise software that became consumer software is optical character recognition software, which originated with banks and postal systems (to automate cheque clearing and mail sorting) but eventually became personal productivity software. The dissemination of technological change throughout an economy, at least for some technologies, thus moves from research and development (in which technologies are invented) through commercialization (in which they enter the business world) to consumerization.

Consumerization can even happen to health care. In the 2010s, U.S. health care has been going through a consumerization process known as a "retail revolution", an advent of retail price sensitivity and urgent care availability that was formerly absent. Patients with high deductibles, used to other industries having accurate price tags or at least estimates, increasingly expect them in health care as well.

Origins

Although consumerization has existed for decades, the term consumerization as a name for the phenomenon is believed to have been first used regularly in an IT industry context by Douglas Neal and John Taylor of the Leading Edge Forum in 2001. The first known published paper on this topic was the "Consumerization of Information Technology," published by the LEF in June 2004.' The term is now used widely throughout the IT industry, and is the topic of numerous conferences and articles, most prominently thus far as a special insert in "The Economist" magazine in October 8, 2011.

The technology behind the consumerization of computing can be said to have begun with the development of eight-bit, general-purpose microprocessors in the early 1970s and eventually the personal computer in the late 1970s and early 1980s. Thus the microcomputer revolution, in which electronic computing moved from exclusively enterprise and government use to include personal computing, is the cardinal example of consumerization. However, it is significant that the great success of the IBM PC in the first half of the 1980s was driven primarily by business markets. Business preeminence continued during the late 1980s and early 1990s with the rise of the Microsoft Windows PC platform. Meanwhile, other technology-based products, such as calculators, fax machines, and mobile phones, also had their origins in business markets, and only over time did they become dominated by high-volume consumer usage, as these products commoditized and prices fell.

It was the growth of the World Wide Web in the mid 1990s that began to reverse this pattern. In particular the rise of free, advertising-based services such as email and search from companies such as Hotmail and Yahoo began to establish the idea that consumer IT offerings based on a simple Internet browser were often viable alternatives to traditional business computing approaches. In recent years, this view has become increasingly accepted due to the widespread reliance on free, advertising-based services from a growing number of firms such as Google, Facebook, Twitter.

Business implications

The primary impact of consumerization is that it is forcing businesses, especially large enterprises, to rethink the way they procure and manage IT equipment and services. Historically, central IT organizations controlled the great majority of IT usage within their firms, choosing or at least approving of the systems and services that employees used. Consumerization enables alternative approaches. Today, employees and departments are becoming increasingly self-sufficient in meeting their IT needs. Products have become easier to use, and cloud-based, software-as-a-service offerings are addressing an ever-widening range of business needs in areas such as video-conferencing, digital imaging, business collaboration, sales force support, systems back-up, and other areas.

Similarly, there is increasing interest in so-called Bring Your Own Device strategies, where individual employees can choose and often own the computers and/or smart phones they use at work. The Apple iPhone and iPad have been particularly important in this regard. Both products were designed for individual consumers, but their appeal in the workplace has been great. They have demonstrated that elements of choice, style and entertainment are now critical computer industry dimensions that businesses cannot ignore.

Equally important, large enterprises have become increasingly dependent upon consumerized services as search, mapping, and social media. The capabilities of firms such as Google, Facebook, and Twitter are now essential components of many firm’s marketing strategies. One of the most important consumerization questions going forward is to what extent such advertising-based services will spread into major corporate applications such as email, Customer Relationship Management (CRM), and Intranets.

One of the more serious negative implications of consumerization is that security controls have been slower to be adopted in the consumer space. As a result, there is an increased risk to the information assets accessed through these less trustworthy consumerized devices. In a recent CSOOnline article by Joan Goodchild she reported a survey that found "when asked what are the greatest barriers to enabling employees to use personal devices at work, 83 percent of IT respondents cited "security concerns" This shortcoming may soon be remedied by the chip manufacturers with technologies such as Intel's "Trusted Execution Technology" and ARM's "Trust Zone" —these technologies being designed to increase the trustworthiness of both enterprise and consumer devices.

Technology implications

In addition to the mass market changes above, consumer markets are now changing large scale computing as well. The giant data centers that have been and are being built by firms such as Google, Apple, Amazon and others are far larger and generally much more efficient than the data centers used by most large enterprises. For example, Google is said to support over 300 million Gmail accounts, while executing more than 1 billion searches per day.

Supporting these consumer-driven volumes requires new levels of efficiency and scale, and this is transforming many traditional data center approaches and practices. Among the major changes are reliance on low cost, commodity servers, N+1 system redundancy, and largely unmanned data center operations. The associated software innovations are equally important in areas such as algorithms, artificial intelligence, and Big Data. In this sense, consumerization seems likely to transform much of the overall computing stack, from individual devices to many of the most demanding large scale challenges.

Consumerization facts

This survey was conducted in June 2011 in the U.S., Germany and Japan among IT personnel responsible for endpoint operational management and/or messaging and collaboration operations. Respondents needed to be part of an organization with at least 500 employees worldwide. A total of 600 surveys were collected equally distributed across countries and industry verticals.

Consumerization Report - Chart 1

Consumerization has reached the tipping point

Data shows that the majority of companies surveyed already allow employees to use their personal devices for work-related activities. On an aggregate, 56% of the respondents say yes to Consumerization as end-users favor personal devices because easier to use, more convenient and allow them to mix personal and work. While the trend is clearly affecting organizations worldwide, not all regions have adapted at the same pace: the U.S. already lead this innovation with 75% of yes, the more conservative Japan is on the raise with 36% and Germany somewhere in between with 59%. From an industry vertical perspective, Education (80%), Health Care (69%) and Business Services (67%) are the most consumerized industries while Manufacturing (48%), Government (39%) and Utilities (36%) are slower at embracing consumer technology. Company size doesn’t seem to be a discriminating factor although mid-large organizations show higher adoption rates, up to 65% for companies with 1,500 employees.

Consumerization Report - Chart 2

A strategic approach to Consumerization starts with providing IT support to personal devices

31% of the mobile devices connecting to the corporate network are owned by the employees in organizations that open up to consumerization: 66% are laptops, 25% smartphones and 9% are tablets. Considering that consumer smartphones and tablets are likely to run non-standard operating systems – such as Android and Apple iOS – Taking a strategic approach to consumerization starts with providing IT support to these employees for their personal devices when used for work related activities. The majority of the organizations (59%) already provide full or limited support: within the IT department, Security Teams (37%) are the most likely to provide this kind of service, Help Desk (24%) and Endpoint Management (23%) are quite common while some organizations also have dedicated Mobility Teams (14%).

Consumerization Report - Chart 3

New IT tools reduce security risks and management costs

Security (64%) and data loss (59%) remain top concerns for most companies allowing employees to bring their personal devices in the workplace. Compliance and legal implications are greater concern in the U.S. and Japan than in Germany. To reduce security risks and to lower management costs, 79% of respondents require employees to install mobile security solutions on their personal mobile devices. 69% of respondents agreed that mobile device security is a key component in protecting their IT environments from employee-owned mobile devices while 71% of respondents consider a combination of mobile security and mobile device management to be the most effective.

External links

• http://lef.csc.com/events/581 Related Events
• http://www.scoop.it/t/consumerization
• http://BringYourOwnIT.com Leading independent forum on Consumerization and BYOD