If any of the big, incumbent Whitehall IT suppliers have not yet done so, they really need to read this web page.
It’s part of the new Government Service Design Manual, launched earlier this week by Whitehall CTO Liam Maxwell – it is effectively a guide for how to select, purchase, design and run IT across government.
It’s not an IT strategy – there have been numerous of those in the past that failed entirely. It is instead a set of guidelines that state, among other things, how government IT buyers should engage with IT suppliers from now on.
The page, “Creating a culture that supports change“, is, frankly, a scathingly public critique of the cosy relationships forged by the so-called oligopoly of system integrators and big software firms that have dominated Whitehall IT spending for many years.
It also reflects the denial that many of those suppliers maintain as reformers led by Maxwell try to drastically reduce or even eliminate the comfortable, ongoing, large revenue streams that have poured in from the public purse through long-term outsourcing contracts.
Take some of these excerpts from the official government manual as examples:
“It may be necessary and more cost-effective to write-off previous financial investments, so you will need courage and conviction to stop spending on old, legacy systems.”
“Your existing supplier base will tend to resist change – and the more successful a supplier has been working under the old model, and the more entrenched it is, the greater this resistance is likely to be. The changes needed will often be more successfully initiated and delivered by those not encumbered by past success – new market entrants and those traditionally closed-out from government business, such as small or medium-sized businesses.”
And these paragraphs are perhaps the most remarkable public statement of intent from any government IT leader:
“If you have incumbent suppliers, it is important that you understand and anticipate their likely reaction as they struggle to maintain the status quo and resist change.
“Incumbent suppliers will have data that reflects the past success of their business models and the way their business worked. They will be less certain about the future and may be concerned about the weakening of their market share and their exposure to genuine, open competition.
“The rewards and culture of these companies are likely to be built on their current business model. That will reinforce their internal resistance to change. It is difficult for them to persuade shareholders and financial investors to replace a well-understood, if obsolete, business model with an approach that favours the treatment of some IT products as commodities.”
That is a direct challenge to every major incumbent supplier; practically a determination to break the existing relationships – one that may even tread dangerously close to breaking competition law as it could be interpreted as a specific bias against such incumbents.
But the document doesn’t spare old attitudes in Whitehall either:
“You will also see similar resistance in-house, where many staff may have long grown accustomed to old ways of working… Some may have become dependent on external suppliers’ advice. Some may even have built their career on accreditation in a single supplier’s technologies.”
These statements are, of course, precisely what critics of government IT have been saying for a very long time – and what reformers have been saying privately for the past couple of years. But to see them in a formal government document is really remarkable.
There was a notable moment in Maxwell’s interview with Computer Weekly to coincide with the launch of the Service Design Manual. Our reporter, Kathleen Hall, asked him if the manual would help departments who have big outsourcing contracts coming up for renewal in the next two years (of which there are many).
Before she could event complete her sentence, Maxwell interrupted to correct her: “No. A lot of departments are having contracts FINISHED in the next couple of years.”
It is certainly the case that some suppliers have yet to grasp this reality.
Computer Weekly wrote a story recently revealing that the Department of Environment and Climate Change (DECC) is the only Whitehall department unable to adopt cloud computing yet, because of a lock-in with system integrator Fujitsu.
The DECC press office confirmed this in a statement: “Nearly all of DECC’s IT services are currently outsourced to Fujitsu as part of a contract that expires on 31 March 2014. There are significant cost implications in moving to cloud services in advance of this contract expiring. Therefore DECC has planned the introduction of cloud services to coincide with the end of the Fujitsu contract, meaning DECC will adopt a range of ICT cloud services starting on 1 April 2014.”
Fujitsu responded to us, claiming the story was inaccurate, and politely suggesting we remove it.
Needless to say we disagreed – backed up by the strength of the DECC statement. Lock-in is not only technical or contractual – having your budget tied up by a major outsourcing deal is just as much of a lock-in to any supplier or technology solution.
“Technology lock-in happens when previous decisions regarding technology limit future decisions, possibly so that only one real choice exists.”
