Tuesday, May 10, 2011

Word of the Year: Disintermediation

From my weekly email newsletter:

In 2010 I started hearing people in the technology field use the term "disintermediation." This term comes from economics. Mediation refers to the person in the middle - the intermediary. So dis-intermediation means "cutting out the middleman."

We've been hearing this a lot in technology for a few reasons.

First, Microsoft considers US - their "partners" - as the intermediaries. So when Microsoft uses the term disintermediation, they mean cutting you and me out of the picture so they can sell directly to the end user and not have to share profits with us.

Second, to end users the intermediaries are anyone other than the manufacturer of the software or hardware. So whenever a client can buy direct, they want to have that option. It might not always make sense to go direct, but it is an option that needs to be put forward as never before. Clients are beginning to expect the option.

Third, cloud services have dramatically increased the ability to remove intermediaries. Clients can buy services directly OR using their good old service providers.

In other industries, disintermediation has also gained popularity. In any business where brokers and intermediaries have flourished, technology is making the broker role more difficult. I know from the world of publishing that old-school book publishers are having a very tough time. Even book stores are seen as intermidiaries when people can buy direct.

We've also seen disintermediation in the field of real estate. Why pay 6% to the realtor when almost every form you sign is 1) standardized, and 2) required by state law? Just get the forms, fill them out, and make the deal. So in the real estate bubble that burst two years ago we saw cut-rate do-it-yourself real estate operations that took a much smaller piece of the pie and provided only the most minimal services.

Since Gutenberg invented the printing press, technology has always increased the ability of people to acquire goods and services without intermediaries. In other words, technology has been cutting out the middleman for almost 600 years. And you can count on that trend increasing in speed and frequency.

If you think about it, and are not emotionally invested in it, disintermediation is not a BAD thing. It's just a thing. It exists. You need to know about it and decide what you'll do. Brokers of various kinds will always exist. The best brokers will always add value, and therefore make a good living connecting users with services.

And so perhaps our industry is morphing into a broker system of sorts. (Or perhaps it's always been that way and we are just realizing it.)

Here's the Good News

Guess What?

All of your clients are going through the same thing. Lawyers are finding that their potential clients can find the same contracts they "write" online through the same services they subscribe to. Doctors are finding that potential patients are going to drive-by clinics to get super scan analyses that cost lots of money and are never covered by insurance. Imagine how difficult that is: Like when you get a new client AFTER they spend $30,000 on hardware and software.

Your clients are looking for ways to save money. They are looking for ways to save money by eliminating the middleman. Your clients are looking for ways to disintermediate their supply line. This is a great opportunity for you. Almost all disintermediation involves technology. Woo Hoo!

Keep an eye out for opportunities to help your clients improve their businesses. In particular, the big move in the next few years will be to help clients make more money by cutting out a middleman of some kind. This is a huge industry and YOU are perfectly situated to take advantage of the opportunity.

. . .

If you find something particularly successful, let me know!


Now Shipping:
The Network Migration Workbook:
Zero Downtime Migration Strategies for Microsoft Networks

No comments:

Post a Comment

Feedback Welcome

Please note, however, that spam will be deleted, as will abusive posts.

Disagreements welcome!