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Bottom Up Adoption: The End of Procurement as We’ve Known It

From the beginning of time two forces have vied for influence over us. One is bottoms-up, decentralized, and emergent. The other is top-down, centralized, and directed.

The first force catalyzes change and divergence, while the second tends toward order and convergence. The first gives birth to new ideas, and the second enshrines them.”
– Adam Ludwin, From LOLcats To Occupy Wall Street, Everything Is Happening From The Bottom Up Now

Traditionally, industry analyst firms have been oriented around top down adoption patterns. CIOs and other IT decision makers comprise both the research subjects and purchasing audience for the majority of firms in this industry, large and small. Which was logical given traditional procurement patterns. When hardware, software and services are available only at high prices, command and control is an appropriate management structure. Attempting to scale the decision making process for big ticket items across a large body of middle managers is not likely to yield acceptable outcomes.

An approach that makes sense in one context, however, may be misapplied in another.

The technology purchasing landscape today looks very different than it did even five years ago. Where once CIOs might reasonably expect to have the clearest understanding of what technologies are leveraged within their own organizations, today they are, as Billy Marshall put it, “the last to know.” This pattern manifests itself every day within the majority of businesses. Not because CIOs are failing, but because of trends that have fundamentally and likely permanently disrupted their ability to centralize the technology adoption process.

The four trends we see as most important in driving this are arranged here in rough chronological order.

Open Source

In the late nineties, startups and enterprises alike were effectively beholden to commercial suppliers for the majority of their software needs. Because each piece of the requisite software infrastructure had to be licensed, the capital expenses associated with new initiatives was high. This represented a barrier to entry, and thus a brake on innovation.

With the popularization of open source software, developers from enterprises and startups alike were able to operate independently. For the first time, the actual software practitioners were free to choose their own software rather than having it selected for them and subsequently imposed upon them by upper levels of management. Even in situations where the ultimate production infrastructure targets remained commercially licensed software, open source software like Linux and MySQL allowed for prototyping and rapid development without the attendant costs, both financial and in procurement latency.

This was the first major shift affecting procurement, and perhaps the most profound. None of the infrastructure we take for granted today – Linux, Apache, MySQL, PHP, etc – were originally adopted from the top down. Their adoption was, instead, a fait accompli. CIOs – the last to know – gradually became aware that increasingly significant portions of their infrastructure, unbeknownst to them, were running on free and open source software. The inevitable demand for production support options for this software is what fueled, in time, the valuations of MySQL, Red Hat and others.

Bring Your Own Device

In October, Apple CEO Tim Cook asserted that 92% of the Fortune 500 were “testing or deploying iPad in the course of less than 18 months,” which may help explain why the iPad revenue stream by itself would place within the top third of that group. The interesting thing about this is that the majority of businesses appear uncertain about precisely why they’re deploying tablets: “Most participants, 51 percent, indicated that they did not have a clearly articulated strategy.”

The answer, in most cases, is that there isn’t one. iPad adoption, much like the penetration of iPhones and Android handsets is being driven by users who simply want the device. Faced with a choice between users – chief executive officers among them – who will employ their own devices for work purposes with or without the permission of IT, many businesses are compelled to support the platforms even without concrete business justifications for them.

The consumerization of the enterprise is decentralizing the process of technology selection, but its importance may lie rather in design. Like all products, technology is designed and built to be sold to a specific buyer. For enterprise products, historically, the actual user has been a secondary concern; the buyer – typically centralized IT – was the priority. Consumer technology companies like Apple, however, are designed for a user. What they give up in IT friendly features they more than make up for in usability and the ability to delight.

The Bring Your Own Device trend, therefore, may well improve user productivity by driving devices designed to be used rather than managed into organizations, from the bottom up.

Software as a Service

Software as a Service is a classic case study in timing with respect to market acceptance. Not many remember today that the model actually failed the first time around, when its practitioners were known as Application Service Providers. Pyschologically, few enterprises were prepared for either the idea of renting software or externalizing critical data like that stored in customer relationship management systems. By the midpoint in the last decade, however, these concepts were sufficiently commonplace to see Salesforce.com a publicly traded company with a valuation north of a billion dollars.

Consumer markets, meanwhile, had adapted much more quickly. Hotmail debuted in 1996, Yahoo Mail the year after and Gmail dropped in 2004.

Some of those same consumer services were pressed into service by enterprise workers, in fact; it was once common for Exchange users to forward all of their email to Gmail due to the disparity in storage limits between typical Exchange implementations and Google’s webmail product.

