The Next Big Impact
Date: Monday , October 05, 2009
Business wants to achieve three things - higher growth, higher profits and better asset efficiency. Together, they impact shareholder value. IT helps in achieving these by enabling operational excellence and innovation.
IT has achieved a lot. The earliest generation of IT – the mainframe generation – brought enormous number crunching power. In the beginning, its application was in simple things like payroll processing, etc. However today, the number crunching power of IT is used for things like gene sequencing, which is extremely important. The next generation of IT brought the computing power to every desktop and impacted business productivity. Then came the Internet generation of IT, brought about by the marriage of the computer and telecommunications, and it has started impacting the quality of our lives. We don’t have to stand in a queue for withdrawing money from the banks or to buy a movie ticket and we can stay connected with friends and relatives today. But I feel that we will be seeing the real impact of IT in the coming years. Whatever has happened till now is only the movement on the runway. The impact of IT is about to take off.
The future impact of IT will be in the area of operational excellence and innovation, but the theatre of action for IT will change and expand significantly. In operational excellence, for example, there will be three significant impact areas – organizational simplification, corporate performance architecture and management and corporate governance.
Organizations have to simplify the entangled web of discrete processes and systems that run today. This will be totally driven by IT. The end goal is to have a flat, agile organization that can respond in real-time with zero latency. Organizations must have a single digital nervous system.
Corporate performance architecture & management will be the skeletal and muscular system of the organization. Strategies must be linked to activities. Metrics processes and systems must get integrated. IT will be the ligaments and the tendons. Companies will model, track and optimize their performance; much like a sportsman or an athlete does to his or her body. The idea is to achieve predictability and sustainability of business results with profitability and de-risking.
And the heart and soul of an organization are its values, its transparency and its corporate governance. It is impossible to create a sustainable organization if it doesn’t enjoy the trust of its stakeholders. IT can help in achieving compliance – through data, monitoring and processes. In areas where there are no regulations, we must put self regulations in place. I feel that it is the responsibility of the board to ensure that we have absolute transparency in all our financial dealings and we adhere to the highest level of corporate governance.
In innovation, the first area will be in enabling sustainability and climate change. Global climate and global economy don’t have to be hostile to each other. We need to innovate radically – and IT has a huge role to play here – for them to co-exist. We require large investments in “green” technologies. Equally importantly, we need to think “green” and incorporate green design principles in all our processes, products and market offerings.
The second impact area will be the ecosystem of digital consumers and networked communities. The power equation between an organization and its customers has changed. Earlier the customer was a discrete entity. But today, they are networked–and then, there are networks of networks. The power of a network is proportional to the square of the nodes. So the consumer networks have become very powerful. Organizations have to learn to use IT to engage with them effectively, understand their requirements and co-opt them in their thinking, planning and creation process. Those who won’t do this will become irrelevant.
Then there is pervasive computing. Almost every device will be a computer of some sort –laptop, mobile phone, gaming machine, TV, refrigerator, microwave oven, car – you name it. And they will be connected –through the Internet and through sensor networks – to each other and to us and to the surrounding environment. Information, then, like electricity, will become a form of energy. The trick will be to be able to harness the enormous amount of information generated.
The fourth impact area for innovation will be the emerging economies. Emerging economies are the drivers of global growth. They offer new growth markets for all organizations. You have to create products that are specific to these markets – and, at the same time be environment friendly. Emerging economies are also going to become innovation hubs as the innovation eco-system takes root in these places.
A lot of these impact areas go beyond the organization, because the boundaries between society and organizations will blur. Just like the boundaries between our personal life and private life are blurring – we take work home and bring our songs to offices.
And then there are a couple of emerging areas where IT will have a significant role to play and the result will impact the society as a whole. One is the new concept of digital commerce – electronic commerce, mobile commerce etc. IT has a huge role to play in ensuring safety and security of transactions and providing visibility and control in flow and supply. At the same time, this new commerce is going to have an impact on society. It’ll enable us in banking the unbanked. It will probably create a whole new thinking towards money. The other is in genomics and related fields. IT has a huge role to play there as well. It will be about preventive treatment and personalized medicines.
Going forward, it will be an extremely exciting time for IT. It’s role will be nothing less than designing the 21st century enterprise and society.
The author of the article is Kris Gopalakrishnan, the CEO & Managing Director, Infosys Technologies. He is an IIT Madras Alumni.