THE EVOLUTION OF THE PLUG-AND-PLAY ECONOMY
The Rule of Decreasing Support Costs
In The Tipping Point: How Little Things Make a Big Difference
, Malcolm Gladwell effectively describes how a series of small changes ultimately lead to a cascading effect, in which a quantum shift occurs. Such a shift is exactly what has happened since the late-1990s with regard to the availability of easy-to-use services over the Internet and the resulting increase in possibilities for go-it-alone entrepreneurs.
Today, almost everyone is familiar with Moore’s law, which holds that every 18 months computing power doubles while the price drops by one half. My decade of experience in the Internet technology arena has led me to postulate a similar rule for the capabilities available to businesses—the Rule of Decreasing Support Costs: Services that are available today at high expense for large businesses will be available in 12 to 18 months on a plug-and-play outsourced basis to small companies at low monthly usage fees. The examples of this kind of rapid evolution are endless: A few years ago, the cost of systems designed to host and process payments for Internet retailers could exceed one hundred thousand dollars a year. Today, a system with equal or better functionality is available for $14.95 a month. At one time, large information technology firms offered to build intranets for Fortune 500 businesses at a cost of millions of dollars. Today, these same services are accessible, on an outsourced basis, to a small firm at less than $100 a month.
What matters for this discussion is not the Rule of Decreasing Costs in itself but its dramatic implications. The drastic drop in the cost of sophisticated services has made it possible for a solo enterprise to use and automate the same productivity-enhancing services that have made larger companies successful, and to automate this entire effort. This capability is now so
