You gotta love “transformation”; the term is hopeful, positive, even revolutionary, and at the same time it’s almost totally vague, which means you can say pretty much anything you want about it. One reason, as I suggested in a blog last week, was that IT planners and network planners are actually vague themselves on the topic. A technology shift without buyer specificity is bound to end up as a hype magnet.
A recent article on CIO attitudes on the transformation topic caught my eye. It promised a boom year for tech in 2021, buoyed by “transformation”. I tend to agree that this year will be generally good for tech, but I’m not sure about the role transformation will play in that. In fact, I think that transformation’s impact is likely a couple years further in the future.
All surveys are fraught with peril, as they say. Most of them don’t target people who are actually tuned into the topics and trends that are addressed. Even those that are are prone to the survey equivalent of the Stockholm Syndrome; say what your agent wants to hear so they’ll love you and respect you. I’ve worked hard since 1989 to get actual, good, user data, and I’ve found that on many topics it’s utterly impossible to do that unless you sneak up on the topic. Don’t ask “Are you using 5G or IoT?”, ask about current plans without suggesting specific targets. That’s only a starting point, of course.
Another thing that has to be guarded against is “connective bias”. You ask about Thing A, you ask about Thing B, and you connect the responses to the two even though the subject may not have intended that. In the article I’ve cited, CIOs listed strategic priorities as AI, quantum computing, and 5G, but were these the source of a spending boom? I just finished a round of Q&A with enterprise planners in every major market geography, and none of these were considered to be spending priorities for 2021. Further out, sure. Now? No. How, then, would these strategic priorities be influencing the boom expected this year? There is no credible connection.
The boom we’re almost surely having this year is due primarily to two factors. First, companies were cautious in spending in 2020 because of COVID and the lockdown, and they focused their budgets on dealing with those unexpected conditions at the expense of other priorities. Now they have to catch up. Second, the recovery we’re starting to see is boosting current economic growth, which almost always boosts corporate revenues, and budgets tend to be looser in periods of strong revenue growth.
What about the strategic priorities, if we look beyond 2021? I don’t doubt that CIOs would respond to a strategic-priority question that way, because what CIOs are always looking for is an opportunity to use IT transformationally. Since the dawn of commercial computing in the 1950s, we’ve seen three cycles of roughly seven to ten years each, where a new technology paradigm created a surge in IT spending growth relative to GDP growth. If you graph the two together, in fact, the result looks like a sine wave with three peaks. The last one died out in around 1999, and we’ve not had a renewal since. That’s the longest we’ve ever gone without an IT spending wave, and CIOs are hoping for another one for obvious reasons.
The missing link here, both between hopes and actual spending waves and between 2021 IT spending and strategic technologies, is productivity. What transforms a business is what transforms how the business is done, which is how workers do their jobs. All our prior waves of IT success were based on a paradigm that offered productivity benefits. It was the benefits that drove the spending, because they created projects with ROIs that far surpassed the corporate targets. There were dozens of technologies that failed to achieve that, so we can’t say that “technology” will drive digital transformation, no matter what technology it is. It’s the productivity benefits that are in the driver’s seat, and that means we have to at least recognize how to secure the benefits to validate the transformation.
Why have we not been able to do that since 1999? Because any process of successive transformations will tend to pick low apples first. The first wave of IT empowerment in the 1950s and ‘60s was driven by batch computing, which was a revolution because we didn’t have any form of computing before. The second wave was driven by online transaction processing, which was clearly way more efficient than punched cards, and the third wave by personal computer empowerment of workers. All of these were, in a sense, easy wins. All got IT and its information resources, closer to the workers. What’s next?
It wasn’t just “the Internet” or “remote work”, because while both those things had a major impact on some workers, and also on how companies sold things, they didn’t alter the nature of most jobs, where prior waves did. We’ve kind of run out of low apples in improving the traditional way we do business, and we now have to start looking at the non-traditional.
CIOs are telling us that with their strategic priorities, which reflect things they see as profoundly different. According to the survey, CIOs said AI was the “most industry-impactful technology” in the longer term, and yet we have AI today and it’s not been transformational in the sense that other wave-generating technologies were. The reason is that we think AI should be great, even if we don’t exactly know how to make it so. That kind of project plan isn’t a project plan at all, it’s a novel.
I’ve blogged many times on what I personally believe would have to be our next-wave driver. It’s what could be called the “digital twin” approach. You use IoT and analytics to create a model of a real-world business, populated with real-time information on every aspect of its operation. You can then use this model to plan, direct workers, move goods, and so forth. One problem with the approach is what operators call “first cost”, the amount of money you have to spend to get that digital twin in place, but it’s not the biggest problem.
The biggest problem is delayed gratification for vendors. Buyers will never sit around planning technology advances that nobody is selling. That’s a waste of effort. Vendors will never plan transformational technologies that overhang current solutions and the sale of current products. Thus, we have nobody stepping up to do the necessary lifting.
There could be a major transformational role for AI, IoT, 5G, quantum computing, and other glamour tech concepts, but a role is not the whole play. We need a transformational model into which we fit transformational technologies, and the possible sources of this are all sitting on their hands. I hope a startup with good backing and good positioning will break us out, because I don’t see any other good options.