“In general, you should avoid making long-term commitments to any particular technology, product or supplier until you fully understand the problem you’re trying to solve – and even then, you should ensure you maximise your future development options.”
It’s important to add that there is nothing in the Fujitsu contract that specifically restricts DECC’s ability to use cloud – it is purely a budgetary decision from DECC that it cannot do so while that contract is in place. And I’m using Fujitsu purely as an example – this is not meant as a specific criticism of that company, which continues to work closely with DECC on its current contract and commitments.
But it seems likely that several major outsourcers are yet to fully accept that the landscape is changing and their relationship with their government customers will be very different when their contracts expire.
As the Service Design Manual states:
“Your existing supplier base will tend to resist change – and the more successful a supplier has been working under the old model, and the more entrenched it is, the greater this resistance is likely to be.”
There will be a lot of big suppliers resisting change in the next two years, hoping that the 2015 General Election will sweep away the reformers. Their chances of success in t hat resistance are receding rapidly.
Apparently we are in the post-PC era. The PC is dead. Deceased. Pining for the ffjords. Ceased to be. An ex-market.
But nobody seems to have told Lenovo. Look at the latest quarterly sales figures.
Yet here’s Lenovo – sales up 15% to $34bn, profits up 34%, European shipments up 11% and market share in the region up 12%.
The Chinese giant is doing something right, something that the fading PC giants of HP and Dell seem unable to do.
There’s no disagreement that the PC market is in decline, and will have to share buyers’ cash with tablets and high-end smartphones. But there is still money to be made, and will be for some time, for those suppliers who have the necessary focus and customer understanding.
And yes, that’s a not-even-vaguely-disguised criticism of Dell and HP, both of whom have taken their eye so far off the ball that you have to wonder if they can feasibly turn around their PC businesses. Michael Dell clearly doesn’t think so, given his attempts to buy back the company and transform into an infrastructure supplier.
Lenovo also points to an early move into tablets as a factor in its growth – and it still seems incredible that neither HP nor Dell have produced a genuinely competitive product for the tablet buyer.
The IT market is rapidly diverging. It is going to be increasingly difficult to be a broad-based, do-a-bit-of-everything supplier. You will need focus, specialisation, agility – staying close to IT decision-makers and understanding their needs. Obvious, really, you’d have thought.
Dell’s future is being decided in investor arguments about whether or not to leave the stock market – a distraction the firm could do without.
HP’s future is being decided, well, slowly. CEO Meg Whitman’s “multiyear turnaround plan” is being given generous scope by investors, but it seems customers are losing patience.
The industry is reshaping itself, more big names will fall by the wayside, and the suppliers that IT leaders turn to will be very different by the end of this decade.
The government’s G-Cloud has its critics, who like to cite the relatively few millions of pounds of spending put through the programme as being tiny compared to the annual £16bn government IT spend.
But – putting aside the obvious counter argument that such change takes time and plenty of Whitehall buyers remain locked into costly outsourcing deals – there are significant signs that G-Cloud is having an even more important impact.
The initiative was intended to open up the market to SME suppliers, to reduce lock-in to long-term contracts, and create transparency of pricing. It’s doing all those things. For example, one smaller supplier, Memset, says it has seen its G-Cloud revenue grow 38% in just six months.
To reiterate the importance of G-Cloud, the government now has a cloud-first buying policy.
However, when G-Cloud really makes its mark is when it makes the big suppliers change their behaviour.
At the start of this month, Salesforce.com announced plans for its first UK-based datacentre – effectively a condition of being able to win business through G-Cloud due to data protection regulations around government data.
Now, Oracle has announced it is building a new UK datacentre specifically to deliver government IT services through G-Cloud. Oracle considered this so important that it brought its president, Mark Hurd, to the UK to make the announcement.
Do not underestimate how significant a move this is.
If suppliers of the size and influence of Oracle are seeing the writing on the wall saying they have to conform to the requirements of G-Cloud to continue their business with Whitehall, that is a major power shift in that relationship.
