Posts Tagged ‘digital disruption’
Parents everywhere are wondering about the career choices that they should encourage their children to pursue. While some careers are already badly disrupted, others seem to be flying. How do you tell which activities will be valued in the decades ahead?
Depending on your country, the legal profession is a good example of the different impacts of disruption. Lawyers are not going out of business, but legal firms are experiencing unprecedented pressure on their rates. What is most interesting is that those who are dedicated to arguing in court (barristers in countries such as the UK or Australia) have the greatest success in charging a premium while those who are responsible for advising through legal processes seem to be the most affected by the downward pressure on rates.
This is a microcosm of the challenges and opportunities facing accountants, architects, technologists, management consultants and so many other professions. Disruption is no longer a theory about the future, it is with us now and the situation is getting worse for so many incumbent professions while other, often closely related, jobs seem to be immune.
There are some consistent themes to those roles that are protected and those that are most disrupted. For all of the talk of new technology, it is traditional economic principles of supply and demand which are at play, the role of the internet has been to free-up some of the friction in the system and allow these dynamics to come to the fore.
I’ve argued for a long time that the internet allows small business and individuals to compete with big companies. There are a number of mechanisms, but the most prolific is the rise of aggregation platforms. These platforms allow different groups to offer their spare or primary capacity in new and interesting ways. We are seeing this with taxis, accommodation, designers, lawyers and management consultants. New providers are appearing all of the time.
Platforms allow a number of small market participants to offer an integrated service. Drivers offer a global service through Uber and accommodation owners combine through Airbnb. Both of these are services that lend themselves to commoditisation and standardisation so will tend to reduce in unit cost. This leads us to three rules to use to determine which jobs are most at risk.
Rule #1: Commoditisation even of personal or highly technical skills
Platforms support commoditisation of otherwise individualised services such as driving or private accommodation. Similarly, many of the activities of design, medical diagnostics and legal advice are turning out to be relatively easy to break into units of work, which can be distributed and disrupted.
One of the assumptions that many have on the future of IT is that it is being offshored and outsourced. In fact, this is an early example of the trend that skills that can be defined in a standardised way that can be disrupted. However, that does not necessarily mean that all IT can be defined in standard units of work, meaning that much, if not most, of the profession is less prone to disruption.
Rule #2: Skills where the outcome is incremental
Consumers of services will pay a small premium for a great experience. If the bill is high, however, the premium they will pay for the same outcome with a slightly better service is only small.
For instance, most people choose their builder based on price even if they know that they will have to manage the process closely. Many of these same people will choose an architect based on their creative talents rather than price because the difference between two architects is an entirely different building. However, where the building is a standard shape or configuration, architects have a hard time pitching their wares against each other or even against less qualified designers.
This rule explains why legal professionals who mount the argument in court are less subject to the commoditisation of their services than those who provide legal advice on the process. While the legal process is relatively defined, even a small difference in the quality of the court appearance can make the difference between winning and losing.
Leadership is a really good example of a unique skill where stakeholders are prepared to pay a premium given that each decision has a ripple and long-lasting effect. CEOs are unlikely to receive a pay cut anytime soon!
Rule #3: Deep knowledge is no protection
It used to be that having narrow but deep knowledge of a topic was likely to protect your job. Where the first generation of knowledge systems could codify simple processes and provide access to knowledge, the current generation of cognitive analytics can replicate the process of applying complex knowledge assets to similar but different problems based on patterns of previous responses.
Not only is this disrupting those who solve customer problems and provide complex advice, it is increasingly threatening medical professionals who interpret images as well as legal and tax experts who interpret tax legislation.
So what is safe?
The reverse of each of these rules is similarly true. I’ve argued before that your insight might protect your job. The careers that are most likely to attract a premium in the future have: skills which are difficult to commoditise or involve complex integration; roles where there is a binary outcome for a small difference in capability; and activities that require insight rather than knowledge.
Unfortunately, the jobs that most of us do today have elements that lend themselves to disruption but also activities that are more likely to garner a premium. The exciting thing is that it is the latter that are usually the most fun. I’m an optimist, I think the business of tomorrow will recombine the most interesting elements of today’s jobs and open up even more interesting careers for the next generation.
