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This week’s special report on Corporate IT in the Economist examines economical implications of changes coming with advent of “Cloud” computing. While people are still debating definitions of the term, and the concept is not as new as journalists and marketers (wait, it there a difference? Hmmm..that a subject for another post) making it to be, this report is attempting to cover much wider implications, as I have read before. Quite interesting read in general, but there are two areas that resonated with me the most:
1. As and if the concept of “cloud” becomes more acceptable from corporate, legal, social, etc. points of view, more corporations will start to outsource their business processes, that are not their “core” competence, to BPU’s (Business Process Utilities). How many corporations still run payroll in house? Today most companies collect their payables in house, but as as they age beyond certain point, they do outsource collection to the specialists. There is nothing new to this except the reach, flexibility and the scale which could escalate substantially;
2. As the investment barriers for entry into the software business coming down, the “cloud” offers enormous leverage for fast scaling to meet requirements of any large customer. As SaaS successfully demonstrated, the current software licensing model is no longer license to print money. But even SaaS vendors finding they subscription fees under pressure.
software vendors will have to find new ways to charge for their wares: in the cloud, tying licensing fees to the number of users, for instance, will be difficult, since services will mostly be consumed by other machines. More importantly, the corporate world has become less and less willing to buy software for large sums of money, so software firms listed on America’s stockmarkets now make most of their profits from maintenance and other services
The scary part is that software business model transition may find itself on slippery slope similar to the music recording industry have discovered.
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I would like to pose a theory that the “Internet” bubble was burst by sudden stop of tremendous flow of cash into myriad of projects 2000, not by sudden realization by “the Market” that there is no such thing as “Internet Economy”. Such realizations do not come suddenly.
Technology is often marketed by visionaries who have or display very strong “religious” believes necessary to gather momentum, critical mass of “converts” to make a dream the reality. Hence a term “evangelist” often used to describe job function of these people.
Peter Drucker wrote in his classic book “Innovation and Entrepreneurship” that it often takes 15 years for a new technology to mature into commercially viable product, and provides a number of history examples. The IT industry is particularly susceptible to early claims of technology adoptions - perhaps you are old enough to remember promises of Artificial Intelligence and Paperless Office. Well, it seems that some of these promises are finally being delivered and not in a form of self serving advertising, but in a form of actually observed change in underlying business trends. The Economist reports that
demand for office paper began declining. David Pineault, a paper expert at InfoTrends, a consultancy, estimates that office workers in rich countries will reduce their consumption of “uncoated freesheet” paper (called “woodfree” in Europe)-the sort used in offices-every year for the foreseeable future. Some market segments, such as high-quality paper for photo printing, may buck the trend. But overall, Mr Pineault is “bearish” on paper.
“It’s a generational thing,” says Greg Gibson, in charge of North American office paper at International Paper (IP), the world’s largest paper-maker. Older people still prefer a hard copy of most things, but younger workers are increasingly comfortable reading on screens and storing and retrieving information on computers or online. As a result, IP has closed five uncoated-freesheet mills in America in the past decade, and the industry is consolidating. IP is investing instead in poor countries, where demand is still growing.
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I just read about the rationale of the early typewriter’s keyboard layout designed to slow down an operator, because the ink holder’s mechanism could not support the speed. Ever since the technology improved to eliminate this concern, some brave souls have tried to optimize the layout for performance with absolutely no success. It seems that every financial or social incentive was tried to convince people to migrate and achieve higher productivity, but we all know the result - the QWERTY still rules.
I will never forget the time when banking ATMs suddenly became available almost everywhere, and since then I can count no more than a dozen times going into the bank branch. According to the Source of All Knowledge
The first mechanical cash dispenser was developed and built by Luther George Simjian and installed in 1939 in New York City by the City Bank of New York, but removed after 6 months due to the lack of customer acceptance.[1]
It seems like such a great improvement, but as recent as the late 90’s only 30% of the adult population were comfortable enough to use them.
Change is difficult. In the case of ATM technology acceptance the demographics seem to accelerate adoption, but the QWERTY layout defeated a number of generations and by now I don’t know of any challengers any more.
So what can we learn from this? (This became my favorite question after seeing this movie. Am I qualified for the job of a CIA Director?). IMHO the best environment for adoption of change is when it is more painful NOT to change, than TO change. There is a lot of comfort in routine for most people, and they are only prepared to let it go when holding on to it is much more uncomfortable than a new alternative.
You will likely enjoy much more attainable ROI, if the adoption management/design becomes the second subject on your project document index. Right after WHAT this project is expected to achieve.
This week’s special report on Corporate IT in the Economist examines economical implications of changes coming with advent of “Cloud” computing. While people are still debating definitions of the term, and the concept is not as new as journalists and marketers (wait, it there a difference? Hmmm..that a subject for another post) making it to be, this report is attempting to cover much wider implications, as I have read before. Quite interesting read in general, but there are two areas that resonated with me the most:
There are many excellent blogs and other resources on the Internet which explore methodologies and Best Practices for business process re-engineering, project management, systems implementation, software engineering, and change management. However I could not find much help with unlocking value of integrated utilization of these disciplines to facilitate Organizational Transformation. In this blog I would like to focus on this subject. I would like to stress that this is not an academic inquiry, but a practitioner's desire to discuss and share practical business knowledge and Best Practices. Let's see how it evolves - "Every brilliant idea quickly degenerates into a lot of hard work" - Peter Drucker.