Oracle was identified as holding 70% of all government software licences, receiving more than £200m in revenue from Whitehall every year.
The Cabinet Office told Computer Weekly last year that Oracle was one of the worst culprits for price inconsistency – charging up to three times more to some departments for the same products.
And there was a furore earlier this year after the publication of an official notice for a £750m Oracle framework agreement – a deal that seemed entirely at odds with the Whitehall IT reforms of which G-Cloud is a central component.
I was told that agreement would be quietly shelved – a case of cock-up not conspiracy, said insiders – but it demonstrated the prevailing mood that Oracle for too long had the government over a barrel.
The fact that the software giant is now investing in a new datacentre, apparently as a direct response to the growth of G-Cloud, is a sign that the balance of power between government IT buyers and their suppliers may finally be shifting in the right direction.
We’re proud to this week launch our second annual quest to select the 25 most influential women in UK IT.
The issues affecting women in technology have only become more important and high profile in the past 12 months. National newspapers have picked up on the theme – our poll last year even got a mention on BBC Radio 4’s Women’s Hour show.
In that time we’ve also launched a LinkedIn group for women in IT, which has proved extremely popular. Women in IT is a thriving community of interest, and a positive influence on the wider profession.
Last year’s programme, which saw Thomson Reuters CIO Jane Moran voted the most influential woman in UK IT, was a big success and generated a lot of debate. We’ve since seen a definite increase in the number of female IT leaders attending our monthly CW500 networking events – although they are still a minority.
The issues that continue to restrict women to barely 18% of the UK IT workforce have not gone away though – a macho, male-dominated, geeky image; inflexible working patterns; difficulties catching up with new technologies for women returning after career breaks to have children; and so on.
But there has rarely been wider appreciation of the problem, and of the benefits of having more women in the IT workplace. More IT leaders say they want to recruit more women – although often the challenge is finding enough women with the right skills to apply for such positions.
The IT industry is changing the way everyone works and lives – with flexible and remote working becoming key to resolving work/life balance issues, as well as making organisations more agile and mobile. As such, IT leaders need to take the initiative to make the IT profession one which exemplifies such principles and comes to be seen as one of the most female-friendly sectors to work in.
IT needs a workforce that has the skills, experience, and diversity to innovate through technology – and one that reflects the diversity of the people using technology every day.
It is often said that women are less likely than men to promote themselves. Identifying the most influential women in UK IT is our way to help get over that – and if you know a female in IT who deserves greater recognition as a role model for others, please let us know.
It’s become something of a common public perception that Dell is a company in crisis.
Fourth-quarter revenue down 11%, profit down 31%, and its founder engaged in a battle with investors to delist from the stock market to buy time and space for a radical overhaul – these are pretty solid indicators that all is not well.
But Dell’s undoubted challenges are linked almost entirely to the decline in its core PC market. Look beyond the desktop and into the datacentre and the story is a lot more positive.
Server, networking and storage sales are on the rise, and Dell continues to be aggressively acquisitive as part of what its new UK CEO Tim Griffin calls an “accelerated transformation”.
So it was timely to be invited to meet with the senior leadership team from Dell’s enterprise solutions business, who were in London this week to meet customers, greet the troops, and no doubt try to reassure them all that the future is better than some of the press coverage would have you believe.
Executives were very non-committal on founder Michael Dell’s plan to take the company into private ownership – “Business as usual, no matter what happens,” declared Marius Haas, president of the enterprise solutions group, closely followed by the usual stream of carefully rehearsed on-message statements that you get from most US senior managers at IT suppliers.
(I can’t help but think the company would benefit from a more down to earth response to inevitable questions about the de-listing plan – “Things are tough, we admit that, and we know radical changes are needed, but we’re going to do what it takes” – that sort of thing. But on-message was the big message).
Dell’s server chief, Forrest Norrod, was typical of the bullishness among the non-PC business divisions, predicting that Dell will be the number one x86 server supplier by the end of the year.
Critics say that Dell missed the rise of the cloud, but Norrod says differently – while Dell may not be competing as a public cloud provider, it is a major supplier of servers and storage to companies that are, and is doing nicely as a result, he says.
