The rise of the digital services economy

Posted by Mike Vizard on Jun 16, 2014 10:33:00 AM

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Thanks to the prevalence of application programming interfaces (APIs) it will soon be possible to create digital businesses simply composing applications together drive a new business process.

This shift to digital business models is expected to fuel the next phase of growth for a Services Economy that will drive trillions of dollars in economic growth in the years ahead.

The widespread availability of RESTful APIs has made it a lot simpler to integrate everything from applications to infrastructure. Now we’re seeing the emergence of multiple types of overlays that make it simpler to invoke the functionality those APIs expose. mobile_app

In the case of networking, those overlays are known as software-defined networking. In the case of applications, the next big thing are cloud services that end users can use to integrate data without the direct aid of a developer.

In both cases, users of these tools will essentially be able to use visual tools to compose new services. Going forward, just about every product sold is going to be accompanied by a raft of service options that customers can invoke for an additional fee.

The connected car, for example, is going to come with a raft of services in the form of applications that can be added in much the same way people install applications on their smartphones today. The providers of these types of services will leverage APIs to dynamically create new services that they can test market will a relatively small investment upfront.

For IT service providers in general and managed service providers in particular, the rise of a Services Economy has a lot of implications.

Even after a decade or more of promoting manages services as a more efficient model for delivering IT, the fact remains that most IT is still delivered locally by an internal IT organization. Cloud computing has gone a long way toward helping to change that. But even now, the cloud has not transformed how most IT is consumed.

Within a context of a Services Economy, however, IT becomes just one of many services that are being delivered to the business. Instead of thinking in terms of IT as a capital expense, organizations will increasingly view IT as one of a pantheon of services they are dynamically consuming.

For the business that means more flexibility in terms of how they outlay capital expenses. From an IT perspective it means the internal IT organization starts to perceive itself as more of a broker of IT services than an actual builder of those services. As that mentality shifts, it should become a lot simpler for IT services organizations to sell both managed and cloud services.

It’s even arguable that the single biggest impediment to selling managed IT services is the fact the internal IT organization doesn’t think of IT as a service. Much like a traditional reseller, the internal IT department operates on a “break/fix” model. It’s only when something actually breaks that they actually take an action.

The expansion of a Services Economy that is dependent on robust sets of IT services that are continuously available will, of course, put an end to that kind of thinking once and for all. In fact, for a lot providers of IT services that day simply can’t come soon enough.

Topics: IT Services Trends