Technology is reshaping businesses in a Darwinian process where only the fast and flexible survive
There is an important difference between the technology business and business technology. The former a vibrant, growing universe of companies making and selling new technology is a story we have covered extensively in these pages over recent months. The latter the use of technology to empower 'traditional' business models has received less attention.
There's a simple reason for this: The technology sector is exciting, young and flooded with investment. It has had an intangible aura of 'cool' for over a decade. It is a story that practically writes itself, which is one reason why you see it getting so much attention in business media across the world. Applying new technology to more typical businesses is, on the other hand, often a mundane-sounding affair. 'New communications system installed in a shipping company' yawn. 'Data warehouse implemented at a retail chain' hit the snooze button.
The reality of the situation is that despite the luster and shine of the technology sector, it is really the tip of the iceberg when it comes to the impact technology is having on business. The vast body of the beast, lurking below sea level and off the radar relates to how businesses are using new technology to revolutionize their companies and industries.
The shift to internet-based reservation systems was a key factor in empowering low-cost airlines to take on and in many cases destroy long-established, once-untouchable competitors. Having a clue about technology and how people relate to it, helped a computer company with no experience in music, entertainment or publishing (Apple Inc.) strike a deadly blow to the world's largest entertainment businesses, who have yet to work out how to compete with the company's iTunes music store, which has sold over 3 billion songs since coming online in 2003. The existence of platforms like eBay and Craigslist have created an entire industry of home-based online ventures that are steadily taking business away from much bigger and better funded competitors.
Around the world, across every sector and industry, you see the same thing: companies that cannot adapt their business model to take advantage of new technology are slowly, surely, being made irrelevant by companies that can.
The Second Web
For the last two decades of the twentieth century, the story of technology in business was the computer. Computerizing and digitizing business processes was the name of the game, which companies joined at an increasingly frantic pace. The computer and its peripheral devices were the center of the boom. By the end of the century, you would be lucky to find a desk-bound office employee who did not spend the majority of their day sitting in front of a PC.
In the late 1990s, the focus moved away from the PC to the network, as networking and the internet became the new big thing. With the world's businesses largely computer-based and almost all company information in digital form, the synergies and opportunities surrounding connecting all those computers -- and all that information were enormous.
The ubiquity of computers, internet and digitization in the late 1990s led to a boom of never-before-seen proportions, as pretty much every entrepreneur, big business and investor tried to get in on the action with a new dotcom startup or internet-friendly business plan. The resulting dotcom boom (and bust) gave a huge boost to the internet as a whole, as billions of dollars were invested into the development of new web technologies, communications infrastructure and online businesses.
Many such businesses did not make it through to the other side, running out of cash as the bubble burst. Those that did make it, and those that followed in their footsteps, inherited an internet with much of the groundwork laid for its next evolution.
It is in this latest phase of internet technology that we find ourselves today. A phase characterized by the widespread availability of extremely powerful computers, fast, cheap internet bandwidth and vast amounts of low-cost online storage space. In this context, where much of the physical aspects of technology have essentially been commoditized, the trend has shifted to focus on harnessing the potential of the people using technology.
Dubbed Web 2.0 by many, it is characterized less by the machines themselves than by the way they are used; less by the reach and speed of the network than by the platform that it provides to individual users. Web 2.0 places the individual at the center of a more participatory, decentralized, service-driven environment, one that businesses across the world are rapidly learning how to take advantage of, to get more from their employees and offer more to their customers.
Leap frog
One remarkable characteristic of the latest boom in technology is that unlike any other great scientific advancement, it is being implemented and experienced almost simultaneously across the world. In many cases, web-based services become instantly available to anybody with an internet connection, regardless of location or economic status.
"Countries like Egypt, with the lack of too much legacy network, can go straight to high performance bandwidth," says Andrew Elder, head of emerging markets at network equipment maker Cisco. "People can then access the same information as anyone in the world."
In the case of Salesforce, a leading web-based customer relationship management system, the company delivers the software entirely over the internet via standard web browsers, with no software installation CDs or set-up process. Anyone with an internet connection can access Salesforce and upgrades to the software are like changes to a website immediately seen by all site users. This means that new system improvements are available to a user in Papua New Guinea at the same moment they become available to a user in London. Accessing the system also costs the same monthly fee, whether the user is an investment bank in Paris or a used-car dealership in Lagos.
For wireless communications infrastructure, the closing of the gap is even more obvious. Standardized, interoperable systems such as GSM for mobile phones and WiMax for long-distance wireless broadband, offer essentially straight-out-of-the-box installation. No pre-existing network infrastructure is needed and in many cases it is far easier to install such networks in areas not already blanketed by a multitude of different fixed-line and wireless communications systems.
The upshot of all of this is that it is as easy and often easier to implement wireless networks in relatively undeveloped emerging markets. Luxor is now covered in WiMax, meaning that you are now as likely to find a super-high-speed wireless connection in Upper Egypt as you are in London.
The opportunity posed by a lack of legacy infrastructure and systems extends to business. Companies can now go straight from having no significant IT system to a state-of-the-art integrated IT and communications system in a single move. For many Egyptian companies, this means that the first major IT system to be installed can be as advanced and capable as that of any multinational.
"There is a real willingness here for small companies to adopt new technology and use it to compete with big companies they use their size to have agility," says Elder. "What they are saying is 'give us the functional capability of advanced products at the low end, that we can implement quickly, that are easy to use and configure and allow us to deliver services that will rival the bigger companies.' They use that agility through our technology to compete with much larger businesses."
Larger firms, who have been gradually adding hardware and software to their systems for the last twenty years, enjoy no such luxury. A company-wide systems upgrade, complete with a fully integrated new system of compatible hardware and software, is a half-decade proposition. This comes much to the glee of management consultants, who reap hundreds of millions of dollars a year in fees by helping these big businesses navigate the complex mess of incompatible legacy infrastructure that their organization has inherited.
As to the next evolution, that is a topic that keeps conferences halls filled and tech company execs plying the lecture circuit. What is clear though is that in the Darwinian process of technology evolution, only those businesses that can adapt will survive.
By Tom Gara
© Business Today Egypt 2008
