Business Disruption Will Increase Next 10 Years

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If you think the pace of business change is rapid now, rates of change might be even faster in 10 years, argues Forrester Research analyst Phil Murphy. In part, that is because potential revenue model velocity will increase. When distributed sensors of all types are in place, real-time information will shorten any supplier’s ability to react to changes in demand. Applications will drive revenue velocity

Where traditional supply chain models that build products, then warehouse them for distribution and sale give way to systems that sense and build on-demand. Payment, procurement and logistics processes all will change to match the new model as well.

That means one facet of business in the Internet era, namely the ability of competitors to enter new markets more easily, will get easier. “Upstarts will appear in markets thought to be untouchable in 2011,” said Murphy.

One typical result of a market being deregulated, and one result of Web-based competition, is a greater variety of segmentation of business models, where competitors “slice up” a formerly monolithic market and try to carve out customer niches. Deregulation causes differentiation

Also, since most monopoly markets (one is tended to say “all”) tend to feature generous profit margins, one immediate result of deregulation or more-liquid e-commerce capabilities is retail pricing pressure. Deregulation creates pricing pressure

in fact, that is one hallmark of “deregulating” markets. In one sense, cloud computing, open source and Internet-driven e-commerce perform the same market function as “deregulation,” namely enabling new competitors to enter markets they had not been in before.

The ultimate fate of virtually every market, under competitive conditions, is leadership by no more than three firms, though. Markets tend to feature just 3 leadersThe good or bad news, depending on whether a firm is an incumbent or a challenger, is that cloud-based application access, among other changes in the software distribution and creation ecosystems, will enable contestants to challenge incumbents in a greater range of markets in 10 years.

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Gary Kim is a contributing editor for TechZone360. To read more of Gary’s articles, please visit his columnist page.

Edited by Rich Steeves

Contributing Editor

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