Australian chief executives, having been towelled by their American counterparts in the productivity stakes over the last three decades (Argus' grim warning to Australia, March 1), have a chance to make good because there is yet another shift in computer strategies emerging. In a strange way word of mouth has gone digital and it can often be measured and intercepted.
If Australian non-mining chief executives miss this one then the Argus wake-up call (which drew an enormous audience yesterday) would have been in vain and our productivity relative to US companies will continue to decline – which has long term implications to the non-mining sharemarket.
After just two months in the top job at IBM, Ginni Rometty is heralding this "new era” after spending her first 60 days as IBM chief executive speaking to 100 other chief executives to determine how their IT needs are changing.
What she discovered is a computing shift, that businesses big and small should be now preparing for.
Rometty unveiled her findings in New Orleans at IBM’s annual PartnerWorld conference.
In Australia, and in many other countries, IT departments are a law unto themselves and tend to operate in isolation from the rest of the business. In this new era companies that persist with that strategy are in grave danger of going out of business.
According to Rometty, the top global chief executives recognise that they need to shift decision making from the back office to the front office. This isn’t just a symptom of the shift towards mobility for consumers and employees, but also an increasing recognition that smart computing power is better in the hands of someone who’s with a client or a supplier rather than with an IT professional or management personnel at head office (Technology Spectator: Prepare for a data brawl, March 1).
In Australia the executive who recognised this trend ahead of most of his peers is former Commonwealth bank chief Ralph Norris. His successor, Ian Narev, says that his job is to implement the Norris front office empowerment technology to lift CBA productivity. But the world that Rometty is unveiling will provide more power to the front office then even Norris could have imagined because in this new world information about CBA (and every other company) outside CBA is almost as important as that inside the company.
In this new world, systems and devices need to be friendlier for users – think Apple’s rise as a business supplier – but chief information officers must also become far more visual within an organisation and adopt some of the responsibilities of an operations officer. They aren’t confined to the bowels of an organisation.
This shift is a consequence of what Rometty chooses to call the "millennium generation”. It’s a generation of increasingly connected consumers and workers that interact with each other and their organisations in more ways than the front desk.
Just imagine the multitude of ways you can make a complaint about a company, starting by choosing a social network device. Each complaint path becomes a new avenue of information for consumers – which at the moment is not always understood by those on the front desk. Much of the interactions that are taking place between users can now be intercepted by an organisation.
It's an aspect of a more digital world that creates more data – much more.
Just how much data is being created at any given time is up for dispute, but a good rule of thumb is that it’s increasing by a factor of ten every five years. Many companies believe that this data being assembled about them is completely irrelevant to the organisation because it is created outside it – think of Twitter, for example. While it might be tempting to take this view so as to simplify your operations, competitors will be sifting through this data to gain a competitive advantage. Indeed, Rometty says the chief executives believe "data will separate the winners and losers in every single industry”.
Of course these are Rometty‘s words and it should be pointed out that this observation carries great riches for her company.
This data isn’t about just Tweets and Google hits, but about all the points you can use to extract information from your company and sector.
So what is required to be a winner in this world? First of all, simply investing in significant mobility that looks good to employees and customers as well as collating massive data on the most expensive servers will not work in this world. Yet this is the strategy that chief information officers like to sell to chief executives.
Instead, the winning chief executives must set up reliable, responsive systems around those front office sites and have employees who know how to consistently extract value from this bigger pool of data.
In a sense, none of this is new. There’s more digital stuff out there and the players that can take advantage of it will win the greatest rewards. This pattern will continue indefinitely, but the skill of picking a trend from this increasingly complex pool of information is at the core of an organisation’s ability to reinvent itself.