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|IT and its Implications
This Discussion Paper was first prepared by the author, David Skyrme, for RSA's Tomorrow's Company Inquiry Network in 1994 and subsequently updated and presented to the Business Futures Study Group of the Strategic Planning Society in 1995. This paper will not be updated, but be left unchanged for the historical record. For subsequent developments please see the Update at the end of the paper.
" This was to have been the nuclear age. It turned out to be the information age" (IBM Publication, mid-1970s).
Information Technology (IT) now pervades many aspects of daily life and work. Steady technological progress since the 1960s has increased its influence with some predictable and some less predictable consequences. IT is likely to have an even more profound impact in the 1990s as the transition from an industrial era to the information age continues apace. This discussion document attempts to identify the likely trends and impacts on people, organisations and society.
To do so we review the trends and discontinuities of the last 25 years, to discern what might be important as we make forward projections that take us into the next millennium. Readers who want to omit the historic backcloth and delve straight into the future should go directly to section 3.
The prevailing trend has been the constant improvement of 20-30% per year of the cost-performance of computer systems, based on improvements in their basic technologies and components. At the same time the density of active components has also increased at a steady rate, such that memory and disk sizes of a given package double every few years. In a major study MIT determined that information technology was distinctly different from all other major product types, since over a 10 year period it showed a 25-fold improvement of the relative prices of technology and labour compared to a 1.4-fold improvement for the next six most competitive technologies.
This fundamental trend in technology improvement has been plotted and predictable from the early 1960s, and although specific technologies have changed (e.g. the substitution of semiconductor memory in place of magnetic cores), the underlying trend seems to be set for at least the next 10 years resulting in:
Over time computers have become increasingly affordable, making them accessible to more people and continually increasing the range of applications that are cost effective to computerise. Another way of expressing this change is to consider the primary users and role of computers at different times:
1960s - predominantly used for science (heavy computation) and accounting functions (repetitive data processing). Large main-frame computers needing special environments operating in batch mode.
1970s - emergence of mini-computers. Proliferation into departments for specific functions e.g. manufacturing management. Timesharing with several terminals per system (but terminals only available to a small proportion of the work-force).
1980s - emergence of personal computer and communications. Terminals within reach of most employees. Applications extended to many office functions, including budgeting and analysis (spreadsheets), word processing and latterly electronic mail. Increasing independence off main-stream computing from a central IS management group.
1990s - increasing integration of disparate departmental computer systems. Applications now extend between departments and even between organisations. Multiple networks become interconnected. Portable computers as well as computers at home. Applications exist for virtually every business function.
Another perspective is that the focus of IT has shifted from COMPUTATION (data processing) to COMMUNICATION (information handling) with an ongoing shift towards COGNITION - computer support for knowledge work. Tools are emerging that aid thinking, the organising and sharing of information and the development of knowledge (e.g. via computer conferencing, systems modelling).
Alongside the trends in systems have been related trends in architectures and software. There have been continual improvements in simplifying the level at which computers are programmed and of offering more functions. Thus an end-user today using Macros in a spread sheet language like Excel is doing high level programming that carries out statistical functions and exploits the graphics and real-time facilities of the computer.
The diversity of functional subsystems e.g. storage has led to a separation of the different functions of an overall system and consequent development of architectures. These provide a consistent way for the different functional elements to operate with each other. The notion of 'system' has now extended to a greater network so that architectures now include clients (the users PC) and host servers (for data-bases, printers etc) that communicate in standardised ways.
Computer trends have also led to changes in the roles of users and IT specialists, with significant changes in the role of the MIS function. From controlling most computing in an organisation for two decades, the MIS departments lost much of their power to business units and departments in the last few years. Those MIS departments that remain (having not been 'outsourced') are very much consultants, service providers and enablers to the businesses. Whereas the dominant MIS issues in the early 1980s related to technology e.g. software productivity, now similar surveys show that partnership with the business, and the strategic leverage of IT now top the list.