I was recently invited to deliver the keynote address at the University of Melbourne engineering and IT awards night. I took the opportunity to challenge today’s students to think about the people being left behind as in the move to a digital economy.
Some 25 years ago I had the privilege of attending this university. In thinking about tonight and the achievements of so many of you, I couldn’t help reflecting on the challenges my generation faced entering professional life in the 1990s and comparing them to what you will see in the decades ahead.
Wherever you turn in the media you are hearing the term “digital disruption”. For those of us lucky enough to be educated in the so-called STEM disciplines of Science, Technology, Engineering and Mathematics, we probably feel empowered and excited by the talk of “digital disruption”. How could we not look forward to using the technology of our time to replace the cars we drive with electric vehicles, our plastic credit cards with mobile wallets or the work cubicle of my generation with working flexibly at a local café.
We must not forget that the same sense of optimism is not necessarily true for societies around the world. At a macro-level, where there is technological disruption, business disruption follows. But where there is business disruption, social disruption is all too often the result.
Already email has all-but killed traditional mail. Mainstream bookstores are a shadow of their former selves. I can’t remember the last time I was in a record or CD store. Hardly any businesses worry about advertising in the telephone directory. Each of these changes has cost jobs and not everyone who lost out has found a role in the changing economy.
We have a responsibility to make sure that change is not only good for those of us lucky enough to have access to the right skills, but also to make change good for society as a whole. Future generations will judge us by how we navigate the next two decades.
Change leaves winners and losers
We should be under no illusion, the changes we are going to go through in transport, energy and, particularly, financial services will leave far more at a disadvantage than any change that we have seen so far in the era of the Internet.
Does it matter that the next wave of innovation could see the end of local media content rules? Does it matter that Department stores could be wiped out in Australia? Does it matter that banks could be taken to the brink by a wave of fintech innovators, including peer-to-peer lending?
Take the last of these; replacing banks sounds an awful lot like risking the failure of the banks. Whether it was in the nineteenth century, twentieth century or most recently in the GFC in this century, whenever banks have gone down many ordinary people have been badly hurt.
Disruption spurred-on by digital technology is extending into mainstream engineering, for example, batteries are looking to finally fill the gap of solar energy, providing stored base load power for when the sun isn’t shining and electric vehicles that hardly need servicing. We could be just a few years away from houses going off-grid en masse. These changes will leave car dealerships without a source of service income and power utilities without a market.
The concentration of wealth
The birth of the commercial Internet offered an opportunity for small business to compete with large companies with many of the advantages of scale and geography being removed. At the turn of the century we saw an opportunity for a utopia of innovation spread across the globe with the rewards reaching far more people than ever before.
20 years in and the reality is not entirely aligned to this vision. The network effect means that there are advantages to scale. The more people that use the same search engine, the better its algorithms. The more people that use the same music service the better its catalogue. The more people that use the same social network, the greater its reach.
However, the evidence is that the groundswell of innovation is turning the tide with new money pouring into start-ups regardless of location and value being added in more locations that ever before. That is where this room can lift its sights. Seek to add value to the local economy where you and your family want to live and where you can see a society that you want to build. Don’t be afraid to resist the pull to traditional centres of innovation. Don’t just think of your personal wealth but also of where your effort will contribute to your community.
Using technology as part of the solution
We in this room have the ability to channel our knowledge, skills and innovative flair to not only develop new applications of technology but also to corral and encourage the application of technology in such a way as to minimise unintended consequences and potential achieve new benefits for our society.
We can choose to enable a sharing economy, created through yet more innovations such as 99designs, Kaggle, Freelancer, Airbnb, DriveMyCar, and so many more, which provide income to a wider range of people using their available talent and resources.
We can choose to support local talent through the development of great ideas and then seeing them through to commercial success. We can use automation and 3D printing to enable local manufacturing. We can develop specialised services which are ready to be purchased by government and industry so that they are less dependent on imports.
I refuse to believe that we can’t use technology to improve access to capital while maintaining a safe financial system. I am convinced that we can find better ways to access products and services without doing away with storefronts. I know that we can make the move from fossil fuels to renewables while keeping a highly skilled engineering capability locally.
