Market swings obscure big changes

The stock market battles between the bulls and the bears are obscuring a number of fundamental changes taking place in the wider business community and in the way we work. When the stock market settles we will look back and say – "how did I miss that trend?” And so last night an improving US was matched against a Europe turning pear shaped. The enormous liquidity in the market gave the bulls a win, but only just.

But accelerating is an underlying trend that will see far less business travel, more work conducted outside the CBD to avoid the peak hour rush and a new elite developing in corporate management structures – the so-called chief information officer. In this environment smaller firms have a much better chance of winning. For Australia, some of these changes mean we will have the potential to truly compete on a global scale and reduce our current reliance on minerals.

So let's take a breather from the European crisis and go through these changes, with the help of work we have done at Productivity Spectator.

A huge study by IBIS World into Australia's digital future in 2050 predicts that firms with revenue between $1 and $100 million will grow faster than the giants. Unlike previous eras, when capacity constraints locked smaller firms in a niche market, the increasing trend to outsourcing non-core functions to technology, or remote workers using technology, will remove those ceilings.

You can see this trend already unfolding in the legal industry. Among other legal firms, Minter Ellison has embarked on an aggressive push into Asia because it can assign lawyers to any case around the world without having to open fully staffed offices. In an interview with Productivity Spectator, Minter CIO Peter Westerveld says the teleconferencing technology is now so immersive that client-lawyer interaction feels as real via telepresence as it does in the room. Not only can Minter better serve its clients in, say, Ulan Bator, but associates can far more effectively collaborate on cases and board members no longer have to fly between cities. For a firm that measures its work by billable hour, freeing up partners from travel delivers big benefits (Legal has gone digital, Productivity Spectator, May 30).

IBIS World's report suggests that by 2050, 25 per cent of us could be working fully or partially from home. I think it will happen before then, particularly among older workers (like me!). This will not only have enormous benefits in terms of reducing road congestion but will also reduce company spend on expensive CBD offices and potentially help revitalise regional centres, and prevent the current unsustainable urban sprawl.

As workers and CEOs increasingly demand flexibility and mobility from their companies, chief information officers will need to dramatically change the way they fill their roles. With the explosion of smartphones and applications, technology moved from its previously protected/isolated position to one understood by all users. This consumerisation of technology means that CIOs will take a much stronger role on the executive team but will also need to be as strong on the business side as they are on the IT side.

Technology can give a great boost to productivity but if done badly can simply exacerbate bad work practices. In and interview with Productivity Spectator, Ann Steward of the Australian Government Information Management Office explains how a recent upgrade of the systems at the Department of Human Services required a total overhaul of the work processes in the organisation. Eliminating duplication and unnecessary procedures needed to take place before an IT system could be overlaid (Innovation in government, Productivity Spectator, June 13).

Steward is thinking much more strategically about how different government departments can collaborate by harmonising and standardising systems. By removing friction across the bureaucracy and getting departments to share a private cloud, Steward hopes to see big increase in productivity.

This strategic focus on costs will separate good CIOs from the pack. We are already seeing a huge transformation in the way we use the internet to transact between customers and suppliers. This is creating enormous margin pressure on established firms as small, nimble players utilise these online platforms to undercut those who have legacy assets to maintain.

Corporate Express (a division of the American giant Staples) supplies a substantial chunk of the office supplies of corporate Australia. It's a high-volume, low-margin business. Garry Whatley, the company's CIO, is finding that as margins get squeezed, cost improvements are being demanded of participants all along the supply chain. He says that where firms once tried to remove individual component costs, now they are looking at the cost of transacting (Integrating the CIO, Productivity Spectator, June 6).

There is a great opportunity for our highly knowledgeable workforce to take advantage of the rapid economic development in Asia. Our competitive advantage will not just be in the fact that we can provide a range of services in the same time zone.

Australia does not benefit from a large, natural market to test our new products. If we can get the technology right, that will no longer be a problem. Take time off from the European crisis to look at how these developments affect your career and your business.