Lesson 3: Leveling the Playing Field with IT
In the early days of technology, large companies had the resources and the greatest need to invest in technology. In those days computing was on mainframes and most applications were developed to save labor. Today the technology does much more – it is a pervasive part of an organization and our daily lives. Technology has become faster, better, cheaper, and more accessible. Instead of differentiating the large and well-financed organization from the small firm, information technology (IT) serves to level the playing field. The one-person firm can have access to hundreds of millions of potential customers by setting up a simple Web site.
Segment 1: Storereport.com
IT and the Internet are great levelers – the small firm and the individual entrepreneur can have the same technology capabilities as the giant corporation. An application service provider in Mississippi offers sales and inventory control for gas station convenience stores. The technology itself is not leading edge; grocery stores have employed scanners for decades. However, until the Internet and the application service provider model, the technology was too expensive for a low-margin convenience store. The convenience store owner employs a PC and a few hand-held devices to use the system with minimum training.
It is interesting to note that this model was the same one suggested by time-sharing companies prior to the invention of the PC. Computing should be like a utility – plug it into the wall and use what you need. How viable is this concept? Is there a certain size of firm where you should have your own IT department and staff? At what point does the relatively fixed cost of an IT installation become cheaper than the variable costs of the applications service provider?
eBay offers a further illustration of leveling the playing field. Hundreds of thousands of individuals make a living buying and selling on eBay. The auction site provides a way for an entrepreneur to reach millions of potential customers. One person can start a business with a ready-made online advertising and sales distribution system courtesy of eBay and/or Amazon.