This book analyzes network-based services using a new framework that links market uncertainty to the choice between distributed management
structure and centralized management structure. It explores communications technology and suggests how investors, managers, service providers,
and consultants can make better decisions about technology. It also highlights how new technologies are adopted and evolve. This book introduces
a new way to think about the management structure of network-based services such as email and voice mail.
In Part One, the critical link between market uncertainty and the choice between distributed and centralized management structure is explained,
and examples that illustrate the power of this linkage are given. Part One explains why high market uncertainty favors distributed management,
while centralized management does better when market uncertainty is low. Part Two contains two case studies of email and voice mail that
demonstrate how this theory explains the history of these network services. Part Three applies ideas from Part One to several new technologies:
Voice-over-IP (VoIP) wireless network infrastructure and Web applications and services. The chapter explores the predominant theme illustrated in
examples from this book: Flexibility in choice between centralized and distributed management creates value for users and service providers. Last, I
give advice to different types of readers of this book. For example, I discuss how a venture capitalist should apply this theory to help decide
when to invest in particular technologies.
This book presents an options framework to analyze the decisions about the architecture of network-based services and how these services should
be managed, thereby giving managers a strategic advantage in today’s uncertain world. The most important concept in this book is how to benefit
from uncertainty by leveraging flexibility. Flexibility in uncertain markets creates value because it allows firms to optimize profitability by
having a strategy that incorporates new information. Options illustrate the trade-offs between efficiency and flexibility—the greater the uncertainty,
the greater the value of flexibility. Managers who know when flexibility has a greater value than efficiency (and other business advantages of centralized
management structure) have a strategic advantage in today’s uncertain and dynamic IT world.