One other continuing trend is the shift of value in an overall system from hardware to software and now to services (especially project and consulting services that help users gain the maximum benefit from their IT investment).
The general trends are reasonably predictable (we believe) and are depicted in an accompanying table [not published on these Web pages - Ed.].
The continuous trends have been modified by two kinds of discontinuity:
1) Predictions that failed to materialise
2) Unanticipated changes
Included in those of type 1 are
Productivity Improvements - despite investments in IT that now exceed $300 bn a year, there has been no noticeable increase in overall industrial productivity (less than 1 per cent per year in manufacturing industry and virtually nil in office productivity). Only recently as work and work processes are being reorganised (business process redesign) are we seeing the levels of productivity improvements that have been formerly predicted.
Paperless Office - computers have made it easier to generate paper, whether it is business reports or junk mail. Office habits have kept paper as the medium of choice.
Expert Systems - expected in the early 1980s to take centre place in computing but today used only in a small, but albeit growing, number of applications. Extensive effort is needed to capture knowledge from human experts, and only certain types of problems lend themselves to expert systems solutions. The notion of 'thinking machines' is being replaced by 'thinking humans augmented by machines'. In the future neural networks look to have more promise.
Translation systems - There are multi-lingual systems that use translation tables compiled by humans. True natural language translation is a very complex problem.
Widespread use of Voice input/output - another more complex problem than at first envisaged, especially when dealing with unknown voices. There are, though, a growing number of niche markets.
Industry Convergence - in the early 1980s there was considerable talk of convergence of the telecommunications and IT industries. This failed to happen despite attempts e.g. AT&T's involvement with Olivetti, BT's computer activities. Despite shared technologies, there are distinct differences between these industries- computer vendors are in a competitive products industry with thousands of customers while the telecomms providers are generally in a monopoly service industry with millions of customers. However, some form of convergence, perhaps more alliances and joint ventures, is again on the cards as these characteristics and product functionality seem to be moving together.
Japanese Fifth generation - the non-event .. so far. It does seem that the Japanese, while good at continuous improvement, have failed to make the quantum leap into a new generation system. Also software remains predominantly a US dominated industry.
The second type of discontinuity (unexpected changes), number among those that have already happened:
Emergence of IBM as a dominant force - Their bold gamble with the IBM360 series, coupled with high-level selling allowed IBM to surge ahead of its rivals. The irony is that it was IBM's move into PC's that fuelled Microsoft's growth. They have now overtaken IBM in terms of market capitalisation.
PC revolution - Once viewed as hobbyist, the rapid spread of PCs in corporations allowed users to wrestle control from the all powerful MIS departments.
GUI (graphics user interface) - A Xerox Labs curiosity that helped Apple but GUIs only gained universal popularity with the introduction of Windows 3.
Games and Entertainment - It is said there is more computer power in the world in Nintendo game machines than all the main-stream computers. Increasingly entertainment is likely to represent the leading edge of what might follow in business (image manipulation. multi-media, virtual reality).
Other unanticipated changes seem to be happening at the moment:
Universal e-mail - After slow evolution during the 1980s, PC LAN software such as CC:MAIL has made electronic mail more acceptable in corporations. On a global level Internet (evolving from academic and research networks) has emerged in the last couple of years as a dominant force. Note that its higher level protocols do not conform to OSI (open Systems Integration) but to TCP/IP.
Megafailures - The number of high profile failures of IT projects is growing (A US State legislature $500m, London Stock Exchange, London Ambulance, UK TECs), resulting in senior executives (CEOs and chairmen) losing their posts. On a contrasting note, successful implementations that change market arrangements (notably First Direct in home banking and Direct Line insurance) have been outstanding successes for their companies and individuals.
These lists are instructive since many of the discontinuities are not directly related to technology but its wider impact. Thus as in many of future scenarios there is much interlinking between trends in one domain and those in others. For example human and organisational factors are starting to have a significant affect in the corporate environment, whereas social and political factors are starting to emerge in the wider environment.
