DBMaker - New Technology
New Technology

Greet 2020 IT New Era

Author / Wang Ruohua      [Issue Date: 2014/10/17]

The popularity of using the network, the start of cloud services, the model of selling things by using virtual platforms has changed existing business models. Big Data is omnipresent and is changing purchases, service and transactions. The role of science and technology has changed from responding to leading based on market demand. All major companies should change their attitudes and positions toward the face of this new generation of IT.

According to the statistics by Cisco, a world-renowned Internet giant, nearly 5 billion network devices are expected to connect to the Internet in the next six years, namely, by 2020. According to the statics by the United Nations, the global population by 2020 will remain constant at about 7.2 billion, even population in non-developed countries, including newborn babies, will remain the same. Almost every person owns a network device. What an astonishing figure this is. Networks will become an indispensable tool in our lives rather than an optional one.

Therefore IDC predicts that, by 2020, in terms of global spending on IT, it will become the mainstream of IT market that the investment in third-party cloud, mobility, big data and related service will exceed that of personal computers and networks. In the future, no business operation can lack information technology and in fact will heavily depend upon it. Without information technology, there would be significant problems with manufacturing processes and it would be difficult to understand the needs of customers, for example, consider the power and rise of "online shopping" today. As all the spending habits have changed because of the network, the big data library produced by the network becomes very meaningful. In the past, to know the customer's spending habits, we must cultivate relationships with them and do questionnaire survey for a long time, and in the end the gathered data may be not be reliable because sometimes customers are deceptive. However, because of the usage of the network platform, the mind of all customers will be shown through their access on the network and recorded without bias. Yet, how to record these things and make these data more meaningful and even valuable is the question. The current IT model must undergo a big change.

When 2020 arrives, what should IT be? According to interviews by A.T. Kearney with more than 150 global CIOs of medium-sized enterprises, in the next seven years 70 percent of companies expect to invest most of their budget in IT, particularly in the interaction between sales client-end customers (see "Figure I"). Meanwhile, many CIOs say that even IT will be in the list of the Group's risk assessment projects. In addition, these companies also will not spent a lot of money in purchase equipment or building machine rooms, because in the future performance of cloud clients will improve and usage of cloud clients will further decrease the demand for hardware devices. Why do companies need to continue to invest in IT? The conclusion is that the role of IT in the future will be helmsman of sales and no longer be representative of science and technology, therefore, IT must change from passive acceptance to one of actively facing the future in a innovative way.

"Figure I" expected value of IT investment in 2020 (Data Source A.T. Kearney)

Of course, such a change requires that CIOs need to expand beyond their previous role of only being good at technology research and development. CIOs need to know more about not only the business but also how to deal with big data and understand customers. It is because of this that more and more companies are willing to hire a CIO as a member of the board of directors (see "Figure II"). The CIOs of the future need to have professional knowledge of information technology coupled with business savvy and innovation thinking.

"Figure II" the percentage of companies who expect to hire a CIO as a member of the board of directories (Data Source A.T. Kearney)

Which aspects of IT development will begin to change? How do we prepare? Here we share our thoughts centered around three primary areas.

1. Simplification. Packages for lazy people will be widely used to reduce the complexity of customization and to increase the flexibility of IT's applicability.
2. Standardize and streamline the operating system to make it easier for outsourcing, such that major suppliers and outsourcing services can do the main system development.
3. The concept of IT should come closer to that of sales. All IT designs must be in line with the company's sales targets and customers' preferences rather than mere innovative technologies.

Start with simplification. The reason why information technology in the past was an annoying part of the whole is that it was too complex to be easily understood. This has always been a significant problem and is a reason that Steve Jobs was dedicated to change the world of information through his work at Apple. Apple phones make information technology user-friendly and even the elderly who have never used a computer can easily use intelligent 3C for online tasks. In contrast, in the enterprise, all members of the IT department are experts in science and technology, however overly complex architectures and customized instructions tend to make these personnel adrift, particularly new comers or those not familiar with a particular system. Once the market changes, such a complicated structure cannot flexibly coordinate with the sales system or the production lines to change designs. This further hinder a product's time to market and increases the costs risk caused by accidents and changes. For this reason, reducing the complexity of IT infrastructure is for most CIOs their first proposal. Viewing from the result of many enterprise IT simplifying efforts guided by consultant companies that specialize in business management, the greatest benefit is reduced costs, conserving resources, and making IT more flexible. Simplification can save procurement of unnecessary devices and maintenance expense and the standardization carried out in the simplification process, which further makes outsourcing a realistic possible, is another advantage. According to published outcomes, IT costs in this transformation program are expected to decrease by more than 30% to 50% over three years. What an amazing figure! The released of internal IT staff can concentrate their minds on improving performance, innovating marketing programs and creating valuable sales design.

