What Happened to the Milkman?

I grew up in Pittsburgh in the 1960’s, on a cul-de-sac overrun by children aged 5 to 15. Each of their families consumed milk…lots of milk. We had two deliveries a week to our house. Each delivery included 6 glass gallon containers of milk, plus a carton cottage cheese and several boxes of butter. There were at least three different milk delivery companies that serviced the 16 homes on our street. Today, there are only a few milk delivery services in existence in the entire country.

What happened to the milkman?

The demise of home delivery came quite rapidly, the confluence of new technologies, economic forces, and changing demographics.

• Better refrigeration systems meant that large dairies could deliver milk to a much larger geographic area, cutting into the market of small dairies.
• Large dairies also had much better economies of scale, lowering prices at retail and cutting further into the market and margin of the milkman.
• Milkman didn’t just deliver milk…they were the first of the great recyclers. They picked up glass empties when dropping off full bottles. However, the rise of plastic containers obviated the need for glass bottles.

By the early 70’s, the baby boomers were young adults and were not consuming as much milk. Moms and dads could now pick up a gallon or two of milk at the local grocery store, and it would last all week.

SaaS and the milkman

Over the last 10 years, many software providers have migrated from a license-based model to a service-based model known as SaaS…software-as-a-service. Interestingly enough, their path to a service model has interesting parallels to the milk market. Like large dairies, large data centers are now able to deliver computing power to end users around the world by dint of megabit (and soon gigabit) bandwidths. In addition, the economies of cloud farms make standalone data centers much more costly and more inefficient. Finally, today’s elastic computing environments allow IT professionals to spin up additional servers and storage during peak times, and dial back during slow times…more easily than going to the store for a gallon of milk. The small, independent data center is becoming as anachronistic as the milkman.

AP Automation in the cloud

AP automation happens to be one application just made for cloud computing, and for several very good reasons. The twin benefits of scalability and reliability are central to the value proposition. So too is the nature of the work, the integration requirements, and the rapid pace of change taking place in the industry as new technologies come online. Cloud computing also enables flexible work alternatives, including on-demand staffing to help at the end of the month or quarter, and the ability to work in lower cost markets.

Why not milk-as-a-service?

Today, you can get almost anything delivered as-a-service. Transportation, razor blades, wine and beer, pet grooming, shoes, tuxedos, even weekly wardrobes, as my daughter knows. And AP Automation. But not milk…at least not where I live. I am betting on a come-back. There’s nothing quite like a quart of chocolate milk from the back of a truck. Just ask any baby boomer.