Commoditisation vs. The Long Tail

Recently, whilst reading 'The Long Tail' I got to wondering about the technical challenges that this theory presents to organisations. How can you reconcile the need to drive down technology costs, whilst at the same time offering tailored solutions to a multitude of small, niche customers?

Cost reduction programmes presently focus on Commoditisation and Standardisation; all of which can lead to a lack of flexibility and variety in the offerings to end consumers. The challenge is to acheive this rationalisation of the technology stack and supporting processes, whilst at the same time enabling the business to rapidly develop and deliver a plethora of tailored solutions to niche markets. One obvious solution is the use of Offshore organisations; by acheiving labour cost reductions, it is possible to do more with less budget. This makes it possible to develop solutions for markets that before-hand would have been uneconomic to service. However, more is required than simply moving the provision of services offshore.

In order to achieve the flexibility and responsiveness required by the business to service 'The Long Tail' it is necessary to provide Service Factories on top of the commoditised technology platform. Service Factories enable less technical business users to rapidly develop tailored, niche solutions on top of commoditised platforms. By pushing the development of this Business Process layer back up closer to the customer, a number of benefits can quickly be realised;

• Speed to market: the IT support structure no-longer represents a bottleneck to solutions delivery; the responsibility now lies with the business teams. Service factories work through configuration rather than software engineering, so solutions can be developed, piloted and enhanced much more quickly.
  
• Fitness for purpose: by moving the provision of business solutions closer to the customer, a better fit with the customers needs can be achieved. The IT support structures tend to be removed from the business and the customer.
  
• Reduce burden on IT support structure: by moving the development of business solutions away from the IT support structure, resources are free to focus more on ensuring that the underlying platform and tools are available when they are needed.
  

In order to exploit Service Factories, you need to change the mindset of the organisation and engage a new breed of semi-technical / business focussed teams who can rapidly translate business oppotunities into solutions. Obviously, first you need to provide the commoditised platform and the Service Factories themselves!