There is a war of attrition taking place in the workplace between the ‘baby boomers’ – the landmark generation that entered the workplace in the sixties – and the ‘millennials’ – their modern equivalents, born after 1980 and who have never known a world without information technology.
Traditional CIOs and IT managers are facing a backlash from this new generation of switched-on workers who are also tech-minded consumers. This social group is driving a change in the modern workplace and is forcing consumer IT into the corporate environment.
But this is by no means a peaceful transition, and it looks as if the consumer and corporate IT worlds are on course for a head-on collision.
A new, connected economy is already thriving in the personal technology arena. The millennials have grown-up with and embraced Web 2.0 technology, hosted applications, SaaS, social networks and instant messaging. It is little wonder then that they complain that they are frustrated and disillusioned by having to revert to old deskbound technologies whenever they log on in the office.
Make no mistake, a consumer revolution is taking place which will provoke a radical rethink of how we build and manage the business IT infrastructure.
In the 1980s we placed a PC on everyone’s desk and began to build the corporate IT infrastructure that we know today. We started by providing a basic processor linked into a ‘steam-driven’ network. Users accepted whatever hardware and software was on offer. They were grateful just to be connected. That era was nonetheless one of profound challenge for CIOs. Communications became digital, offices had to be wired up and networks expanded. It has taken nearly 20 years for businesses to contain the costs of these technologies.
But now a further shift in the corporate IT infrastructure is upsetting this historical perception. The convergence of traditional office systems and personal multimedia devices is finally happening, and the most visible point of convergence is the web itself. We are all becoming dependent on web-based services in our domestic lives and expect similar facilities in the workplace.
A recent Fujitsu-sponsored survey of European CIOs showed that the millennials expect more consumer-grade equipment to find its way into their organisations. Choices of hardware, software and services will be increasingly influenced by the personal technology marketplace rather than by the internal IT department.
Gartner has also verified this change in corporate working practices. In its Predictions for 2008, the analyst claimed that tech-savvy workers will make IT decisions in the future and that businesses must bow to the demands of the internet generation.
Gartner predicts that by 2010 end-user preferences will decide as much as half of all IT buying decisions, including hardware, software and services. This reflects the feeling held by many that we are regressing at least three generations of technology as we arrive in the office each day.
Consumer IT evolves today at break-neck speed in terms of product and service innovation – just look at Apple and Google. In direct contrast, most corporate IT infrastructures are based on ‘one size fits all’ platforms that are five to 10 years behind the current market. Corporate users feel trapped in a time warp.
Room for compromise?
So how are the baby boomers going to handle this difficult situation? CIOs are seemingly presented with a stark choice: continue to assert their monopoly powers in the face of rising user opposition, or open the floodgates to consumer IT in all its shapes and sizes.
Clearly, CIOs have a corporate responsibility to protect corporate assets, many of which today are in the form of electronic information, and to ensure connectivity within their organisations and to relevant trading partners. However, they must retain the backing of their paymasters – the business customers and their end users.
Perhaps things should not be viewed as quite so black and white. There is a middle ground for the CIO to adopt – a ‘mixed economy’ where internal IT departments retain end-to-end control of IT services but are agile in their choice of product and service providers.
In a sense, this is a plug-and-play philosophy in action. This requires a comprehensive re-working of technologies, processes and skills within IT support, and a more enlightened attitude towards a wide spectrum of external partners.
Existing investment in legacy technologies is a major obstacle which continues to hinder the advancement of corporate IT. This ranges from hardware and software to the processes and skills that pervade traditional IT organisations.
Such legacy is both inadequate in servicing current needs and also highly costly and resistant to change. CIOs complain that operating costs have reached 70 per cent of total IT budgets – and continue to rise at an alarming rate. Clearly this situation is untenable for the longer term.
There is a strong analogy to be made with the car industry of 30 years ago. Manufacturers boasted that they produced cars at a loss and made all their money on after-sales service. Toyota changed the rules by making cars that were reliable, and won customers over in their millions. The IT industry needs to embrace this lean attitude and develop near zero-defect operating -environments – and soon.
Analysis of IT budgets today shows an alarming rise in operating costs due to legacy factors. For the average IT infrastructure around a third of lifecycle costs is attributed to the design and build of new systems. The rest is associated with running costs which are beginning to absorb all available IT funds and stifle any future IT-led innovations for the businesses.
Learn to be lean
The hard truth is that the IT department is now grossly overweight with unnecessary and highly wasteful operating costs. With a growing emphasis on lean operations, many CIOs find themselves in the spotlight from their peers who are further advanced with lean implementations.
Lean IT practices pioneered by Fujitsu in Europe and Japan suggest that a radical rework of current systems and IT infrastructures could shift the operational expenditure/capital expenditure balance from 70:30 to a more favourable 40:60. This would transform the relationship bet-ween the IT department and its business customers and herald the era of Lean IT.
Individual organisations are at risk of losing competitive advantage by failing to embrace new IT methods but, furthermore, the UK as a whole could be in danger of falling behind other countries. While this is most certainly an international trend, the UK has some unique impediments compared to its European partners.
The UK corporate world is dominated by rigid, 10-year IT outsourcing contracts that stifle user choice and corporate discretion. This is changing gradually as more sophisticated contracts are being adopted by progressive companies such as Reuters and BP.
The driver for IT consumerisation at the product level has largely been an Asian phenomenon – Samsung and LG in Korea and Sony, Fujitsu, NEC and Toshiba in Japan – but Apple and Nokia are excelling in product innovation and leading IT service providers such as Google, Amazon, Facebook and eBay are all US-based.
Competitiveness in the rapidly evolving digital world of business and pleasure will be about hyperconnectivity – where people, devices and machines of all kinds will be universally connected.
So just how long will it be before office IT catches up with the home? The answer is simply never if CIOs persist with current monopoly supply practices. The average IT refresh within the corporate environment is as much as five years for end-user devices and more than 10 years for servers and mainframes. Product innovation cycles in the consumer world are now as short as six months, and likely to shrink even further.
The gap between corporate and consumer will only get wider as time progresses.
The answer to these trends involves a radical change in direction for corporate IT. CIOs must take four brave steps:
1. Open the floodgates to consumer IT in a managed fashion that preserves end-to-end integrity and information security: a difficult but necessary act that will see working on the web take centre stage.
2. Tackle inherent waste in IT operations by applying lean thinking. This spans the full ‘design, build and operate’ aspects of IT systems. We are talking here about a fundamental change in culture, skills, processes and technologies, not a quick fix.
3. Refocus on value, away from providing the kit and pipes to supporting information management and security where a tight grasp is needed to protect corporate information assets – a move from infrastructure to ‘info-structure’ management.
4. Rework the contractual basis on which the firm operates with its main subcontractors and service providers, adopting a more flexible approach that enables and encourages change and innovation.
The UK is one of the most advanced service economies in Europe. But as we enter an uncertain economic future we cannot be complacent. Without the benefit of consumer-focused IT infrastructures we will fall behind more progressive nations like Japan and Korea who invested in broadband fixed and mobile networks many years before us and who have benefited through product and service innovation well ahead of the international curve.
The new multimedia world of the home and car, and other related consumer environments, will bring high-definition images to every aspect of our social and personal lives – with the prospect of virtual reality only years away. This is a far cry from our desktops and BlackBerries.
It is essential that CIOs act now to create a working environment that will be acceptable to the new generation of millennial workers. Failure to marry consumer trends with the secure corporate environment will result in serious implications in the near future.