Now we come to a deeper observation of standardization. According to the survey, nearly 80% of CIOs expect more than half of required functions can be satisfied using standardized software products, and even more hope that this software can meet nearly 80% of their needs. What does this mean? This means that the customized software which requires tremendous human resources will cease to be popular. The benefits are obvious: standard specifications can significantly reduce the effort required to introduce new products. What is needed is just a little set and even the risk of on-line testing will be reduced as will the testing time. Others in the industry have done the related processes and the problems encountered have been resolved in more than one trial, therefore, the system has high stability and common design acceptance. In this way, a highly customized language will be produced, which can avoid that, once the developer is no longer responsible for the system, many orphaned or abandoned designs in the system influence performance. Another benefit may be that regulatory requirements, most programming risks, and responsibilities can be assigned to the software suppliers. The suppliers are fully committed to enterprise requirements in the form of upgrades or updated versions, so the internal IT staff who would otherwise be overloaded, can focus more on the management and innovation of requirements designs. Especially in the mature software market, the ERP system for example, companies can use a complete standardized software product to simplify it rather than customize it, which can avoid the troublesome problems arising from system incorporation into other companies or branches of the company when the company is being internationalized to improve the value of IT the operations.

When the architecture is simple and functions are standard, the streamlining of the operating system sees the light. Once the operating system has streamlined a number of system changes arising from sales demand or short-term advertising activities' requirements, it can be readily outsourced for others to perform. In this way, corresponding changes are quickly executed to accommodate the market and headaches because of temporary manpower shortages are alleviated. What's more, corporate sales achieve a success, which truly represents the value of IT – the key for IT to succeed depends on the extent of adapting to market changes.

"Figure III" IT outsourcing volume and offshoring volume , expected to grow in 2020 (Data Source: A.T.Kearney)

According to the survey, albeit showing some variations, outsourcing and offshoring continue to flourish (see "Figure III"). Primarily because they reduce personnel costs, reduce complicated employment problems, and eliminate to the challenge of finding people who have the relevant skills and expertise needed. In addition, outsourcing companies have plenty of experience and are able to help enterprises avoid costly mistakes. After all, these professional companies are abundant in the science and technology sector and personnel are easily funneled into the process. Many companies in the Asia-Pacific region believe that outsourcing is a good strategy for improving the quality of service and therefore they tend to seek the assistance of a large IT service providers to manage complex projects to accelerate the speed of the product line. Meanwhile, it's a method for a lot of IT departments to reduce IT operational risks. In fact, many enterprises have plans to assign a certain percentage of the IT budget to major suppliers such as SAP and Accenture. These companies sign service agreements to establish needed service and set up the required penalty relief to spread their risk.

Additionally, outsourcing or offshore services companies, in recent years, have shifted to Eastern Europe, mainly because personnel costs are rising in Asia. Moreover, Eastern European labors generally have better language skills and locations closer to Europe, the Middle East, and Africa (EMEA). On the basis of these factors, Eastern Europe is becoming the new darling of offshore outsourcing services. Many large professional outsourcing companies in North America and the UK think agree because a number of offshore services who need offshore service are mostly English-speaking countries. The language barrier is the most important challenge. Although the volume of business shifted to Eastern Europe is not large, it is worth our attention.

Some people say that men and women like Mars and Mercury. I It is a generally difficultly compatible and we see this same relationship with information technology and marketing. Why is it also so difficult for them to co-exist? We know that it's difficult for a man to develop his left and right brain thinking equally. However, the task nowadays to narrow the distance between IT and sales is an important one and the talents who can combines IT and sales are needed for our future IT industry. Demand for such people will grow very fast. However, according to the figures, it can be found that experts with IT literacy and sales experience are rare compared with the increasing of demand for their services. According to the statistics by the UN, we learn that both France and Germany have a shortage of information talents. Take Germany for example, until 2020, it is estimated that about sixty thousand positions of information staff will remain vacant. Unless Germany makes new efforts to attract and develop IT talent with business acumen, the situation will be even more miserable. Compared with Germany, the United States, Canada and Britain are in a better situation which should thanks to their recruiting for talent from other countries, including Indians who can only speak their local language. So skills is a benchmark for nurturing talents and a long period of operation and training is necessary. Rather than exploiting the existing talent, because such people have proven their bad loyalty but also have difficulties integrating themselves into industry dynamics and corporate cultures. Therefore, faced with the challenges of the next six years, enterprises should carefully foster their own IT staff by making them participate in the production line, the sales line, and even the company's business reporting rather than blindly enriching their skills only related to information to make them better understand the future operation direction of the company. In addition, as a member of the IT industry, we should make full use of time to reach courses on the business management consultant and network marketing, learn more about market orientation and consumer mentality, and take a look at those real human needs involved in the virtual trading.

Lastly, we quote "Technology always comes from human nature." A phrase we take from a Nokia advertisement of many years ago. The future of IT lies in learning as much as possible about human nature, because in the coming century service will outweigh science and technology.

Data Sources

1. IT 2020:Preparing for the future
2. Future Gazing: The future of IT in 2020
3. Cloud and the future of offshoring
4. The future of IT
5. The future of Corporate IT
6. IT in 2020: Internet of things, digital business enthusiasm abounds
7. IT Careers 2020