Every exec was all too happy to point to chief rival HP as a better example of a company trying to shed a reputation as a basket case.
But the server chief told me an anecdote that perhaps gives the company’s best response to the critics.
He was up late one night, unable to sleep, when his email pings with a message from Michael – at one o’clock in the morning. Norrod proceeds to engage the CEO in a back and forth that lasts until nearly 2am. Jokingly, Norrod emails Michael to say – hey, we’ve both got kids, what are we doing talking business at this time of the morning?
To which Michael Dell emails back to conclude the conversation with a single sentence: “I like to win”.
Dell’s transformation is essential and nobody will pretend it’s going to be easy (well, when they’re not relentlessly on-message, at least).
One of the great fallacies about Dell is that the consumer decline in PC sales is life threatening – that’s simply not the case. About 80% of Dell’s PC sales have always come from businesses – falling consumer sales sting, but are not the biggest problem.
There will be one more iteration of corporate PC sales for Dell as customers upgrade from Windows XP to Windows 7 before the end of XP support in April 2014. But that will be the catalyst for a subsequent slump in the corporate PC market too, and that’s the deadline by which Dell has to resolve its dilemma and reduce its reliance on the market for which it has always been best known.
You used to buy from Dell because of its great supply chain – quality, highly customised PC configurations, delivered cost-effectively and quickly. Then everybody improved their supply chain and that advantage was reduced.
It’s taken a long time to get the company out of that mindset. I can remember being told Dell was on the road to being a software and services company nearly 10 years ago. IT services and outsourcing was going to be the saviour – but that didn’t happen. So now, the immediate future is in the datacentre and eventually the cloud – an environment every bit as competitive as the PC market at its peak, albeit with somewhat higher margins.
Michael Dell is trying to achieve something that has never been done before – take a major, multinational, multibillion-dollar company off the stock market to change its structure and strategy, without the pressure and intensity of having to deliver growth to investors every three months.
I think he’s doing the right thing. The transformation needed at Dell simply could not happen under the rapacious watch of the financial markets. The scale of change needed does show that the change is happening later than it should – the emotional connection to the PC market is proving hard to break.
If he succeeds in de-listing, it will be an interesting few years comparing Dell’s behind-closed-doors transformation with HP’s very public and often painful “multi-year turnaround plan” under CEO Meg Whitman.
But you don’t found a company in your bedroom, grow it to a $60bn giant, and then not be up for a fight for survival.
Michael Dell likes to win. That’s no guarantee that he will, but his corporate customers should give him the time to make it happen – although their patience will not last forever.
Two years from this week, it’s the next General Election.
Unless the Coalition collapses before 7 May 2015, the election date is fixed and immovable. That means there are just 24 months left for the IT reformers in government to make their changes equally immovable before the political will behind them potentially dissipates.
They have a lot to do.
In the three years since Cabinet Office minister Francis Maude set about tackling the IT oligopoly of big suppliers that dominates Whitehall IT, and so reduce the annual £16bn IT budget, much has been achieved.
We have a mandatory open standards policy; the first ever preference for open source built into the Digital Strategy; a cloud-first-policy emerging through the G-Cloud; and significant savings made from existing, long-term contracts with that oligopoly.
Just this week, we’ve also seen an important milestone as all the government departments completed their move to the new, open-source, agile-developed Gov.UK website – at a much reduced cost from its predecessor, Directgov.
But it’s equally easy for the critics to claim that apart from some lengthy documents, a new website, and a mere few millions pounds spent through G-Cloud, it would not be difficult to see a return to the bad old ways if the political clout enforced by Maude were to disappear.
Certainly the big system integrators are quietly confident that the irresistible force of change will not become an immovable object – this article quoting a senior HP executive published by Kable demonstrates just that, while also demonstrating how the big suppliers completely misunderstand what the reforms are all about.
Several big outsourcing deals come up for renewal between now and the election, and it will be instructive to see what happens and whether they will be extended. The response Computer Weekly received from the Department of Energy and Climate Change suggests it sees a future away from its incumbent supplier when its contract ends in 2014.
