Welcome to the new year, and welcome to the new age. With it comes a great rethink of what information technology is, and its relationship to the business. IT is becoming the business, and the business is becoming IT. Simultaneously, organizations have become providers of technology-enhanced services, as well as consumers. I've written on this convergence in many posts here at ZDNet and elsewhere, and the following is a recap and update, with the implications for 2016 and beyond.
A study released a few months back by Accenture and Oxford Economics predicted that the increased use of digital technologies could add $1.36 trillion to total global economic output in 2020. Essentially, moving forward full-force with digital would add an economy the size of South Korea to the global market (current GDP at $1.3 trillion).
Where is this added value coming from? There are a number of benefits being delivered through the rising digital economy:
- Increased efficiency and energy savings, as manual, duplicated or calcified processes are replaced with software-defined and analytics-driven processes.
- Increased market responsiveness, with businesses able to respond to consumer demand through social media, and anticipate future trends through analytics.
- Higher levels of collaboration, as members of organizations are able to work together and share information with each other almost instantaneously, as well as with customers.
- Greater innovation through knowledge-sharing, as businesses have greater access to pools of knowledge and resources outside their walls. Many tough problems are being solved because they are being opened up to the world, thanks to technology based networks.
- Greater innovation through experimentation. Put simply, technology makes it incredibly cheap to fail. And the more you can fail, the more you can learn what works. I couple years back, I heard Scott Cook, co-founder and chairman of Intuit Inc., describe his company's formula for achieving game-changing innovation: be willing to constantly run small-scale experiments, to develop a "culture of fast cycle experiments." In the case of Intuit's TurboTax, the company encourages up to 140 experiments each tax season, with new Websites and new services. Intuit learned to process these experiments in rapid order, he says. "They would install them on Thursday, run them over the weekend, and read and analyze them on Monday," he says.While 89% of experiments fail, it's important to conduct them frequently and let them play out, he says..
- More entrepreneurial energy and opportunity, as teams or individuals are able to take advantage of an abundance of cloud and social media resources to launch new businesses or business lines with minimal startup capital required.
The common denominator to all these success drivers is how well organizations leverage IT resources -- both internally and from outside sources. Technology is providing a new impetus to entrepreneurship and organizational transformation. Technology is playing a key role in flattening the organizational hierarchy, and pushing decision-making down to the managers and employees who deal with customers and production on a day-to-day basis.
That's why today's leading IT initiatives -- everything we talk about on these pages, from Web services to SOA to cloud to virtualization to big data analytics, open up new possibilities and opportunities for developing an entrepreneurial culture within organizations, as well as spurring new ideas for start-ups. Don Rippert, IBM general manager of cloud strategy, put it very eloquently at a customer event in 2015: "We go to cloud computing to magnify and amplify our talents, not just to make things simpler."
As a result, access is now open to the world's most powerful tools, machines, software, as well as the minds behind them. These technologies and approaches are paving the way for the composite or loosely coupled company - which may be an entity that exists purely as an aggregation of third-party services, provided on an on-demand basis to meet customer demands. Most of these services will be passed through as Software as a Service, both from within the enterprise and from outside.
This tech-fueled entrepreneurial spirit is also something that larger enterprises, particularly the Global 1000, will be ready to digest. While larger enterprises usually have their own humongous internal IT development shops, some of the largest companies may, in fact, be the most enthusiastic embracers of the virtual, componentized way of doing business.
The best-run companies are becoming "orchestrators" of networks of services, rather than actual producers. To achieve this orchestration role, companies may find their best option is to turn to third-party services and marketplaces that can provide the necessary software on demand. They can tap into services that they themselves may or may not have the time or inclination to build. Why reinvent the wheel by having your staff spend time building service components, when you can quickly subscribe to a component, that's been tested and uptime certified, and pay for it on as-used basis?
In day-to-day terms, it means new ways of working with technology. As Mohanbir Sawhney, professor with Northwestern University's the Kellogg School of Management, once put it, the concept of the "application" is becoming obsolete --being rapidly replaced by services, "combined, mixed, matched and reused as needed."
Cloud computing is pushing software vendors to change their models to component delivery, making plenty of room not only for small start-ups, but also for development shops within traditional enterprises that have great ideas. We'll see the emergence of the corporation-as-service-orchestrator phenomena.
This is unleashing what will perhaps be the largest wave of innovation seen for a long time, as documented by Nathan Toups and Brad Carleton within their "Cloud Revolution Manifesto," which forms the cornerstone of their book, Embracing Disruption. In essence, it calls upon IT executives and professionals to take leadership roles within their businesses, because no one is more qualified to step up to the digital revolution. Here are the values expressed in their manifesto:
- "We are the embracers of disruption. We are the pioneers of a new frontier."
- "The cloud model is new territory, and the rules are being written as we go along. A cloud-based business operates on a different plane than traditional business, and new kinds of opportunities that are only just starting to be discovered."
- "We are the denizens of a new world built by human minds and machines. Our world grows stronger, faster, and more capable every day."
- "We embrace: Bold visions of the future backed by real data. Distributed systems with no central authority. Freedom to share information and self express. Strength through a global community of hackers and free thinkers."
- "We value: 1) Expression over conformity; 2) Standards over servitude; 3) Distribution over centralization; 4) Reuse over waste; 5) Data over dogma."