In Andy's mind, the standard tool for differentiation as we head to a level of blandness in all of our products (IT, financial, consumer, etc) ends up being price. He believes that customization is a factor that can more effectively provide differentiation.
[...]In amongst the differentiation possibilities are some factors that were quoted in the first age of the Internet, the one that really didn’t work when some basic business rules were ignored. The one that really interests me is ‘customisation’, the idea that by a fully connected and interoperable business world it would be possible to deliver exactly what was wanted by connecting the consumer directly through the manufacturing or services ecosystem.
In the current age of the Internet; Web Services, SOA and Web 2.0, [...]
I agree with Andy that Web 2.0, with its focus on simplicity in aggregating web services into a single application has enabled application designers to differentiate. My blog is for example different from the CTO Blog not just because of its focus or content, but because of the components we have alongside the basic text, differentiating our approach and the way that readers interact with us. Our product is different, not just because Andy writes better stuff than me.
Looking at this from a slightly different angle, some enterprise software companies have been successful at differentiation before, by being the focus of a strong ecosystem of partners that customize their products. FileNet with its community of Value Added Resellers (VARs) had a powerful base product (that was otherwise just another bland repository/workflow offering) that was tailored by the VARs according to the needs of their market segments to provide vertically focused offerings. These were further customized by the VARs to provide the eventual 'bespoke' solution for each customer. FileNet was highly differentiated by the fact that its VARs knew their own market segment better than almost anyone out there, making the end product different than that offered by IBM for example.
To my mind, this mirrors Toyota's approach with Scion, as described by Andy. The problem now is that FileNet has been acquired by IBM. And Big Blue aren't renowned for wanting to hand over potential services engagements to other companies, despite the 'toolkit' nature of some of their enterprise software that would suit this model.
I haven't seen how FileNet's VAR network is holding up, but I would be interested to hear of any feedback from anyone 'in the know'. VAR customization was an essential part of FileNet. Can IBM stomach that reality? If not, maybe in the world of enterprise software acquisitions Web 2.0 is the only sustainable customization model - it offers DIY rather than IBM.