NOTE: This posting first appeared in the June 11 edition of the Daily Herald Business Ledger
Alex Bratton has a warning for several industry executives.
Adapt your business model to mobile technology, or become extinct.
Bratton, CEO of Lisle-based Lextech, has seen firsthand how mobile and app technology is changing the way businesses operate. The company, during its 11-year existence, has itself adapted with the growth of mobile technology, providing Fortune 500 companies with custom technology solutions and “using it to drive real value to end users,” he said.
Through his work, Bratton said he has come to see common challenges across all the industries his company has worked with. Most notably, he said, are companies that don’t recognize small, innovative developers who are making apps that are cheaper and easier for the customer to use. As a result, Bratton predicts these three industries will not be the same in the next decade because of mobile technology.
1. Point of sale: These are the companies making cash registers, bar code scanners and cash sale systems.
“They are currently in the process of being blindsided by mobile payment solutions and they don’t even realize it,” he said.
He said Apple started the revolution with the development of the iPhone and iPad. Square, with the creation of a credit reader that plugs into an iPhone or iPad, has brought that revolution to the small business owner.
“This has allowed small, innovative companies to become giants very quickly,” Bratton said. “There are a lot of large organizations that don’t see this coming.”
He adds that the big companies have had the opportunity to become more innovative, but have not realized that the general public is now shifting away from traditional cash register sales to mobile devices.
“And the store owners are now realizing, ‘Oh, I can run my store on a couple of iPads? I don’t need that cash register anymore,’” he said. “Or I just need one cash drawer in the back because I can drive everything else on my mobile devices.”
2. Speech augmentation: It is a specialty industry that focuses on people who have difficulty speaking. Bratton said the industry leaders have developed devices with pictures or icons that a person can press, and the device speaks for them. These devices can cost several thousand dollars.
Developers have created apps that can do the same thing and more for considerably less cost to the customer, Bratton said.
“They are rapidly being put out of business by $50 to $100 apps that do remarkable things,” he said. “They let people communicate, are potentially easier to use, easier to update, and they just completely displace the specialty hardware.”
Bratton said he saw this about two years ago while working with clients in this industry. The companies panned the idea of developing mobile apps because the they thought the hardware wasn’t good enough, and their customers would continue to buy their more expensive devices.
“If someone needs a device today, am I going to spend $10,000 on a device of $100 on an app? That just doesn’t make sense,” he said. “And that $100 app may give me more capability that the other stuff.”
3. Portable gaming: Sony and Nintendo had the market in portable gaming with their PlayStation PSP and Nintendo DS devices, but Bratton notes “the iPod Touch has became a massive seller as a portable gaming device, and now all phones have the same capabilities.”
As a result, developers are creating games that can be played across platforms, and that can interact with other functions on a customer’s smartphone or tablet.
“People can use Skype, they can instant message, or use their phones,” he said. “It’s more flexible and it has a thousand more developers for it as well.”
This can especially be seen in the casual gaming market, such as puzzles, Sudoku, Words With Friends, and the like.
“This is just skyrocketing and in a way the Internet never could because we now have it in our pocket,” he said. “As adults, we’re probably not walking around with a Nintendo DS in our pockets, but we can fire up Angry Birds on our smartphone in a moment.”
All three industries share the same issue, he said: The leaders failed to recognize the potential of technology and the speed it has been moving, which has allowed small, innovative companies to come and essentially reshape the market. Bratton believes the invention of the smartphone was the catalyst for the explosion of mobile technology.
“The smartphone is the first piece of tech that’s easy to use,” he said. “As a result, the hurdle for the average person to adopt it has gone away. It’s the fastest adoption curve ever.”
And, as a result, it’s the customer driving the industries to change, as opposed to the opposite. And that means that all business — not just the three Bratton mentioned — face this challenge to stay viable.
“We as consumers are demanding it. Companies not forcing it on the consumers,” he said. “Consumers are dragging this into the enterprise and terrifying CIOs around the planet who haven’t figured it out yet.”
His advice is that company executives recognize and embrace the new technologies, then be more aggressive in innovation. And that goes beyond mobile technology, he added, as the advent of cloud computing, big data analytics and other future technology advances will affect how the industry will fare.
“Responsible executives need to understand what this technology means to their organization and not rely only on their tech team to tell them what to do. They have to understand the business impact of technology,” Bratton said.
“That’s scary. It’s a big change from the way we’ve run business for the last 30 years.”