The Rise of the Cooperative Economy, cont.
The Power of Streams
One of the fundamental characteristics of almost any business decision is
risk. Will a product manage to do well against other products, will the
product work in a new niche, can a product even be created in a timely,
economically feasible manner? Part of the reason that large, monolithic
corporations arose in the software industry in the first place was because for
much of the last thirty years, the risks involved in the production of
software have been so high that only companies with deep pockets could
effectively afford the losses when a product did fail.
However, the software market in the early twenty first century differs
radically from what existed even at the start of the 1990s. Perhaps the
principle difference is that most of the permutations for stand-alone
"shrink-wrapped" products (excepting games, which I'll get into later) have
already been produced. The word processor as it exists right now is not
significantly changed from what it was twenty years prior -- the user
interface is a little cleaner, the speed is a little faster, but most of the
capabilities in any word processor of today fall into the "bells and whistles"
category. Ditto, the spreadsheet. Databases are poised to undergo a major
change as we move from relational to hierarchical databases, but even there
the market is quickly reaching saturation point. There are search engines
built around any number of algorithms, paint programs that do everything from
lay color on three dimensional models to generate dynamic sky and sea
simulations, and so forth.
In other words, with a few fairly specialized exceptions, we have just
about exhausted all of the immediate "productivity applications" that can be
readily visualized, and any new tool that emerges is likely to be something
that handles the job slightly better or faster. In many areas, even
incremental upgrades are no longer attractive to consumers.
Another factor coming into play that is also causing the programming
landscape to change is the rise of XML and its attendant technologies. XML is
a disruptive technology -- it alters whatever it touches. With XML, it becomes
possible to replace complex, proprietary client/server applications using
specialized code with open data (and potentially open code) running on a
"browser" -- a more or less universal client. This has a number of effects,
but among other things, it means that you are no longer specifically tied into
proprietary formats (and the applications that produce them). This means that
if two companies provide similar services over the Internet (or on a local
intranet) then your criterion for use ceases to be system integration (which
platform does this application run on) and shifts to cost, reliability, and
capabilities.
Moreover, such services are largely anonymous -- two companies could use
completely different techniques for affecting a given technology, but so long
as their interfaces were similar you may not be able to tell the difference
between the two. This gives a marked advantage to a smaller (potentially much
smaller) company, which doesn't need to spend as much money maintaining the
large overhead of the other company. Moreover since the streams involved can
readily be reformatted on the fly, the smaller company may actually be acting
as a broker for other streams that are provided by yet other companies (where
a company could be anywhere from one person to a mega-corporation).
The implications of this are profound and far reaching. One of the key
differentiating factors between large and small companies on the web as it
stands is that large companies can effectively differentiate themselves by the
volume of their output -- they have more people to throw at development, if
you will. Yet as stream based architectures become more common place, you will
see ever increasing numbers of companies that work in alliance -- one company
handling the back end data processing, a second handling the mid-tier
analysis, and a third handling the display and presentation layers, as an
example. This exists to a certain extent now, but the data integration isn't
strong enough yet to make such companies mesh well together; that will change
with XML.
This will likewise start chipping away at the foundations of the
mega-corporations, at least those that are involved principally with the
delivery of information systems. It's worth figuring who that leaves out, as
it helps to give a feel for the corporate landscape a decade from now. You
might think that those companies that manufacture physical items would be
largely exempt, but in fact most manufacturing companies consist of equal
parts physical plant and information infrastructure. Steel manufacturers still
need to sell their steel, still need to maintain accounting systems, still
need to maintain their internal documentation. These are all areas that could
conceivably spin into a virtual maelstrom. Restaurants and similar service
industries likewise have a fairly complex data infrastructure, especially once
you move into the concept of ordering your Big Macs and Domino pizzas
online.
Indeed, with mass customization looming (you can now order Nike shoes with
your own slogans on the side), a significant amount of both manufacturing and
retail industries will likely end up in cyberspace. Distribution services such
as Federal Express or UPS are already highly automated, and its no stretch to
see the rise of specialized services that essentially act as distribution
switchboards for the complex web of trucks, planes and boats necessary to move
the items being ordered online.
The education industry will be completely transformed by common standards,
as it becomes possible for schools to share ever larger bodies of educational
resources, grade student performance, teach remotely, and coordinate
educational strategies. Once you decouple a student from needing to be in a
classroom for x number of years before becoming exposed to certain
information, the nature of school itself changes. Expect likewise to see the
rise of certified online tutors for much the same reason. Finally, the
universities effectively lose their monopoly on education, a move that is
already happening, although the education industry is also recognizing that by
removing the requirement of proximity (being on-campus), it vastly extends the
market for people who wish to continue their education but can't find the time
in increasingly busy lives (the impact of XML and open data on education is a
full chapter in and of itself, and one that I hope to get to in my book).
Financial services -- banking, insurance, financing -- are largely virtual
already. Entertainment is definitely moving toward a virtual existence, and is
probably, as mentioned earlier, a good case study of the new economy. Health
care is as much a database industry as it is a human services industry, and
everything from making accurate diagnoses to monitoring health real time is
moving toward the virtual sector. Governments, pressured by taxpayers to make
their bureaucracies more efficient, are making the first tentative steps
toward building an open data system for handling everything from taxes and
permits to the creation and enforcement of laws. The trend of companies to
repackage government information with some value-added quantities will likely
become much more prevalent.
While all of these areas are worth exploring in far greater detail, the
implications should be clear: there are very few areas of the economy that
will not end up going into the business of moving streams around, and as a
consequence the same factors that are hitting large software companies -- the
dissolution of management, the rise of cellular company/teams, the creation of
alternative forms of value, and the redefinition of our definition of work --
will carry through to the rest of the economy in relatively short order.
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