The main technology drivers are likely to result in:
Continued Improvements in Price/Performance and Functionality - Gigabytes of storage on a personal computer, image bandwidth communications into the home at everyday phone charges will become the norm.
Multi-media - Computers will touch more of peoples' senses through moving images, sound etc. These can be packaged, recalled and sent to others quickly through networks. Expect closer links between broadcasting, photography and publishing, and new industries based on narrowcasting to emerge.
Paperless Transactions - Although the paperless office did not happen, more business transactions will eliminate the need for paper through the use of JIT (just-in-time processes, image storage, DIP (document image processing), EDI (electronic data interchange) and EFTPOS (electronic funds transfer through point-of-sale).
Portability - Access to communications, information and computational resources wherever you are. The initial indicators of this trend are wireless computers and local area networks, PDAs (personal data assistants combining computer and communications capabilities in a hand held device).
Connectivity on a Global Scale - People can easily communicate and send information to each other wherever they are. Initially they do not even need to know of anothers persons' existence - (global) communities of interest will form around the focus of electronic information exchange data-bases. Super electronic highways will transfer bulk information across the globe in seconds.
Collapse and Displacement of Time and Distance - transactions and communications can take place over vast distances as if they were local; they can take place asynchronously in time without the participating parties needing to be simultaneously available. The time float in many systems (which creates business opportunities e.g. for banks) can be dramatically reduced.
Any Information, Anywhere, Anytime - At any time of day or night people will be able to access 'virtual' libraries, classrooms, universities, offices, museums etc. The proliferation of information will need careful attention to the information management to avoid 'drowning in data but being starved of information'. In turn this will lead to 'knowbots', information filters etc. that search out relevant information automatically.
The underlying message that these themes imply is that:
Technology will be capable of empowering individuals and of enriching and enhancing their lives. Our future prosperity and wealth is not likely to be hindered through lack of technology. It will be our human capacity to devise and organise socio-technical work systems and to assimilate new technology based activities into our daily lives.
Some specific implications are
Telepresence - Work, learning and other activities can place through IT with limited physical contact: from telesales to telemedicine. In turn ..
Emergence of Global Tele-Businesses - where information is traded, where goods are traded and where information products (newspapers, courses, software) are delivered via wire. The place and time of transactions is distorted. Wealth is created in a location outside of the obvious trading zone e.g. today a person in Leeds communicates with someone else on the other side of town viaCompuServee - the routing is handled from Ohio which is where the revenues accumulate.
More Flexible Work Patterns - teleworking (at home or in remote offices), working outside of fixed shift patterns, work on the move and while 'on vacation' will all increase. People will choose when to work based on personal preferences and where to live based on factors other than availability of local employment opportunities.
Existing Industry Boundaries will blur and new Information Industries emerge - media, broadcasting, education, publishing, telecomms - in fact any industry handling information - is likely to change its definition and shape. Many existing companies will fail to make the transition to the new electronic information form.
New Relationships and Structures - New forms of relationship will be created through electronic communication both within and beyond the firm e.g. business networks, interest networks and social networks that are global not local. There will be a growth of electronic markets - individuals and organisations trading across the network. There will be work teams composed of individuals working in different locations and time zones.
Power Shifts & Democratisation of Information - Control by individual power groups (governments, MNCs) becomes more difficult as information becomes widely available. A countervailing implication is ..
Politicisation of Information - Information is Power. Therefore people and groups will seek to control information flows. Information is a tradable commodity. In turn this puts greater emphasis on information control and security. Already some governments are looking at new taxes on 'information'. Providers of information will seek copyright. There will be a growing focus on the ethics of information.
Security, Safety and Privacy - With so much reliance on information, special attention will be given to safety and security, against accidents, human frailty or criminal activity.