You will face different professional challenges to those that I faced as I approached the end of my education at this university. You will be the shapers of society in the decades ahead. You will help decide whether to throw ourselves headlong into technology-driven disruption or whether to keep a watch out for those who are left behind. You will decide whether you will be drawn into ever greater geographic concentration of innovation or if you will take the path to keeping value in the community you want to be part of.
I hope you will seek to make the right choices with the education you have worked so hard to earn.
Everyone is talking about digital disruption and the need to transform their company into a “digital business”. However, ask most people what a digital business is and they’ll talk in terms of online shopping, mobile channels or the latest wearable device.
In fact we have a long tradition of using the word “digital” as a prefix to new concepts while we adapt. Some examples include the wide introduction from the 1970s of the “digital computer” a term which no longer needs the digital prefix. Similarly the “digital mobile phone” replaced its analogue equivalent in the 1990s introducing security and many new features including SMS. The scandals caused when radio hams listened into analogue calls made by politicians seem like a distant memory!
The term digital really just refers to the use of ones and zeros to describe something in a way that is exactly repeatable rather than an inexact analogue stream. Consider, for instance, the difference between the ones and zeros used to encode the music in an audio file, which will replay with the same result now and forever in the future, compared to the physical fluctuations in the groove of an old vinyl record which will gradually degrade. Not only is the audio file more robust it is also more readily able to be manipulated into new and interesting combinations.
So it is with digital business. Once the economy has successfully made the transition from analogue to digital, it will be natural for all business to be thought of in this way. Today, however, too many people put a website and mobile app over the top of their existing business models and declare the job done.
Their reason for doing this is that they don’t actually understand what a digital business is.
Digital business separates its constituent parts to create independent data and processes which can then be rapidly assembled in a huge number of new and innovative ways. The move to digital business is actually just a continuation of the move to the information economy. We are, in fact, moving to the Information-Driven Business that puts information rather than processes at its core.
Airlines are a good example. Not that many years ago, the process of ticketing through to boarding a flight was analogue meaning that each step led to the next and could not be separated. Today purchasing, ticketing and boarding a flight are completely independent and can each use completely different processes and digital technology without impacting each other. Passenger handling for airlines is now a digital business.
What this means is that third parties or competing internal systems can work on an isolated part of the business and find new ways of adding value. For retailers this means that the pictures and information supporting products are independent of the website that presents them and certainly the payment processes that facilitate customer transactions. A digital retailer has little trouble sharing information with new logistics, payments and mobile providers to quickly develop more efficient or new routes to market.
The digital facade
In the 1970s and 1980s businesses were largely built-up by using thousands of processes. Over time, automation has allowed these numbers to explode. When processes required clerical functions the number of options was limited by available labour. With automation, every issue can be apparently solved by adding a process.
Where digital business is about breaking activities up into discrete parts which can be reassembled, analogue business tends to be made up of processes which are difficult or impossible to break apart.
The problem with this is that the organisation becomes a maze of processes. They become increasingly interdependent, to the point where it is impossible to break them apart.
Many businesses have put mobile and web solutions over the top of this maze. While the result can look fantastic, it doesn’t take long before the wheels fall off. Customers experience inconsistent product, delivery or price options depending on whether they ring the call centre or look online. They find that the promised stock is no longer available because the warehouse processes are not properly integrated with the online store. Without seamless customer information, they aren’t addressed with the same premium privileges or priority across all channels.
In many cases, the process maze means that the addition of a digital façade can do more harm than good.
Ironically, the reverse model of having a truly digital business with an analogue interface to the customer is not only valid but often desirable. Many customers, particularly business clients, are themselves dependent upon complex processes in their own organisations and it makes perfect sense to work with them the way that they want to work. An airline that is entirely digital in its core can still deal with corporate travel agents who operate in an analogue world.
Digital transformation from the inside out
I have previously argued that the technology infrastructure that supports digital business, cloud, is actually the foundation for business transformation (see Cloud computing should be about new business models).
Every twenty-first century business needs to define itself in terms of its information assets and differentiated intellectual property. Business transformation should focus on applying these to the benefit of all of its stakeholders including customers, staff, suppliers and shareholders.
Starting from the core and building a new enterprise around discrete, digital, business capabilities is a big exercise. The alternative, however, is to risk being pulled under in the long-term by the weight of complexity.
