There are few comments I would like to make on this great post.

1. The first one is screaming to be made,

“Propagated with confidence that they’ll actually be executed as designed. In many circumstances, once a new process has been embedded in Enterprise IT it’s simply not possible to execute it the old way. These technologies act as a ratchet, making backsliding impossible.”

because it is so contrary to what I see in business practice as the biggest challenge – adoption management. Many Enterprise Software implementations and focused process improvement initiatives failed miserably because knowledge workers have a luxury to ignore technologically enforced process changes. Billions of $ in SFA investments were written off because salespeople refused to use them is the most obvious example.

2. Productivity growth in US during the last few years were primarily achieved by extension of working beyond 60 hours per week via using Internet, Blackberries, and other technologies – not a true quality improvement. 60 Minutes reported that productivity per hour is higher in France then in US. No doubt the IT infrastructure has enabled this development.

3. The investment part is an interesting subject since the cost of IT components, excluding labor, have plunged comparing to performance improvement of these components. The labor cost have not increased since 2000-2001, hence we are witnessing deflationary environment in IT IMO.

4. The IT initiatives were primarily focused on obtaining efficiency of underlying business processes, and IMO that game is over for two reasons:
a. there is much “air” you can squeeze out of process and most of it has been squeezed by now;
b. methodologies to justify the investments seem to have lost credibility, because at the end companies had to hire more expensive people to support the systems compared to clerical staff they laid off;
c. the option of outsourcing and off shoring entire business process, thanks to IT infrastructure availability, is hard to ignore.

Sorry for my rambling, but this issue is too close for me to be cool.

That said, I believe that for many businesses IT expenditure has reached a kind of inflection point. This inflection point has to do with the management perception of an increasing threat of an unsuccessful IT expenditure out weighing the opportunity of a successful IT expenditure (whether a project or a portfolio of projects). This perception is real and based upon the all too familiar experience most experienced management teams have with unsuccessful IT projects. This risk management (threats/opportunities) inflection point is (I believe) a manifestation of the reality of the technological state of information technology today. Today’s environment is stupendously complex when compared to the environment of 1973 – 1995. This complexity simply makes the probability of any large scale IT effort (project or portfolio) being successful problematic for business decision makers. Given the choice, they decide to not make the investment, and they are right to do so from an economic perspective. If innovations are not found that push the inflection point back (decreasing threats, increasing opportunities) it is hard for me to see anything but a flattening out of IT expenditure and even some retreat.

So, to me the issue is boiled down to whether or not new tools are created to tangibly manage the complexity of IT investment. If these develop (I believe they will be) then I believe productivity gains will continue unabated. However I don’t know if this means IT expenditure will increase accordingly, it might paradoxically go down depending upon how powerful the tools actually are. I say this because I feel the tools to manage IT complexity will probably come from the open source area.

Regards,

Jamie Bullen

Excellent post. I think you touch on the answer very late in your post…IT process improvement has become so embedded in our lives that there’s “leak” for lack of a better term into other measures of productivity gain.

As you suggested, computing, networking, internetworking are all so vital to almost every walk of life now (in our country and other industrialized nations specifically), it’s no longer simply sufficient to measure growth of computing power, et al…

Imagine the work that needs to be done on the power of grid/cloud computing?

What about the frictional boundaries that are crumbling? Startups can outsource so much of their IT stack and simply focus on the core tenets of their idea. Amazon is providing super computing capacity for pennies, unlimited storage for pennies, etc…

Great work as always, I look forward to further discussions.

Happy Holidays,

Jason

Was surprised to note there was no mention of the “mob intelligence” possible with Enterprise 2.0. What is only possible today can develop into a vision statement for companies tomorrow. And development of an intelligent Enterprise Virtual Space would go beyond any invention of the past. In fact, per “Open Source Spying”, Intelligence 2.0 (courtesy Arik Johnson) is already being driven by the promise incorporated in the following reported statements:

- Spies, Andrus theorized, could take advantage of these rapid, self-organizing effects. If analysts and agents were encouraged to post personal blogs and wikis on Intelink — linking to their favorite analyst reports or the news bulletins they considered important — then mob intelligence would take over.

- ….in a system like this, as AndrusÂ’s theory goes, the dots are inexorably drawn together. “Once the intelligence community has a robust and mature wiki and blog knowledge-sharing Web space,” Andrus concluded in his essay, “the nature of intelligence will change forever.”