Note that many of these factors are interdependent. The relationships between them are complex. The implication is that no single discipline can harness the potential or solve the problems of IT. We need 'hybrid managers' and team-working on a scale not witnessed in traditional management (Taylorism, specialisation, reductionism).
IT is having a profound effect whose potential is only now being realised. The organisation as we know it today is likely to disappear. Here are some indicators and some questions to provoke further discussion.
New Strategies and Business Opportunities - especially those that exploit
Information - Information products, point of sale and service at customer's convenience; conventional products enhanced by information
Time/Space - 24-hour, round the clock service via the phone or computer terminal
Fundamental Changes in Work
More routine work becomes automated. Use of business process engineering to cope with standard processes and high volumes. Redefinition of middle manager role (for those that remain).
Less routine work becomes more knowledge based and requires integration of human and computer networks to enhance knowledge creation and development.
Focus on Information and Knowledge as Strategic Resources.
Managing information and information flows will become more important than managing its underlying technology. We need to develop measures that value information and its contribution. We need to develop principles of good information management and exchange. Our current financial and accounting measure need drastic overhaul to show the real worth of companies and their future potential in an age where information and knowledge are power.
Global consumers; international electronic mail-order. Open for business 24hrs/day. More information related businesses e.g. information retailers for the high street and the home.
Work migrates to areas with skilled labour pools at low cost. Information work will taken to worker rather than vice versa. Teams can form on a global basis. Examples already evident are Bermuda for US airline transactions, India for UK software development, Ireland for insurance processing. Expect work done in UK offices to be handled in Singapore in the future. New global clusters of specialisation based on IT infrastructure.
What happens to information jobs in developed countries?
Information processes carried out around the clock; work is transferred from time zone to time zone.
A major problem is the low awareness by senior executives of these opportunities and threats.
Are existing large corporations able to embrace the new paradigm and fundamental transformations required before they are sidelined?
In contrast some start up companies are globally electronically connected from the outset and embrace networking organisational styles.
Will these be the main sources of future wealth?
Redefinition of the Corporation - Growth of Business Networks
We may well witness the end of the major corporation as we know it. Already the merger mania of the 1980s has given way to focusing on core activities and outsourcing others. In much of information and knowledge work the economies of scale do not apply. Will the prevailing form be teams and individuals forming loose associations (business networks) based on business needs and shared values?
The Demise of 'Jobs'
Individuals will belong to several networks, some commercial some non commercial. Individuals and small teams can enter reciprocal contracts with each. The notion of 'job' is replaced by notion of work contracts (often with several organisations cf. Handy's 'portfolio of jobs').
Lack of Leadership and Skills
These are likely to be the main barriers to the 'information age' benefits being achieved. There are national educational and infrastructure issues here. Countries like Singapore are investing in both infrastructure and people. Their leaders know what the critical success factors are of the 21st century. Other than Sir John Harvey Jones, and perhaps some senior executives of telecommunications companies, this leadership seems to be lacking at both government and corporate level in the UK. For example, official statistics still count precisely tangible goods but have no clue on how to handle the information economy. Another example, investment in innovation favours product rather than information service project (c.f. did Reuters ever get a government grant vs. many grants to ICL, GEC etc.)!
Loss of Sovereignty - Organisations that are transnational and exploit global IT will have access to power sources not available to national governments, hence:
Global Lobbying - International non-government organisations will make increasing use of global networks to form coalitions and harness powers for specific ends.
Growth of Supra national Institutions - based on specific issues and needs e.g. global police force to combat international crime
© Copyright. David J. Skyrme. 1995. This material may be copied or distributed subject to the terms of our copyright conditions (no commercial gain; complete page copying etc.)
These developments are covered more fully in Chapter 1 of Knowledge Networking: Creating the Collaborative Enterprise. The developments are monitored and reported at the accompanying website for this book.
Management Insights are publications of David Skyrme Associates, who offers strategic consulting, presentations and workshops on many of these topics.
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