Better, faster, cheaper is the new norm. Change is all around us. In this blog I discuss key business trends and opportunities for business, including:
- Cost of Energy
- Economic Crisis
- Economic Recovery
- Technology Enabled Business Innovation
Spurred by the recession – companies are continuing to look aggressively at delivering services more cost effectively. The vast abundance of telecommunications capacity and availability of the internet has made it easier to find suppliers around the world. It has also made possible that information and services work can be delivered almost from anywhere in the world.
The breadth of outsourcing offerings now covers most business and Information Technology (IT) functions, including finance, human resources, supply chain, and systems development. Developing countries, such as Vietnam, are investing in people, communications and IT infrastructure to become viable outsourcing destinations for western businesses.
The pressure will be on business and IT organizations to continue to become more agile, innovative, and cost-efficient. And if you don’t your competitors will.
The financial crises of 2007 and 2008 have rattled economies. This has resulted in significant government intervention in the world economy through regulation, bail-outs, economic stimulus – all paid for by record borrowing by governments. As this plays out in economies around the world, and as we’ve already seen in the UK and Greece, companies will need to plan for the eventual curtailment of government spending in order to balance their books. Business and IT will need to be prepared to find alternate sources of business, but at the same time governments will be open to solutions to help them reduce costs.
With greater regulation IT will face a higher burden of proof to regulators and external auditors of their compliance practices. This increasing burden of compliance and audit will create an opportunity for process improvement. I expect that businesses will seek ways to automate repetitive compliance activities.
During the recession, businesses and consumers significantly curtailed their spending and held on to cash in face of uncertainty and loss of jobs. They are waiting for signs of economic recovery and certainty about the future before they commit their scarce resources. This is creating significant pent up demand for goods and services. Once there are credible signs of an economic recovery, there will be significant pressure on businesses to respond by hiring, investing and fulfilling this pent-up demand.
IT needs to be ready to support this increased economic activity
During economic recoveries, new investments will fuel new business ventures and ideas that will deliver new innovation as well as competition. It will be imperative for businesses to evaluate and integrate innovations, or risk being left behind.
Managing Increasing Energy Costs
We are witnessing significant demands on energy to meet the needs of the emerging and developing countries. Although demand for energy has slowed down due to the global recession, I do expect that the price for oil, gas and electricity to continue to increase when economic growth returns.
Governments and utilities around the world are investing in smart grid and smart metering technologies to increase conservation, reduce the need for power generation, and provide more accurate and timely energy use information. Some of the leading jurisdictions, such as in Ontario, Canada, are requiring the installation of smart meters and implementation of time of use rates. Businesses and individuals should take advantage of these technologies and information to reduce and adjust their electricity consumption to lower their costs.
Other opportunities for reducing costs include consolidation, local-based manufacturing, to shared-services, implementation of virtualization and energy efficient technologies.
Technology Enabled Business Innovation
Today we have the confluence of inexpensive computing technologies, communications infrastructure, and relatively low access to capital. This confluence has resulted in reduced barriers to entry for businesses and individuals, contributing to and fuelling competition and economic growth. Not hindered by legacy investments new businesses and offerings will compete credibly head on with existing market leaders.
I recommend that businesses take a hard look at the following developments:
- Cloud Computing – Enables you to leverage computing resources over the internet on demand. Security and privacy remain concerns that need to be addressed for your particular circumstance.
- Software as a service – Delivers a fully managed application as a service, allowing you to focus on configuring and using the application, not on managing the application and underlying infrastructure. Security and privacy remain concerns that need to be addressed for your particular circumstance.
- Wireless – Enables new applications and services to be delivered regardless of physical location and access to wires. Enables more timely and intimate connections with customers and employees.
- Mash ups – Integrating disparate data sources, applications and services to deliver new insights, products and services.
- Business services on demand – Whether it is a call center, invoicing, payroll, tax, business services are being designed and delivered as on-demand services. This enables a business to only pay for the service when they need it, as opposed to making significant investments in infrastructure, people, and processes in advance of demand. I believe this takes outsourcing to the next level and enables new ideas and concepts to be delivered to the market quickly and with minimal cost.
- Process automation – Used to be the mainstay of large businesses with ERP systems. Now more affordable and quick to deploy through on-premise or software as a service offerings to small and medium size businesses.
- E-marketing – Using social media, search, and interactive to generate brand awareness, sales leads, instead of and/or to supplement traditional media.
IT as a microcosm of the business will be required to continually re-evaluate its service delivery model and processes to ensure that they are the most agile and cost effective to support the business. Although cost-efficiency and operational effectiveness will be important, I predict that there will be increased emphasis on agility, flexibility and speed of IT to anticipate and respond to business demands. We are now seeing this play out with increasing adoption of software-as-a-service offerings that enable rapid implementation and continuous enhancements.
I will explore approaches and strategies for thriving and surviving in these challenging times in future blogs.
What’s your opinion? Please feel free to comment…