The well-known Pareto’s principle, also referred to as the 80-20 rule or the law of the vital few,
can be used to illustrate the distribution of wealth in a country. The original Pareto’s principle states
that 20% of the population in Italy owned 80% of the wealth in 1906. Subsequently, Pareto’s principle
has been observed in many other areas. The generalized Pareto’s principle suggests that, for many
events, roughly 80% of the effects come from 20% of the causes. For example, it has been observed
that many companies in the information and communication technology (ICT) industry have been faced with the same phenomenon in which 80% of their budget was spent on maintaining existing ICT
services and infrastructures, while only 20% on their core business functions. As a result, a limited
amount of computing resources and capital can be used to improve the core competences of small- and
medium-sized manufacturers (SMMs), including the development of new products and the
improvement of existing products.