Big Change: Breaking Things into Smaller Pieces

One of the byproducts of the Internet is a phenomenon that is impacting all sorts of things, the trend of breaking things into smaller and smaller pieces, dramatically changing the subsequent consumption models. The ability to connect everything using the Internet opened up new business / economic models, new ways of working, new ways to build and manage relationships and many new ways to design  and use technology. From commerce to business processes to software applications the change is starting to create many new options. 

In commerce this change has disrupted several areas. Music consumption, for example, has shifted from a model where individuals bought a collection of songs (album or CD) to a model where purchasing individual songs is the most common model. This may not sound like much of a change, but in fact it has big economic implications for artists and record companies. On the one hand sales of the more expensive complete song collection to individuals that only really want 1 or 2 songs fell off. On the opposite side though, a single song that is extremely popular can generate quite a lot of revenue. 

Trading stocks is another activity that has change because of the Internet, and the change has direct impact on stock prices and market performance. Before online stock trading democratized stock trading the only ways to trade stocks (outside of purchasing shares of a mutual fund), was through a broker, which generally was full service and not really that available to the broad population. With the Internet came brokerages that operate hands off, at very low commissions and that  allow individuals to trade in very small increments, thus making active stock trading an activity for virtually everyone if they so desire. While this opened up stock trading for a broad population, arguably a good thing, it introduced a level of volatility in the market that was not there before, as less sophisticated investors, with less tolerance for loss, have the ability to trade on a whim.

This trend has created new business opportunities for providing short term access to high value items. The most obvious example of this is in the auto rental market. Traditional rental companies are really set up to provide paid access to a car on a daily and weekly basis. You can pay by the hour, but the rate is prohibitive. Enter services like Zipcar and Citycarshare, where subscribers pay a small monthly fee to have access to a fleet of cars that are available for rent in increments as small as 15 minutes. These vehicles are scattered about the cities where they are located rather than in a single rental location. A subscriber simply goes online, finds a nearby vehicle and reserves it for the desired time. The vehicle are all connected and report location, maintenance status, etc. so that the online inventory is maintained in real time as well.

Work itself is changing due to this ability to break tasks apart into smaller and smaller increments. There are several sites that facilitate the ability for a contract employee to find and execute tasks for businesses. This work could be an entire project or broken down as far as a micro-task. I wrote about this here and here.

Software applications are also experiencing this trend toward smaller “modules”. Software as a service open up the possibility of consuming business processes as a service in smaller, configurable unites, or services. This has big advantages for businesses, in that it’s becoming more and more possible to consume the services that are needed and forgo unnecessary functionality. It also had big implications for application vendors, as the next generation application has a very different profile from those of the past. In fact you could say that the definition of an “application” is being changed by this trend or that we need a new way of thinking about an application. Here’s a simple diagram:

Change in apps leads to change in business processes themselves as more companies move to cloud based apps and realize that they can consume services configured to execute the specific business process.