No matter how many extra interfaces, interim processes or quick fixes are put in place, any business that fails in this transformation challenge will ultimately be seen as offering no more than a digital façade on a fading analogue business.
Business and government is finally treating Digital Disruption as seriously as the topic deserves. I have written previously about the Deloitte Digital Disruption report and highlighted the fact that that in Australia two thirds of the economy will experience a substantial impact in the short to medium term. Almost every economy around the world faces similar challenges.
Few readers of the report would be surprised to see that both retail and media are heavily impacted. A walk past any vacated bookshop or a glance at the rapidly emptying displays in the newsagent’s magazine stand are among the many obvious signs that these industries have been seriously disrupted.
There is a danger that other industries take the examples of retail and media too literally and assume their own experience will be the same. To illustrate why drawing parallels between industries is complex, I’ll use the example of education where many leaders are feeling uncomfortable, but their experience of digital disruption is likely to be very different.
Tertiary education is a sector where lecturers and administrators are watching the rise of MOOCs (Massive Open Online Courses) and wondering whether in the future their students will bother to even enrol in their institutions if they can access the world’s best teachers with a few mouse clicks.
One thing that traditional book sellers and newspapers have in common is that their interactions with their customers are transactional. The publisher sets a price that and the customer who wants the product pays that price. In the past, regulation has protected their markets and continues to provide some level of shelter in many countries today.
Education is different with many actors involved in every transaction ranging from students, parents and employers through to teachers, administrators and regulators. The regulators are complex and range from government to industry bodies. The buyers pay in a variety of forms including subsidies, loans, entry scores and their own preferences (directing government funding). The seller earns revenue in complex ways that go well beyond the individual transaction.
There is no doubt that the learning experience is changing with teachers increasingly delivering lectures through a variety of mediums and students leveraging a wider range of tools. However the real question is whether a small number of superstar lecturers will dominate through MOOCs and, if they do, will today’s university have any part to play in tomorrow’s student experience?
Assuming that tomorrow’s MOOC replaces today’s teacher makes the mistake of likening a university to a bookshop and the lectures to books. A university is in fact a network with all of the actors I described connected together through complex business rules. Economists might describe this as a “two-sided market”.
A two-sided market is a sophisticated relationship between buyer and seller. It is also called a two-sided network which probably more accurately defines the relationship. Their nature is to have a group of customers who have a many-to-many relationship with a group of providers (who may themselves also be customers). In the middle is the facilitating organisation, in this case a university, providing a “multi-sided platform”.
Other examples of two-sided markets, or organizations providing multi-sided platforms, are the major credit card companies, social networks and the better online retailers. In each case, these platforms provide a network benefit that amplifies as the number of participants increases.
The very nature of the advantage of scale for multi-sided platforms means that they tend to consolidate quickly. While there are periods of innovation when lots of new entrants join the market, the winners quickly emerge and are either acquired or begin to do the acquiring. This is a dangerous period for incumbents as they need to make the right bets to ensure their scale puts them in a position to be doing the acquiring rather than risk losing market share and potentially being acquired or eliminated.
Understanding the nature of the multi-sided platform that educational institutions provide removes the fear that MOOCs on their own will become the university of tomorrow. However, innovation means that there will be change and the smart provider will learn from the best of other platforms that are thriving.
Perhaps the next generation of students will experience a mixture of electronic and in-person teaching, industry introductions via Amazon-style recommendations and funding based on incremental performance which is tracked digitally. If today’s universities pick-up on these trends quickly, they will remain in the box seat to dominate educational services in the decades ahead.
The MIKE2.0 wiki defines the Chief Data Officer (CDO) as one that plays a key executive leadership role in driving data strategy, architecture, and governance as the executive leader for data management activities.
“Making the most of a company’s data requires oversight and evangelism at the highest levels of management,” Anthony Goldbloom and Merav Bloch explained in their Harvard Business Review blog post Your C-Suite Needs a Chief Data Officer.
Goldbloom and Bloch describe the CDO as being responsible for identifying how data can be used to support the company’s most important priorities, making sure the company is collecting the right data, and ensuring the company is wired to make data-driven decisions.
“I firmly believe the definition of a CDO role is a good idea,” Forrester analyst Gene Leganza blogged, but “there’s plenty to be worked out to make this effective. What would be the charter of this new role (and the organizational unit that would report to it), where would it report, and what roles would report into it? There are no easy answers as far as I can see.”
