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Why Adding Features Can Lead to Commoditization . . . and What You Can Do About It (Part 2)

by Juniper Employee on ‎03-05-2012 12:25 AM

In my last blog I introduced the paradoxical idea that adding features and functions to networking products is actually driving them towards commoditization, rather than differentiation.  This sounds like a contradiction: shouldn’t more functionality equal greater value to the customer, which should lead to better prices (or, at the very least, less discounting)?  Technology is driving down costs, and customers expect to reap the benefits of that in their capital expenditure costs.  But even powerful new features and functions don’t always command the price premiums they used to.


Complexity Avalanche.jpgResearch by the TSIA – the Technology Services Industry Association – points us to one probable cause of this dilemma.  They call it the “Consumption Gap”, and it is very well described in a book called Complexity Avalanche by the President and CEO of the TSIA, JB Wood.  I have taken the ideas presented by Wood and used them as the starting point leading to some of my own conclusions.  I encourage you to read Complexity Avalanche as well as Wood’s new book Consumption Economics. (Full disclosure: I have no ties to JB Wood nor to the TSIA – I am merely an enthusiastic reader.)


Wood’s concept of the technology Consumption Gap is based on the interaction of two simple observations. The first is the tremendous growth in the number of product features and in the complexity of high tech products.  This includes everything you can think of: software, servers, medical devices and yes, networking.  They all are continuously coming out with new versions with lots of additional features and capabilities.


The second point is that customers have become overwhelmed by this complexity.  They don’t know what to do with all of those features – even though many new functions could in fact be very valuable to them. This creates the technology Consumption Gap: customers do not know how to consume all of the capabilities their machines are able to deliver.

Figure 1 below, taken from Complexity Avalanche, graphically illustrates Wood’s concept of the Consumption Gap:


Figure 1: The Growing Consumption Gap
(Source: Complexity Avalanche, JB Wood, 2009)

 Consumption Gap - Wood.png


If the idea of the technology Consumption Gap is correct, this poses a major challenge for vendors and their partners everywhere.  As customers are able to consume fewer and fewer of the features that are available in the products they buy, they naturally stop judging them on their differences.  New features and functions are no longer differentiators, the customer decides that all vendors’ products are equal and chooses strictly on price.  This hurts everyone in the business: not just the vendors and partners whose margins erode, but the customers as well, because they no longer take advantage of technologies that could be of real value to their businesses.


Which leads me to the opportunity for partners.  Services are what will fill the gap.  So, I would add to Wood’s diagram the blue section in Figure 2. Those are your services. 


Figure 2: The Growing Consumption Gap – Services fill the gap
(Source: Complexity Avalanche, JB Wood, 2009 with additions by yours truly)

 Consumption Gap - Services.png


Your deep understanding of your customers, of your vendors, and of the products in your portfolio allows you to fill that gap through services.  Harness the creativity of your consultants and have them point out how new functions can add value to your customer’s business.  Work with the customer to develop new software, or user interfaces, or monitoring, or machine-to-machine applications. It may be as simple as providing educational services that teach the customer about functions that they are not currently using.  In every case you will add value, you will improve your sales margins, you will sell additional services, and you will differentiate yourself from your competitors.


Using professional services to fill the technology Consumption Gap has a number of implications for a VAR or Systems Integrator. It calls for a new way of presenting yourself to the customer.  It calls for a new way of selling.  It may even call for you to rethink your company’s mission.  These will be the subjects of my next blog entry, next week.  In the meantime, what do you think – is the technology Consumption Gap real?  Is it a threat or an opportunity?  I’d love to hear from you and have you participate in the conversation. 

