Technological Illiteracy: A Fiscal Death Sentence

As the line between technology companies and other classes of enterprise continues to blur, firms are becoming increasingly sensitive to the urgency of the efficient utilization, maintenance, and administration of their IT resources. The ever-hastening pace of technological advancement has underscored the need for firms to cultivate a host of technological competencies to remain relevant within their respective sectors.

Sectors are Saturated and Differentiation is Difficult

Given the dynamism of today’s world, technological illiteracy is a fiscal death sentence. Competition is a zero-sum game, meaning that firms operating within the same sector are forced to fight over the finite amount of disposable income available to their customers — whether it be individuals or business entities.

Nowadays products and services have become exceedingly commoditized, and therefore firms must look to set themselves apart from competitors via their bottom line i.e. by operating more efficiently. For enterprises seeking to scale, operational efficiency is largely contingent on the strategic selection of a firm’s technological toolkit.

The Worst of Both Worlds

Cost savings attributable to technological strides morphed into a double-edged sword. They caused downward pressure on pricing, as they made it easier for nimbler new entrants to challenge formidable, yet less agile, incumbents. Disrupting medium to large firms became possible, as the time and cost burden of an infrastructural pivot was not always viable for the larger entities. The fiscal advantages afforded to an incumbent by its scale were counteracted by the fiscal advantages enjoyed by a new entrant given its freedom to leverage better technology. Consequently, enterprises of all sizes were able to compete along the dimension of price.

For quite a while, price wars rewarded customers with cheap products and services. However, over time, incumbents shifted to the more sinister and sophisticated competitive strategy of engineering outrageous switching costs. That when paired with the use of intellectual property for the purpose of impeding competitors — a departure from its intended purpose of incentivizing innovation — ultimately resulted in vendor lock-in and alleviated the pricing restrictions that were once imposed by healthy competition.

The net result is the proliferation of our dependency on these companies and their services paired with a steady escalation in the prices that we now have no choice but to pay. The brunt of this cost burden, however, is borne by the technologically inept firm more so than the technologically adept firm or the average consumer.

Open Source Containerization

Cloud-based technologies are the crux of many wide-reaching enterprise and consumer services. Firms that utilize the cloud to effectively distribute their products or services at scale are too often saddled with hefty bills at the end of each month. They have little to no option when it comes to migrating their technological infrastructure to a more competitively priced cloud-service provider, as different providers tend to have different computing environments. The implication here is that the migration of a firm’s technological infrastructure would require a tremendous amount of time and effort i.e. extremely high switching costs.

Thankfully, a technological paradigm known as containerization surfaced not too long ago. It allows for the deployment of applications across different computing environments with great ease. This particular trait is of extreme significance, as it effectively frees enterprises from vendor lock-in. Unfortunately, container services are expensive, and ironically continue to propagate the problem that they are so uniquely positioned to solve. Nonetheless, hope is not lost, and we can now look to the advent of open source containerization to deliver our collective salvation. It is reassuring that up-and-coming open source enterprise-grade containerization solutions such as OpenVZ recognize the advantage that platform ubiquity and an active community hold over a myopic margin-maximizing strategy.

Open source containerization is by no means a panacea to the rampant pricing models that plague most firms today. It is, however, a leap in the right direction.