What about the CIO?
And if you are wondering whether your organization needs a CDO when you probably already have a Chief Information Officer (CIO), then “look at what we’ve asked CIOs to do,” Peter Aiken and Michael Gorman explained in their intentionally short book The Case for the Chief Data Officer. “They are responsible for infrastructure, application software packages, Ethernet connections, and everything in between. It’s an incredible range of jobs. If you look at a chief financial officer, they have a singular focus on finance, because finance and financial assets are a specific area the business cares about. Taking data as a strategic asset gives it unique capabilities, and when you take the characteristics of data and you see the breadth and scope of CIO functions, they don’t work together. It hasn’t worked, it’s not going to work, especially when you consider the other data plans coming down the pipeline.”
And there aren’t just other data plans coming down the pipeline. Our world is becoming, not just more data-driven, but increasingly data-constructed. “Global drivers have been shifting from valuing the making of things to the flow of intellectual capital,” Robert Hillard blogged. “This is the shift to an information economy which has most recently been dubbed digital disruption. There is no point, for instance, in complaining about there being less tax on music streaming than the manufacture, distribution, and sale of CDs. The value is just in a different place and most of it isn’t where it was.”
The Rise of a Second CDO?
“All businesses are now digital businesses,” Gil Press blogged. “The digitization of the entire business is spreading to all industries and all business functions and is threatening to make the central IT organization less relevant. Enter the newly-minted Chief Digital Officer expected to provide a unifying vision and develop a digital strategy, transforming existing processes and products and finding new digital-based profit and revenue opportunities. The role of the Chief Digital Officer is all about digital governance, the other CDO role—that of the Chief Data Officer—is all about data governance. With more and more digital data flowing throughout the organization, and going in and out through its increasingly porous borders, managing the quality, validity, and access to this asset is more important than ever.”
“The main similarity between the two roles,” Press explained, “is the general consensus that the new chiefs, whether of the digital or the data kind, should not report to the CIO. Theirs is a business function, while the CIO is perceived to be dealing with technology.”
“The CDO reports to the business,” Aiken and Gorman explained. “Business data architecture is a business function, not an IT function. In fact, the only data management areas that stay behind with the CIO are the actual development of databases and the tuning, backup, and recovery of the data delivery systems, with security shared between IT and the business.”
Hail to the Chiefs
“The central IT organization and CIOs may become irrelevant in the digital economy,” Press concluded. “Or, CIOs could use this opportunity to demonstrate leadership that is based on deep experience with and understanding of what data, big or small, is all about — its management, its analysis, and its use in the service of innovation, the driving force of any enterprise.”
The constantly evolving data-driven information economy is forcing enterprises to open their hailing frequencies to chiefs, both new and existing, sending a hail to the chiefs to figure out how data and information, and especially its governance, relate to their roles and responsibilities, and how they can collectively provide the corporate leadership needed in the digital age.
If any modern economy wants to keep, or even add, value to their country as the digital economy grows it has to search for productivity in new ways. That means bringing together innovations from IT that are outside today’s core and combining them with solutions developed both locally and globally.
Global economies are experiencing a period of rapid change that has arguably not been seen before by anyone less than 80 years of age. Global drivers have been shifting from valuing the making of things to the flow of intellectual capital. This is the shift to an information economy which has most recently been dubbed “digital disruption”.
In just a few short years the digital economy has grown from insignificance to being something that politicians around the world need to pay attention to.
Unfortunately, most governments see the digital economy in terms of the loss of tax revenue from activities performed over the internet rather understanding the extent of the need to recalibrate their economies to the new reality.
While tax loopholes are always worth pursuing, the real focus should be stepping up to challenge of every country around the world: how to keep adding value locally to protect the local economy and jobs. There is absolutely no point, for instance, in complaining about there being less tax on music streaming than the manufacture, distribution and sale of CDs. The value is just in a different place and most of it isn’t where it was.
Although the loss of bookstores and music retailers has been one of the most visible changes, the shift in spending has come at an incredible pace. Just ask any postal service or the newspaper industry. As citizens we are keen to take advantage of the advances of smartphones, the integration of supply chains with manufacturing in China (giving us very cheap goods) and the power of social media to share of information with our friends. We are less keen when our kids lose their jobs as retail outlets close, manufacturing shuts down and the newsagent’s paper round gets shorter.
