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Tuesday, October 28, 2008

Tech : No Sunset

Forrester Research CEO George Colony, argues that the impact of current economic crisis on tech may be milder than anticipated compared to what happened seven years back with the dot com burst. His primary argument is that tech spending is currently hovering around 6% whereas it used to be double that in the last tech downturn. He points out that tech is more centrestage and pervasive that what it was at the start of this century. Mobile penetrations have tripled in the US, online business is surging around the world. It confirms the earlier notion that IT is business. A well articulated argument here shows that the impact may not be felt where the deployment is critical to business and bound to strengthen additional investments. Tom Sullivan compiles the view that startups could particularly get affected due to the credit crisis.
I liked the logic that George has taken in constructing his idea. Besides the enterprises, the younger generation have their world more or less centered on tech in many ways. As I see it, the millennial generation has emerged as a powerful political and social force. Currently including young people up to 29 years of age, the millennials are the largest generation in history; they are independent-politically, socially, and philosophically-and they are spearheading a period of sweeping change in America and around the world and are clearly more tech centric that what was the case few years back. The Green efforts that many forward looking enterprises are embracing are going to further embed tech into core business.
Global rollouts, instances consolidations and the likes provide IT with unimaginable importance within enterprises. Its impossible to think of the birth of some sectors like what we see today without conceding a central role to IT. A Fedex, Walmart or trading rings as we see them today, can’t be even thought of without IT. The web has stroked the fire and the dot.com companies( or their peak valuations in their heydays!!), no doubt made people sit . I heard someone say that if their enterprise systems fail to perform for a few days, their entire annual earnings would be wiped away. Sensible boards insist on a credible CIO to get hired and no wonder we see that CIO’s also get fired faster. As I see across verticals, increasingly the competitive edge is just going to come out of Innovation and IT would play much more significant role in making this happen. In practice, I see that firms that are under investing in technology lose their edge over a period of time. I am not saying that every major initiative would directly contribute to competitiveness, but not trying would definitely harm them.
Though there may be a potential dip in tech interest for a few quarters due to credit squeeze and overall economic slowdown, I see tech playing a much bigger role in the global business bounce back, when it happens. The tough environment would force tech ecosystem to innovate more and do it fast. No doubt - more of the same won't work for ever and the tech sector is not immune to this. Resource allocation challenges may abound, but in many instances, IT investments deliver more value to a company’s top and bottom lines—by creating distinct efficiencies and increasing revenues—than any potential/real savings gained from the more traditional IT cost cutting. Downturns give companies a chance to buck conventional wisdom and increase their IT investments. Savvy enterprises know that focussed initiatives in many areas can generate more efficiencies and contribute to revenue growth that would outshine potential savings from peanut butter spread model of direct cost reductions applied to IT as part of across the board cost reduction. Yesterday, I was in a meeting, where the discussions were hovering around specific areas where tech can play a major role in the transformation of the financial services business. Clearly, it is not a panic situation – in a few quarters the difference would be seen by all.

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Monday, October 27, 2008

On Seeing The Future

A very interesting interview in the November issue of HBR on foreseeing, creating and executing to reach the future from the legendary John Chambers, Chairman & CEO of Cisco. The whole interview is about business strategy. His perspective of market transition as a precursor to disruption is an interesting read.

Market transition occurs when there is a subtle but clear disruptive shift. It could be social, economic, or technological, and it begins many years before the market actually grasps its significance and adapts to it. A market transition gives you a glimpse of a new opportunity to take market share or move into new market adjacencies, and it can take many forms"

Cisco like others in the high-tech sector is confounded with challenges of long development lead times and as a market leader has the constant challenge of predicting six to eight years ahead in the volatile technology market by recognizing early warning signals.Cisco's big bet is typical of such challenges. John outlines how he has geared the organization for capitalizing on these market shifts by giving his command-and-control style and making decision making a highly collaborative process. He claims that with such mechanisms in place, Cisco which used to carry out one or two initiatives a year currently successfully handles dozens at a time.

A very interesting perspective delivered in a matter-of-fact manner.

After you read the interview, listen to John Chambers “Can IT Strengthen the Economy?” interview at the recent Gartner conference just released at ZDNet.

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Thursday, October 23, 2008

The Cloud & Efficient Systems

With infrastructure as a service, basic IT costs are moved from a capital expense to a variable cost, building clearer relationships between expenditures and revenue generating activities. As Jayashree Ullal points out, scalability, latency and performance are the cornerstones in any cloud ecosystem. Recognizing a heightened interest in moving functionality into the AWS cloud to get a better grasp on controlling. AWS comes with added functionalities to add monitoring, load balancing, and automatic scaling to their offerings making it more appealing to enterprise customers. Today, Amazon AWS is no longer in beta. The EC2 platform now supports windows/SQL platform as well. Amazon is boldly promoting this platform as the best environment for deploying .net and other high performance microsft technology centric applications. The implicit belief behind this is that having a low cost infrastructure is only the starting point of being as efficient as possible and that applications will make use of the infrastructure in an adaptive and scalable manner to achieve a high degree of efficiency. This would pitch amazon against the rumoured red dog initiative ( a stripped version of cloud OS) of Microsoft. The ultimate goal seems to be ability to offer services that would support all databases, operating systems and programming models. Microsoft, Google, SFDC are all approaching comparable solutions with varied interests from differing perspectives. This is really good progress for amazon and for cloud computing paradigm – the adoption by SMB segments and enterprises need to be keenly watched to assess how quickly this models gets to the centerstage.

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