I have had a bit of time to reflect on Monday’s CBI conference, and now think that there were some fairly big opportunities for the technology world to take note of – but I’m not entirely sure how well we are reacting (within IT departments, or on the supplier side either).
Jim O’Neill, from Goldman Sachs and the person who coined the “BRIC” (Brazil, Russia, India, China) acronym pulled together some fairly compelling statistics at the beginning of the day – that in the past decade, the UK saw overall GDP go from $1.5T (at the time greater than the GDP of China) to $2.6T; in the same period, the BRIC group went from $3T to $13.5T with China alone accounting for over $7T. That growth is equivalent to seven new UK economies.
O’Neill drew a few conclusions from this: that referring to these economies as “emerging” is old world patronising, and that “growing” (as distinct to “stagnating” for us) is a better description; that there is a new middle class is emerging at a rate greater than has ever been seen in history; and that our economic situation is not going to be improved without working out how our businesses can sell into these growing economies (and that, worryingly, our exports to Ireland are currently greater than to the BRIC countries combined.
Now, a moment of caution; whilst headline GDP growth is astonishing in these and other growing economies (Turkey, South Korea and many others), per capita figures are somewhat less so. The total population of the BRIC economies (according to the CIA World Fact Book) amounts to 2.9 billion people. There are less than 70 million in the UK, creating 20% of the wealth with around 2% of the population.
What this means is that whilst there is definitely growth in UK businesses to be had, it is likely to come with lower revenues and profits to that we are used to in our established trading markets. This is something I witnessed in my last role, where the services that the company provided were able to be charged at a far lower rate than in the North and West.
So, to be able to spot and take advantage of new opportunities, businesses need to be both lean and agile (to use two cliches in one short sentence).
Technology barely got a mention throughout the day – the Prime Minister continued to bang the PR drum for London’s Tech City, but otherwise the main comment came towards the end of the day when a question was asked about what impact “mobile” would have on business (asked by someone describing themselves as coming from a “mobile consulting firm”). Emma Harrison from A4e retorted that she hadn’t talked about technology on the day, because she just assumes that it will be available.
That comment I think is a profound statement about how quickly and deeply the consumerisation and commoditisation forces have taken hold of technology in business. It is now just assumed.
This poses a problem for IT running in traditional models, though, and reflects a challenge that I faced a few years ago when stepping into the IT leadership role at Imagination. We were expanding into new territories (China, Singapore, India and others) at a rate of knots, but had a complex technology infrastructure that put huge interdependence on elements that were physically housed and managed in our own offices. A few key hubs (London, New York and Hong Kong) were reasonably well served, but satellite offices were poorly serviced, and access to core IT services was patchy and unreliable.
Cloud services dramatically changed that pattern. By the time I left, an office could be up and running with an Internet connection and commodity devices bought locally. The IT started to become just an assumption. It also became incrementally lower in cost as hardware requirements from location to location started to diminish. It meant that my team could focus on improving and enhancing our services rather than fixing things that had broken.
It seems that “Cloud” has now gone off the boil in terms of IT buzzwords – the inevitable cycle of the hype curve, no doubt. Commodity IT services delivered over the open Internet, however, seem to me to be crucial to medium-sized businesses in the UK being able to open up new markets quickly and cost effectively. SaaS, PaaS and IaaS all can serve to allow IT to help businesses expand across the globe in a way that traditional IT delivery models really find difficult to scale.
mmitII 