Saturday, December 31, 2011

An End of Year Prediction

Before anyone gets too interested this is not a prediction for 2012, 2013 or even 2020. This is my prediction for global economic shift driven by some fundamentals of economics. First, information is the new currency. We have done a tremendous job over the past three decades of understanding trends and drivers of behavior by collecting data, creating forecasting models, and tweaking our models over time to account for the variety of unknowns. Some areas are easier to model than others with greater or lesser accuracy, but the reality is we now have a good idea what weather we'll be facing more than a week in advance, trillions of dollars have been made in the equity markets, and the progression of debilitating diseases can be stopped before it starts.

Second, money chases problems. If you're able to solve a problem it's likely you'll be able to find money from investors to grow and make your solution as available as possible. The fundamental problem here is that the problem has to be worth solving, and many are not such as purchasing animal food on-line (

Three, as solutions are optimized they become commoditized lowering the opportunity threshold and thus profit margins, and at some point are subsumed by the "system" to which the solution was originally applied. Think of enterprise resource management, supply chain management, and customer relationship management as examples of technologies which are becoming commodities as their growth in the cloud SaaS market expands.

Four, computing power continues to grow at Moore's law. Even if it slows down it won't matter because everyone will agree what we can do today in computing will be dwarfed by what we can do in 10yrs, and that by what can be done 10yrs later, etc.

Five, gold is valuable because it is real. US dollars are less valuable because their value is based on the esoteric idea of the US economy. You cannot trade in a US dollar for its equivalent in economic activity, and every investment in US dollars rides the roller coaster of confidence. However gold has been and continues to be valued by everyone universally. If paper currency was truly valuable, it's value would fluctuate in synch with other valuables rather than being counter-cyclical.

My prediction is over the next 50yrs the US economy, followed by the global economy, will make a shift from providing services back to providing goods. I do not foresee a return to the 1950's manufacturing dominance of the United States. We are a global economy good, bad, or indifferent and other countries will participate. However as our focus on the value of information is optimized over the next few decades there will be a tremendous amount of money available, poured into the market to drive innovative solutions. Those solutions will move the technologies into the mainstream driving them toward commodities until, finally, the solutions will become indistinguishable parts of their parent "systems". All of this new knowledge will enable companies to design, build, and deliver better products. The computing power will be available to do things we have not even dreamed of today beyond real time monitoring of the social web to identify a purchasing opportunity and deliver a customized offer with details, pricing and near immediate availability all within a second or two. Information companies will have a difficult time competing because everyone will have access to the same information and analysis tools. Investment bankers, brokers, consultants will all become the professions of bygone eras as the world turns to differentiation through the real-time application of knowledge. The value of information will drop like US currency and the value of goods, things you can put your hands, will rise in value.

I believe the shift will be so seismic that companies will repackage services as products, services getting such a negative connotation. And how we consume those products will be such a bold new model we have a hard time wrapping our heads around the idea of nanobots and technologies augmenting our human nervous system.

What I don't predict is mass employment in this new model. Employment will continue to drop as productivity grows. Unfortunately that's also a reality of economics. However I believe children born after 2020 are going to have to be equally skilled in managing information and managing the production of goods.

Of course I could always be wrong....

Tuesday, December 13, 2011

Take an Inclusive Approach

Most people have a difficult time wrapping their head around Cloud Computing because it's a multi-disciplinary disrupting technology. It crosses just about every technical and business barrier that exists from accounting to system administration, legal to storage, and HR to application development. Changes within each group are required to make cloud successful. Who should be responsible for the assets? How will systems be managed? What limitations need to be placed on data access? The questions go on and on and on...

Organizations adopting cloud technologies in the second wave, the fast followers, are learning from the early adopters that having a strategy from day one is critical to success. Everyone needs to be singing from the same sheet of music to ensure the investments make sense and will generate the expected returns to the business. However many organizations are taking a narrow approach in defining who is a member of the chorus. I have worked with many firms that from the start exclude critical organizations such as internal audit, legal, software development, and HR. The net result is often a private or public cloud with few or no applications, that violates policies, adds risk to the business, and cannot be supported because of a mismatch of skills.

Socializing cloud is not easy but it's required for success. Everyone in the organization, from the CEO down must understand how their life changes with the incorporation of cloud technologies. Most importantly the line of business leaders need to be educated in what is now possible via virtualization that was not possible before. It's time for the business executives to dream; to stop limiting their vision of the future to what they believe their IT department can deliver or technology can support. Thinking without limitation is a core of creating innovative solutions.

My minimum recommendation to prepare an organization for the transformation engendered by adopting cloud technologies is to execute the following:
  1. Develop an enterprise strategy and roadmap
  2. Educate everyone on what is happening and why
  3. Buy 3rd party education (computer based training) on the basics of cloud and require everyone to take the classes, even the business people.
  4. Create a cloud council with representatives from all the constituent groups to act as a clearinghouse for questions, collection point for input, and distribution point for sub-strategies.
  5. Bring in skilled 3rd parties to augment your team because no matter who you are you don't have enough in-house cloud knowledge.
It sounds like simple logic, and it is, but it's overlooked more often than implemented.