While business leaders are able to consign problem episodes to the dustbin of history quickly, many IT management teams are still grappling with self-confidence issues that can be traced back to the last economic downturn and ‘IT recession’ in 2002/04.
Staff need to truly believe they are jointly responsible for the future of the business – your department must be a lot more than a deferential technology service provider hovering one step short of outsourcing oblivion. But how can you articulate the fundamentals of the new IT mission in a way that staff can internalise?
Looking at the macro-trend level across the IT industry landscape and comparing its offering to the needs of business leaders today, you can boil down the biggest issues to just four things IT is going to have to do really well in coming years. It must industrialise, innovate and internationalise – all in a sustainable way.
Although the automobile first appeared in 1885, it wasn’t until the 1930s that mass production really took hold of that industry. The world was reshaped by the results. Similarly, though we have been evolving business computing since the 1960s, only recently has the true scale-economy model started to emerge.
A network of gargantuan computing centres is now being strung around the globe by Google, Microsoft, IBM, HP and others. For example, Google, which we believe runs over a million servers, has been building its more recent datacentres next to rivers or lakes to aid cooling capacity. Meanwhile, it is a 1.3 mile walk around the outside of one recently constructed Microsoft Live datacentre building.
On these massive internet-connected processing platforms, Software-as-a-Service (SaaS) is mushrooming. Basic applications for small to mid-sized businesses and office software are being offered on subscription. Every major player is now involved in this, with SAP formally joining in last month.
It will take years for existing enterprise computing to change, but wholesale industrial re-engineering has already started in earnest.
Billions of dollars are being invested in this industry model. It will revolutionise technology economics by changing the way IT is constructed, offered and consumed. Your staff will have to make some big bets and take some complex decisions as this story unfolds to surf the strategic cost curves downwards in a timely way.
The numbers will be material to your business bottom line and, if you thought you had time to ponder, I should warn you that thought leader Nicholas Carrhas a new business book about the phenomenon – coming soon to a boardroom near you!
IT infrastructure will continue to become more cost-efficient over time, via new delivery models but that opportunity is equally open to all buyers. What business leaders need now, particularly in Western economies, are new sources of innovation to compete with players from emerging markets. The IT industry is generating new ideas and ways to radically improve products, services and business models, but we have barely started to take advantage.
For instance, Norwich Union’s pay-as-you-drive insurance (see box), uses basic wireless data and GPS location technologies; neither of them new. However, we have a whole collection of new technologies lining up on the near horizon. These include the social networks systems of web 2.0, the diverse array of new display technologies, the fabber, 3D virtual worlds and WiMax.
So what will your company do with this cornucopia of opportunity over the coming decade? Some companies will be too bamboozled to react, some will gorge themselves on everything and achieve nothing, and some will focus clearly enough to extract truly strategic competitive advantage. The modern IT department must be at the epicentre of that deliberation. It seems wholly improbable that companies will make the right judgement calls absent from that competency.
Like it or not, everything we do today takes place on a global stage. Whether it’s our derivatives trading markets competing against New York, or having our health service efficiency compared to that of the Nordics; we all have to be world-class to thrive. This will require us to give up the rump of some technology work to other nations that can do it more effectively. We will retain and excel in some technology specialities but as IT continues to change and advance, those specialities will sometimes arise in unexpected places.