What do you think of when you think of IT in 2019?
Growing into prominence out of the startup world, the key top-level financial decision-driver of the past decade has been that achieving success rests upon the exponential growth made available by technological scalability. This logic has driven venture capital investment, but has also been the absolute core of the IT-sector sales playbook since the inception of the industry. However, IT’s times of inter-sector competitive advantage across the economy are beginning to be over. Commoditization ultimately catches up to all widely-spread technology, as societal network effects take over and turn trends into norms. What was once special, turns normal.
The propagation of the business notion of ever-accelerating exponential growth, as made possible by technological scalability, was the result of an honest, data-based sales argument resting upon the technological development rate of processing chips across decades. Moore’s Law was and is like the sole natural rule of a global growth race, given that market leaders on both demand- and supply-sides of IT were and are seeking increases in processing speed on all fronts. IT was the fastest way to increase speed-to-money, probably still is, and probably will be for a good while yet. An increase in processing speed is like the removal of time from the lap of a racing car: worth paying for as long as you can handle the increased power and use it to destroy time-to-money. Buying faster computers – as long as it could be afforded – never hurt, and was almost a mandatory investment for many organizations to keep up with the times.
IT’s sales arguments were born naturally out of the pressures of evolution had within the information technology industry. They mirrored the actual technological development rate of a core component driving the entire industry, and world, forward – the CPU.
The base value of information technology is all about speed, and thus the natural rise of IT to the top of strategic guidance initiatives is fully understandable. The natural value of time-gains in competitive arenas is obvious. Looking ahead, commoditization is similarly obvious: once everyone has the speed, IT loses its ability to bring excess competitive advantage (initially gotten from an early buying position: first access-to-technology). Commoditization has already started to happen at the top of markets and societies. Just like electricity started becoming a commodity a century ago – losing its competitive advantage after a certain technological inception-level of electricity had been reached – then the same is beginning to happen in the world of IT.
In practice, continued commoditization in the IT market will mean the lowering of costs as skills become more widely spread, slowing the growth of wages whilst increasing the supply of everything IT, where component prices have also plummeted. Commoditization is the engine of the next phase of growth in IT, where the best learnings of the sector’s past decades condense themselves into the next generation of leaders and begin to spread further. The generational shift occurring in IT is massive and those who succeed in intergenerational knowledge transfer will undoubtedly come out ahead.
As IT commoditization continues, digitalization leaders will become consolidation leaders. Even though many digitalization leaders are already deep in the Digital Age, then there is still much digitalization to occur across markets and societies, especially as public sector innovation begins to light up. That commoditization should have begun does not mean that growth will disappear or slow down: indeed, the logic of commoditization will only speed things up further as the IT market begins progressing into maturity during the coming decades, following in the footsteps of electricity. That commoditization should begin does not mean an end to anything else but the high-margin inception of the industry into our reality.
As long as educational investments into IT continue, commoditization will continue, as well. There is simply no way this won’t happen: all knowledge on the functionality and benefits of productivity improvements in an economy will be pointing at increased educational investments into IT. For IT commoditization to not happen, politicians would literally have to be consciously striving to back-track humankind into a pre-digital era, by cutting IT’s educational funding. I wholly hope that we never get the laughs available from that situation, except through some form of comedy on Netflix.
At the end of the day, IT allows leaders to have better operative definition of their present situation: day-in, day-out, like an upgraded instrument panel in the cockpit of an airplane. As a central component of the leadership of a modern organization – on par to finance, legal, and marketing – an operative understanding of IT and its capabilities, instead of the IT itself, is becoming the competitive advantage. Only by being able to see through the IT operation – only by stopping to understand it deeply – can a CEO speak fluently to those doing the operating, and catch them on the same frequency to hear their ideas and ensure that no opportunities are left unturned. Only with an operative understanding can a CEO evaluate innovative potential on-level with those who will build it.
An organization without an understanding of IT threaded through the entire organization will have trouble being an organization at all, in the future. The better a CEO speaks to the organization, the better the results that that organization can expect. Given that organizational success is acceleratively dependent on IT, then it shouldn’t take too long for IT to be a required language skill: right at the very top.
Give us a call – we’re eager to come and discuss IT and its continued meshing with societies around the globe.
“The market will continue to generate big data. The other side of the market will continue to analyse it. Yet another will make investments from said priors, creating work for yet another. All of it runs on IT: let’s make money off of it, shall we?”
© 2019 S&S Partners