We all benefited dramatically as IT improved the efficiency and breadth of services that government and business was able to offer. Arguably the mass rollout of business IT was as important to productivity in the 1990s as the economic reforms of the 1980s. As a direct result there are now millions of people employed in IT around the world.
While this huge workforce has been responsible for so much, today it is not being applied enough to protect economies from leaking value offshore. Many companies regard technology as something they do just enough of to get on with their “real” businesses, even as their markets diminish. Even “old economy” businesses need to be encouraging their IT departments to innovate and apply for patents.
To protect their tax base, and future prosperity, each country has to search for productivity in new ways. That means combining innovations from IT that are outside today’s core and combining them with solutions developed by other organisations locally and internationally. It means looking beyond the core business and being prepared to spin-off activities at the edge that have real value in their own right. And it also means governments and large enterprises need to change the way that they procure so that they are seeding whole new economies.
Today when politicians and executives hear about IT projects they don’t think about the productivity gain, they just fear the inevitable delays and potential for bad press. That’s because large organisations have traditionally approached IT as a 1990s procurement problem rather than as an opportunity to seed a new market. A market that is desperately needed by small and medium enterprises who, while innovative, find it very hard to compete for big IT projects leaving many solutions being limited to less innovative and less efficient approaches. Every time this happens the local and global economy takes a small productivity hit which ultimately hurts us all.
Imagine a world of IT where government and large business doesn’t believe it has to own the systems that provide its citizens and customers with services. This is the economy that cloud computing is making possible with panels of providers able to delivery everything from fishing licences to payroll for a transactional fee.
Payment for service reduces government and business involvement in the risky business of delivering large scale IT projects while at the same time providing a leg-up for local businesses to become world leaders using local jobs.
Government can have a major impact through policy settings in areas such as employee share schemes, R&D tax credits and access to skilled labour. However the biggest single impact they can have growing their digital economies and putting the huge IT workforce to productive work is through the choices they make in what they buy.
Business can have a major impact on productivity by managing cost in the short-term by better integrating with local and global providers, but to repeat the benefits of the 1990s productivity improvements will require a willingness to invent new solutions using the most important tools of our generation: digital and information technology.
Over the last few months I’ve had the opportunity to collaborate with a range of my Deloitte colleagues on a report into the “digital disruption” of business. The result brings together the impacts of digital technologies, with the explosion of information and the enabling capabilities of cloud. For me, the most important aspect of the collaboration has been the separation of digital from its purely technical connotations. While focused on Australia, the report’s findings are largely applicable to all geographies.
Hear the word “digital” and your mind races to the latest internet or mobile device. Over the past forty years many new technologies have been introduced which have caused disruption and met this definition of digital.
Some examples include the wide introduction from the 1970s of the “digital computer” a term which no longer needs the digital preface. Similarly the digital mobile phone replaced its analogue equivalent in the 1990s introducing security and a raft of new features including SMS – who recalls the number of scandals caused when radio hams listened into analogue calls made by politicians? Digital communications over the internet are simply another example of various analogue predecessors being digitised.
Digital business separates its constituent parts to create independent data and processes which can then be assembled rapidly in a huge number of new and innovative ways. Airlines are a good example. Not that many years ago, the process of ticketing through to boarding a flight was analogue meaning that each step led to the next and could not be separated. Today purchasing, ticketing and boarding a flight are completely independent and can each use completely different processes and digital technology without impacting each other. Passenger handling for airlines is now a digital business.
What this means is that third parties or competing internal systems can work on an isolated part of the business and find new ways of adding value. For retailers this means that the pictures and information supporting products are independent of the website that presents them and certainly the payment processes that facilitate customer transactions. A digital retailer has little trouble sharing information with new logistics, payment and mobile providers to quickly develop more efficient or new routes to market.
If you don’t think that this is going to impact you in the short-term, then the report’s analysis should convince you otherwise. 32% of the Australian economy (and by extrapolation the economies of other countries) will experience a major disruption in 0 to 3 years and a further 33% will be similarly impacted in 3 to 5 years. Impact is one thing, but this report leaves you with a sense of just how much work there is still to be done to respond to the digital challenge.