Without doubt there is a growing mood of IT reform across Whitehall – finally spreading to some of the formerly doubting departments, even if there are still tensions between the centre and some of the departmental IT teams.
Already some of the advisors closest to government CTO Liam Maxwell are forging links with Labour and the shadow cabinet in the hope of gaining cross-party support to ensure the reform process can continue regardless of the electoral victor. Don’t be surprised to see a debate about which party is the more “open” as the next two years count down. Wouldn’t it be great if IT reform became an election issue at some level.
But the biggest challenges for reform lie ahead.
A static, informational website is one thing, online transactions are another – the biggest test of the digital strategy will be when citizens are transacting with government online, not just searching for information.
The flagship of “digital by default” was to be Universal Credit, the biggest IT project in Whitehall and increasingly the most troubled. Already many of its digital initiatives, such as identity assurance, have been stripped out.
And the plans for open standards have yet to be tested in a major project – the Microsofts and Oracles of the world are not going to take it idly on the chin if they are excluded for non-conformance.
But there’s an undeniable buzz around Whitehall IT and the digital reforms, and that in itself is a measure of the achievement so far. The target has to be that by 7 May 2015, we no longer call these “reforms” but business as usual.
It’s clear today that the financial services sector has been protected from technological disruption as a result of the 2008 economic crash.
While industries such as retail and media have been thoroughly disrupted by internet, cloud and mobile technologies, banking has seen relatively little of the changes in consumer behaviour that brought the likes of HMV or Blockbuster to their knees.
A widespread conservatism, as bankers kept their heads down to avoid their fair share of blame for the recession, has combined with an increase in regulation to effectively entrench legacy IT systems in many major financial institutions.
In other sectors, the commoditisation of IT has broken down barriers to entry, increased customer choice, and encouraged disruptive new businesses to take on the inertia-bound incumbents. In finance, it’s been almost impossible to do the same.
But things are changing, and the same process of disruption will inevitably shake the financial sector.
The collapse of the Co-op’s plan to buy 632 Lloyds bank branches shows how difficult it remains to increase competition and open up the sector to new entrants. But the government is trying to foster such changes, by forcing easier access to global payments networks, for example.
There was much debate this week at Computer Weekly’s CW500 in the City event for financial services IT leaders, about the relationship between regulation and innovation. There was some agreement that fear of regulation acts as an inhibitor to innovation in the sector, although other delegates felt that it was too easy to use compliance as an excuse not to innovate.
Undoubtedly, for most banks their hugely complex and costly legacy IT estate acts as more of a barrier to innovation than any regulatory authority does. After all, it was “innovation” in collateralising risk that led to the crash in the first place. Few finance firms have taken the bull by the horns and overhauled their back-office systems – Nationwide has a £1bn IT transformation programme in place, but there aren’t many others taking such a big step.
But now we are starting to see glimpses of how the future might be different.
The banks have desperately tried to prevent the emergence of peer-to-peer mobile payment networks, but increasingly the likes of Google, Paypal, and network providers such as Telefonica are offering new ways to move money that bypasses the banks.
Germany has seen the world’s first social media bank – Fidor is a start-up operation that uses Facebook as its primary means of customer acquisition and support. It even offers a savings account where the interest rate is influenced by the number of Facebook “likes” it attracts.
For a young, social media generation looking for their first bank, that’s going to be an appealing alternative – and becomes especially disruptive if they stay loyal as they get older.
Customer behaviour is changing faster than most established banks can cope – offering a mobile banking app is one thing, using that as your primary means of customer communications is quite another. Eventually, that customer behaviour will be as much of a driver for change as government or regulators – and technology will be the means by which those customers force that change.
Like it or not, financial services will be disrupted every bit as much as other commercial sectors, with new entrants shaking up the established players as technology fragments the market. The big banks are blind if they cannot see it coming; they will of course resist for as long as they can, but like every other industry they will over the next 10 years be forced to embrace IT innovation or see their empires decline.