This pattern has played out repeatedly over the years, from webmail to CRM to project management software to website hosting to online helpdesks. All were adopted from the bottom up. By making applications available to anyone with a browser, often at low or no cost, SaaS has surged up through the ranks of enterprises. The inexorable nature of the model is reflected by the growth of providers large (Salesforce.com) and small (37signals).

Cloud

The single most important feature of the cloud has nothing, or at least very little, to do with technology. It is, rather, the pay as you go economic model. As Flip Kromer puts it, “EC2 means anyone with a $10 bill can rent a 10-machine cluster with 1TB of distributed storage for 8 hours.”

What this means in practical terms is that for the first time, hardware procurement is democratized. From an accessibility and availability standpoint, cloud is the hardware equivalent of open source software. Where open source allowed developers to bypass traditional procurement channels by making quality infrastructure and development software freely available, so does the cloud allow the growing class of devops technologists to leave the world of high latency hardware procurement – where same day server provisioning is a feature – behind. Armed with nothing more than a credit card, instances can be spun up and ready for use in ninety seconds.

Cloud is the final piece of the bottom up puzzle. Open source software and to a lesser extent SaaS allowed for the decentralization of enterprise technology development, but at some point hardware would become necessary which was the insertion point for IT. With public clouds, it is possible for the first time to entirely bypass the traditional gatekeepers.

The Net

It should be evident that traditional procurement and purchasing is not dead, just increasingly bypassed by a more efficient process. Also, that a great many enterprises continue to function largely as they always have: top down. More important than the question of whether this model is sustainable in the face of the trends above is whether it should be.

Before lamenting the fact that the above forces are disrupting and destabilizing your enterprise IT, consider that that may be a net gain. If the primary drivers of BYOD, Cloud, Open Source, and SaaS include ease of use, lower costs, frictionless availability, and speed of provisioning, are these trends worth opposing? Particularly since efforts to do so will, in all probability, fail?

Or are they instead assets to be strategically leveraged? There is little debate that businesses that move the most quickly have a competitive advantage. It’s not clear how businesses that prohibit the same tools that enable this will benefit.

Either way, bottom up adoption is here to stay: use it or lose.

Categories: Bottom Up Adoption, Cloud, Open Source, Software-as-a-Service.

  • http://twitter.com/krishnan Krish

    Another category where Bottoms-Up adoption forced the CIO hand is social services like Yammer, Chatter, etc..

    • http://twitter.com/sogrady steve o’grady

      My focus was on the mechanisms of the trends as opposed to their actual content, and was thus including Yammer, Chatter, etc under categories such as Software-as-a-Service. But you could certainly make the case that they deserve their own group because of the unique nature of their appeal. 

  • Guy W Hancock

    Nice piece except that at no point does it address the question of “fit for purpose” which, for an enterprise is far more than one user saying “this does what I need”.

    • http://twitter.com/sogrady steve o’grady

      Respectfully disagree. Most of the above technologies are designed to appeal on an individual basis, whether to developers (e.g. open source) or users (BYOD). When this happens, questions of “fit for purpose” – if I understand your definition – become secondary as adoption has already occurred. MySQL or EC2 or the iPad may or may not be fit, but what they are is heavily utilized. 

      • Guy W Hancock

        When I referred to “fit for purpose” what I was aiming at was the “my iPad does this great thing and so I want to use it” (which is user/individual-centric) as opposed to the “I need a solution that I can deploy across hundreds of users and afford to support and maintain it whilst ensuring it does what they ALL need” (group or company or organization focused).
        In a lovely world we would be able to see the early adopters, then try their solution and if/when it is right or suitable, deploy it to a wider audience.
        The problem with lots of little, individual solutions is that it creates lots of overhead for management and maintence. For example, if you use your iPad at work and have a problem … but the helpdesk doesn’t support it what do you do? Likewise with applications, where is the data stored? Is it secure? Is it in a suitable location? And what happens if you leave and I need to know where all your work is? Organizations have wider responsibilities for data/information that they have to manage.

        I’m only trying to expose the wider issues that must be considered from an organization standpoint, though not usually from an individual’s.

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  • Reddy_s

    Wow What a simple fact about $10 Bill cloud (amazon EC2 )

    1/ CloudThe single most important feature of the cloud has nothing, or at least very little, to do with technology. It is, rather, the pay as you go economic model. As Flip Kromer puts it, “EC2 means anyone with a $10 bill can rent a 10-machine cluster with 1TB of distributed storage for 8 hours.”

    2/ What this means in practical terms is that for the first time, hardware procurement is democratized. From an accessibility and availability standpoint, cloud is the hardware equivalent of open source software.

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