History is replete with examples where ideas are launched with great fanfare and yet fail while subsequent iterations of very similar ideas are hugely successful. The difference between a failed good idea and a success is often only a matter of a few subtle differences.
It can be argued that at any time there are just a few key trends which define technology support for business transformation and innovation in the industry as a whole. In the past we have dealt with network trends that have resulted in better communications, infrastructure trends which have delivered standardisation and technology management trends that have given us a focus on project outcomes.
In each case, the wave that saw these ideas come through was preceded by iterations of similar concepts that simply failed to gain popular support.
The three big trends that we are dealing with in Information Technology at the moment are: digital disruption, cloud and big data. All three tend to get discussed in isolation but are, in fact, closely related. As much as anything, all three reflect the maturing of IT to join other forms of technology where subtle ergonomics, form and design are more important than a simple inventory of features and functions.
Digital is a business trend
Digital technologies are those that contain discrete (discontinuous) elements or values. Contrary to popular misconception, digital does not mean online activities. The opposite of digital is analogue where elements are not independent, such as business processes that cannot be isolated.
Digital business isolates individual business functions and their supply through business services, often through B2C or B2B online channels. Once functions are isolated they can be recombined in new and innovative ways to create disruption. Digital disruption. Examples of this disruption include the recombination of supply chains, retail, financial products, telecommunications and even quite traditional manufacturing and mining activities.
The principles and technologies of digital business are not new, the industry has developed service oriented architecture (SOA) approaches over many years with exactly the same goal. What has changed this time is subtle. Rather than relying on standards for interfacing, digital approaches are relying on market forces to ensure that individual components are able to effectively exchange information. Once again, market self-interest is trumping central planning!
Cloud as a power station
While the move towards cloud is complex, it is certainly not new. Bureau computing through the 1980s (and even earlier) was just as much a cloud capability as today’s services. With the success of the Internet people have been envisioning a move away from owning infrastructure to combining services online for over a decade.
When people talk about cloud, they often refer to the utility model. The argument being that the move is inevitable. After all, no-one generates their own electricity right? In fact, the utility industry knows full well that electricity production is going a full circle with first solar and now increasing gas generation of electricity moving into the home. Similarly, many proponents of cloud argue that it is the continuation of trend towards thin client applications, but similarly software architects are very aware that the rise of mobile apps has seen the return of the thick client with a vengeance!
Centralisation versus decentralization and thick versus thin are simply part of the cyclical nature of IT. Cloud is much more important. It is the vehicle via which discrete services can be combined and delivered. Whether it is the embedding of payment services in ecommerce solutions, CRM for call centres or the provision of storage of photos for home users the really interesting trend is how these services can be combined in new and commercially viable ways.
Big data is an expression of freedom from technology
Big data leverages the digital bread crumbs from all of the new services that cloud and digital, combined, enable and builds on the freedom that organisations are gaining by not having to own or build everything themselves.
When businesses have to own everything, they naturally try to define it in enormous detail. With enterprises that are tightly interconnected (or naturally analogue) enterprise consistency and standards are paramount – hence the focus on master data. As elements of the business become discrete (digital) they can be allowed a level of independence and their data is driven by an internal and external market rather than standards. The result is big data (see my previous post, It’s time for a new definition of big data) which is as different from structured data as databases are from unstructured content.
Big data existed in the past, but without digital and cloud enterprises were reluctant to set it free for fear of losing control of already complex business processes.
User experience is everything
None of digital, cloud or big data are new. What we are seeing is that these technologies are supporting each other in a way that is making them practical and the market is learning to use them in a way that fits with day-to-day business and consumer activities.
Digital business makes sense in a world that is used to sharing big data across organisational boundaries. Cloud is important in a digital world that is not afraid of sharing or migrating whole business functions across boundaries and borders. Big data’s digital bread crumbs rely on the cloud to free-up the organisation from having to maintain control of all information definitions.
Above all else, these trends are being picked-up because they are being manifested in solutions that are easy to understand and use. Without app stores, payment services, CRMs and analytics tools which reflect the way people actually want to structure their businesses none of these trends would be taking hold.
TODAY: Fri, March 24, 2017March2017