One of the criticism made of the late prime minister Margaret Thatcher during the recent coverage of her life and death was the way she abandoned communities that had once relied on former businesses such as mining and manufacturing.
There’s a case to be made that she was right to withdraw state support for loss-making companies, but the failure of that policy was the lack of investment in re-training affected workers who were left on the dole with skills that were no longer needed.
Sadly, this has become something of a recurring theme in businesses themselves in the last 20 years years, and particularly for IT professionals – and it’s likely to come to a head in the next few years.
During any economic downturn, one of the first items to be struck from the corporate cost base is training. In too many IT departments that has gone a stage further – employers unwilling to constantly update IT skills to keep up with the pace of technology change have instead sourced newer skills externally, often overseas.
This has all contributed to the continuing skills shortage today. It’s not a shortage of jobs – there are plenty of IT jobs out there – but CIOs say their biggest recruitment challenge is finding people with the relevant skills they need.
Thousands of IT professionals lost their jobs at the height of the crash, only to find that the skills they had honed on legacy IT in their former employers were no longer wanted elsewhere.
There’s a huge rush to recruit in-house software developers at the moment, from large firms to tech start-ups. One entrepreneur has called for the relaxation of UK immigration laws to attract more highly-skilled foreign developers. Many existing, out of work UK IT workers would take offence at such a move.
As Computer Weekly documents every day, we are in the midst of great change brought about by technology – some would call it the digital revolution. That means a growing need for modern IT skills, in areas such as cloud, web development, mobile, social media and more. The skills that have traditionally been the mainstay of the IT department – systems admin, operations, product-focused technical support – many of these will wither as the legacy technologies they support wither.
And if all this follows the same predictable path, with the same attitudes to training and skills that have hampered UK IT in the past 20 years, we have a very big problem.
It is essential that IT leaders do not allow training and skills development to become the forgotten investment in the digital revolution.
Anyone who has read this blog over the past few months will have seen there are several recurring themes I’ve been banging on about lately. It’s been interesting to see a few things happening recently that, to me, reinforce some of the points I’ve been discussing, so here’s a bit of a random round-up:
UK gives Belgium €300m to develop the cloud
Google has announced a €300m investment in its cloud datacentre in Belgium – that’s in addition to the initial €250m spent building the site, which opened in 2010.
When was the last time you read about a similar investment in cloud in the UK by one of the internet giants? Erm, never?
According to Datacenter Dynamics, one of the reasons Google chose the site was its welcoming government: “The local authorities have a strong vision for how the internet can bring economic benefits and jobs to the area,” Google said.
That’s money the UK is giving away. It would not be difficult to put in place a forward-looking strategy to support the internet and technology industry in the UK. All those big US internet firms like us – we speak a version of the same language, after all. The UK is such an obvious base for developing cloud datacentres, bridging the US and Europe in much the same way as we do in our role as one of America’s aircraft carriers.
And when the inevitable rise of Asian cloud firms happens in the future, they would look to the European location with the most proven infrastructure, and that would be here.
Except it won’t be, because there is no incentive or support for bringing such business to the UK. The government here gets excited instead when Google spends £1m on a new office.
When Google tells us we have a problem with our education system, it seems to make the government jump. But despite the close links between 10 Downing Street and Google, we have failed to gain any meaningful inward investment in the UK as a digital country. We are missing such a huge opportunity and the government should be embarrassed to see that money going elsewhere.
Falling off a cliff
Both Gartner and IDC have reported the biggest decline in PC sales they have ever seen. Gartner said global PC shipments went below 80 million units in the first quarter of 2013 for the first time since mid-2009.
Many firms in different sectors continue to view the changing environment brought about by the digital revolution as a gradual and manageable decline in their established markets. But the disruption and fragmentation caused by the internet and new technologies will not work like that – many markets will fall suddenly off a cliff, and companies constrained by inertia and management sclerosis will go with it.
