OVER THE PAST FEW months, we have heard statements like “technology does not matter”, that somehow investments in technology were yesterday’s news. The “globalization of service delivery and product development” will supposedly kill the innovation engine in the U.S. and that technical jobs are suddenly no longer a career choice for high schoolers. While improved performance by technology companies have belied some of these statements, much confusion and doubt still prevail.
And yet, the view from the inside could not be more diametrically opposed. In my role I have interactions with many CIO’s, Vice Presidents of Product Engineering and CEO’s at various companies and in various industries, and I see a great optimism about the future. Technology remains the single biggest driver of company productivity and we are nowhere close to the end of its potential. True, there have been unrealistic expectations from exaggerated promises made in the past, but that credibility gap had closed. Companies are only just beginning to see the potential of technologies that emerged recently—and the range is so breathtaking that many industries are transforming completely—from connecting employees to each other and to the company, to collaborative tools across extended teams; ubiquitous knowledge like retail inventory that talks to store systems to shop floor inventory that talks to manufacturing systems is growing.
But even more interesting is talking to a few leading edge venture capitalists and buyout firms. Not only are technology buyers re-emerging, but also we are poised on the cusp of major transformation where entire industries will go through a radical shift. Aiding this is a convergence of the forces of low telecommunication costs, the rising acceptance of web as a collaborative knowledge/commerce tool, and the availability of low cost service delivery at quality levels that are higher. This is especially so as companies take the wood block of their current operations and slice it, like so many Jenga blocks, into individual processes and begin to remove (outsource) the ones where they can benefit by having a specialist perform them.
Software product companies are going from “doing it all” to outsourcing globalization, installed base management, multiple OS support, etc., and also embracing new business models now that they are able to imbed a deeper level of customization and inbuilt services. The new age software product company looks totally different from the current ones. Financial services companies are realizing they are doing nothing more than arbitraging information and servicing clients—activities that can be dispersed and focused. New entrants are finding much lower barriers to entry and can gain competitive advantage quickly by focusing on a singular area like understanding risk.
Retailers are realizing that there is more money in understanding their customer purchase better and coordinating supply chains, than the physical transfer of goods. Value is shifting from manufacturers to distributors.