Software that enhances or performs knowledge work is spreading rapidly, disrupting established software markets along the way. For instance, the new wave of data-driven, artificial intelligence-powered software is sparking change in a wide range of industries, from retail to agriculture and beyond.
But when industry incumbents feel threatened by upstart technologies, you can expect them to defend their hard-won turf. Legacy vendors respond in a variety of predictable ways, from denial to acquisitions to launching internal catch-up projects.
Many also resort to misleading propaganda, a practice that undermines innovation and locks end-users into an outdated status quo. An even more pernicious propaganda technique is that of "tech washing."
What Is Tech Washing, And Why Is It A Problem?
Tech washing is the practice of slapping a trendy, new label on legacy solutions. Greenwashing and cloud washing are two well-known examples, with big polluters and big internet appliance incumbents reacting to threats to their business models with misleading spin.
To make matters even more confusing, businesses in adjacent spaces often follow the incumbents’ lead. Wanting to cash in on the new trend, they too adopt the flashy term. In the process, they obscure the key advantages of the new technology, and end-users are forced to struggle to find clarity in a noisy, misleading information environment.
One easy way to fight through the noise and spin is to turn to impartial analysts and industry experts. Third-party experts tend to be conservative in their outlooks because they’ve seen trends come and go. What do they have to say about the true nature of innovative technology? If they see change on the horizon, it’s probably real.
Many legacy vendors’ so-called RegTech products are really tech-washed monoliths designed to serve a horizontal market. Thus, their one-size-fits-all design forces end-users to execute many manual, complicated, labor-intensive process steps that tend to produce critical errors.
In contrast, RegTech products promise not just to eliminate the errors but also the error-prone processes that created them. Cutting-edge RegTech also granularly targets the industries it serves, designed to meet the specific needs of compliance officers in heavily regulated industries like finance, health care, and insurance.
Similarly, adjacent products that only indirectly help companies meet regulatory requirements are not considered RegTech by Deloitte. For example, a solution that helps authenticate end-users using techniques that happen to satisfy regulatory requirements is not RegTech. Rather, it’s an authentication solution (part of IAM). Similarly, an HR background-check solution that helps HR meet compliance requirements is not RegTech. It’s a component of an HR solution.
How To Spot Tech-Washed Products: Five Tells
To help you navigate the confusion, here are five tech-washing tells that you should be on the lookout for so you don’t end up as an easy mark for the washers:
Tell No. 1: The extreme makeover. Does the updated, tech-washed product have a long product history that doesn’t mesh well with the present market landscape? If so, that green, cloud or RegTech product may be the equivalent of an extreme makeover — that is, all of the changes are on the surface while the core remains the same.
Tell No. 2: The outdated business model. Technology innovations often accompany new business models. As cloud computing emerged, vendors could no longer force customers to buy software that only worked on dedicated hardware and which necessitated expensive integration, time-consuming deployments, and expensive support contracts.
Modern cloud-delivered business software tools have moved to an on-demand model that allows customers to finely tune consumption to match demand. If the “new” business software locks you into long contracts, integrates poorly with other business-critical software and requires extensive customization to get it to work properly for your specific industry, consider these all red flags.
Tell No. 3: Paying for feature bloat. Another sign of an outdated business model is the practice of paying for a thousand and one features that you don’t need just to get the few dozen capabilities that are essential to your business.
Feature bloat is a leftover from the one-size-fits-all era when business software suites had to appeal to every industry under the sun. Today, you’re better off seeking software that is purpose-built for your industry.
Tell No. 4: FUD. Many threatened incumbents pollute the information sphere with FUD (fear, uncertainty, and doubt) disinformation campaigns. The goal of FUD isn’t to beat the upstart on the merits but to sow enough doubt that customers fear change.
When incumbents realize that the status quo is untenable, expect them to challenge the definition of new technologies, disparage the leaders driving innovation and question the viability of new business models.
Tell No. 5: The support line starts back there ... way back there. One of the Achilles' heels of the typical tech incumbent is customer support. The bigger a company gets and the more customers it must support, the harder it is to serve them all in a timely and effective fashion. Startups often compete here because customer support is hard to scale up — especially with one-size-fits-all products.
Newer software, in contrast, focuses on specific industry problems and utilizes such cutting-edge tools as AI and machine learning to scale up support in ways that horizontal, monolithic vendors can’t match.
The Fate Of Tech Washing
Tech washing never lasts long. The vendors doing the washing know innovation can’t be held at bay forever, and eventually, the fever will break.
For business decision-makers struggling to sort washed products from the real deal, it’s important to remember that time is on your side. Don’t rush into a purchasing decision. Do your homework, and when you suspect you’ve encountered a tech-washed dinosaur, look for the tells.