Look at retail – HMV, Blockbuster, Jessops. The IT industry itself is seeing the same thing happening – Dell, HP, BlackBerry, Nokia. You can argue about the definition of a cliff, but year-on-year declines of 11% (Gartner) or 14% (IDC) in PC sales are at the very least a sign that the lemmings have started to jump.
Business leaders that fail to change, and ignore the inevitability of the digital revolution in their market, will have no excuses when their revenues reach the cliff edge too.
Microsoft is not going away
Gartner produced some separate research recently that looked at the overall market for end-user devices as a whole – PCs, smartphones and tablets. The headline news was the rise of Android devices, which Gartner predicts will be more than double the number of Windows (desktop plus smartphone/tablet) devices by 2017.
Much of the reporting around this research highlighted the demise of Microsoft – The Guardian labelled it “a slide into irrelevance”.
But even the Gartner graphic used to illustrate that argument in The Guardian told a different story.
To me, this shows that for sure Microsoft is no longer going to enjoy the dominance it has been accustomed to for the last 25 years. But irrelevance? I don’t think so.
Look at that green line, which shows Windows device shipments growing from a little over 300 million in 2012 to just below 600 million in 2017. That’s still not a bad growth rate, even if it masks the fact that the product mix will change from profitable desktop Windows to the likely lower income of smartphone or tablet Windows.
Android’s predicted growth is remarkable but predictable – it’s open source software; Google created it as such for the very reason that it would disrupt the market and fragment the ecosystems built around Microsoft and Apple.
But while device manufacturers and app developers may gain sales as part of the Android ecosystem, Microsoft and Apple are the firms for which that upwards chart represents the biggest actual revenue growth.
It may be a different Microsoft in 2017, one that no longer dominates the consumer nor corporate IT sectors in the way it used to, but it’s still going to be a force to be reckoned with.
While we marvel and despair at the pace of changes being wrought by the technology industry, there’s a body of opinion that everything we are seeing now was entirely predictable.
Perez says we are living through the fifth technological revolution to occur since the Industrial Revolution, and that each follows a predictable pattern. For example, “Each time there are two different periods with a bubble and recession between them,” she says.
Sound familiar? First the dot com boom and bust, and now the seemingly endless age of austerity?
Wardley writes about the move from a time of “peace” to one of “war” – when technology shakes up stable markets, disrupts the business of inertia-bound incumbents, and opens up opportunities for innovative new entrants who become the future giants of the next era.
You can see it in the IT industry – the slow-to-react giants like HP, Dell, Nokia and BlackBerry, while the likes of Google and Amazon rise rapidly. Look in particular at the battle for control of Dell – founder Michael Dell trying to take the company private, while rival investors seek a higher price and a different future, all the while distracting the supplier from the real task of adapting to the changes that brought about the battle in the first place.
Go back even further and you find evidence that the transformational shift represented by cloud computing was predicted as long ago as 1966, by a Canadian technologist, Douglas Parkhill, in his book The challenge of the computer utility.
You see it too in the increasingly rabid reporting around IT security – the idea of cyber warfare with China, and doom-laden predictions of the internet being brought down by hackers abound in national news today, only proving the old adage that truth is the first casualty of “war”.
Wardley in particular is scathing about the likes of Dell, whose travails were, he says, inevitable because they missed the entirely predictable changes in their market.
For IT leaders, this predictability should be a strategic tool.
You can see the same patterns of change happening in every major business sector. In retail, the inertia of HMV, Jessops, Blockbuster and others while new entrants like Netflix and iTunes revolutionised their market. In media, the financial challenge for national newspaper groups as blogs and online content destroys their old business models.
If you’re in an industry undergoing such radical change, which side of the inertia barrier are you on? Are you fighting to protect the peace, or embracing the battle of reshaping your business with IT?
Perhaps you’re in an industry so far protected from such change – financial services springs to mind. Perez claims the 2008 crash actually delayed revolutionary change in the sector, but that the change is nonetheless inevitable. Are you ready for the technology-led change you are about to experience?
All IT leaders need to understand which side of the inertia divide their organisation occupies, and get on the right side before it’s too late. Your future is both predictable and inevitable.