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About the Author
  • Andrew is Operations Manager for OneConfig. OneConfig creates tools for Juniper devices: cloud-managed EX and SRX; and Pre-sales reports for SRX. Andrew has worked in Network Management for over twelve years. During that time he implemented and ran commercial Network Management systems for large telco networks. He also managed the complete development of a custom Network Management system at Telstra (Australia’s largest telco). Following that he oversaw IBM’s redevelopment project of their Remote Network Managed Services platform that provides their customers with complete visibility and control of their IP networks. Most recently Andrew ran the Professional Services Practice for CA Technologies, responsible for the design and implementation of Service Assurance, Performance Management and Service Management platforms into customer environments. Andrew has a Master of Business and Technology from the Australian School of Business, UNSW. He lives on Sydney’s beautiful Northern Beaches. When not spending time with his young family, or dreaming about better and simpler ways to manage complex networks, he likes to ride his mountain bike, surf and play golf.
  • Boon Thau Loo is an Associate Professor in the Computer and Information Science department at the University of Pennsylvania. He is also a co-founder of Gencore Systems, a cloud analytics spinoff from the University of Pennsylvania. He is well-known for his research on programming and analysis tools for designing, implementing, and securing large-scale distributed systems. He received his Ph.D. degree in Computer Science from the University of California at Berkeley in 2006. Prior to his Ph.D, he received his M.S. degree from Stanford University in 2000, and his B.S. degree with highest honors from UC Berkeley in 1999. He was awarded the David J. Sakrison Memorial Prize (2006) for the most outstanding dissertation research in the Department of EECS at UC Berkeley, and the ACM SIGMOD Dissertation Award (2007). He is a recipient of the NSF CAREER award (2009) and the Air Force Office of Scientific Research (AFOSR) Young Investigator Award (2012). He has published 100+ peer reviewed publications and has supervised 6 Ph.D dissertations. His students include current tenure-track faculty members and winners of 3 dissertation awards.
  • Experienced and results driven executive sales leader with over of 22 years of Management in Enterprise, Commercial, Carrier & Channel Sales, both on a national and global basis. Have run global businesses as part of the executive team from start-ups and acquisition to over $570 million in annual revenue. Responsible for managing all reseller channel sales activities, including partner recruitment, partner satisfaction and revenue attainment for JacobsRimell (now Amdocs). Prior to JacobsRimell, I served as Senior Manager of Global Service Management at Cisco Systems and Vice President and National Sales Manager at Philips Electronics, where I led significant company growth and was instrumental in developing U.S. enterprise channel sales and operations as well as revenue goals. Prior to Philips, I have also held senior sales executive roles at Sony and Sharp Electronics. Now on my 8th year at Juniper Networks.
  • Remarkably organized stardust.
  • JONATHAN BELCHER Vice President, Americas Commercial Inside and Partner Sales Jonathan Belcher is vice president of Americas Commercial Inside and Partner Sales at Juniper Networks. He is responsible for sales development and growth of Juniper Networks commercial inside sales, resellers, strategic alliances and distributor partners. Jonathan formerly held the role of vice president of Partner sales for Juniper’s APAC, Greater China and Japan theaters. From 2012 to 2014, he led the rollout of the partner programs designed to increase the strength of how Juniper and its partners deliver solutions to enterprise and Service Provider customers across APAC. He joined Juniper in 2010 as vice president of the strategic worldwide alliance with Dell. With more than 20 years’ partner experience, he has managed large alliances and channel sales teams in the Americas, EMEA and APAC. Jonathan has also held a number of senior management positions building partner organizations in companies such as Fujitsu, Quantum and Neterion, and partnering with IBM, Dell, Hewlett Packard, Compaq Computer and Sun Microsystems. He holds a B.S.B.A in Business and Marketing from the University of Arizona. He resides in Austin, Texas
  • I have been in the networking industry for over 35 years: PBXs, SNA, Muxes, ATM, routers, switches, optical - I've seen it all. Twelve years in the US, over 25 in Europe, at companies like AT&T, IBM, Bay Networks, Nortel Networks and Dimension Data. Since 2007 I have been at Juniper, focusing on solutions and services: solving business problems via products and projects. Our market is characterized by amazing technological innovations, but technology is no use if you cannot get it to work and keep it working. That is why services are so exciting: this is where the technology moves out of the glossy brochures and into the real world! Follow me on Twitter: @JoeAtJuniper For more about me, go to my LinkedIn profile:
  • Justin has held a variety of positions at Alternative Networks since 1997 including responsibilities for running sales, product management, marketing, and training functions. More recently he has been incubating a Wide Area Network division, and running cross sales in the enterprise sales division following an acquisition.
  • Justin Scopaz is senior director of Juniper Networks’ Worldwide Distribution organization. In this role, he is leading a global team driving worldwide distribution strategy, sales, and operations. Prior to Juniper, Scopaz spent nearly two decades at Ingram Micro in a variety of senior leadership positions. Most recently, he served as vice president and general manager of Ingram Micro’s Data Capture and Physical Security business units. He also had responsibility for major national partners. Based in Orange County, California, Scopaz is involved in both private and charitable organizations. He holds a B.A. in Business Management from California State University.
  • Martin Hester is the head of channels, alliances, commercial and cloud for Europe, Middle East and Africa. In this role, he is responsible for Juniper’s commercial and cloud business in EMEA. Martin has been at Juniper Networks for 10 Years. During his tenure, he has built a deep understanding in alliances, distribution and partner operations and has been an integral part of Juniper’s channels and alliances go-to-market strategy. Prior to Juniper Networks, Martin held a number of direct sales and management roles in Bay Networks, Nortel Networks, Avici Systems, Hitachi and Extreme Networks.
  • Mitch Lewis, VP of Partners and Alliances, Asia Pacific, brings over 25 years’ industry experience in sales, marketing and technology roles for companies that include AT&T, Dilithium Networks and Microsoft. He also served as VP of APAC Sales and Marketing and President of Indonesia for Ericsson.
  • I manage the Professional Services department for a Juniper Elite reseller in Southern California. When not trying to keep my customers and engineers happy I also like teach Juniper classes and spread the word about the power of Junos.
  • Americas Field and Partner Marketing
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