Does IT Matter in the Age of the Cloud?

December 7, 2014 Tata Communications

You could say we live in the age of the Cloud: a phase within the larger digital age, but a unique chapter in history, too. One that requires new ways of strategic thinking. Because when end-users can reshape the business landscape through technology; when more and more customers seek integrated communications solutions; and when technology no longer facilitates but brings together culture, industry, and media, we have to ask how we should view Information Technology (IT)? With all of these dramatic changes, does IT need to be dramatically redefined? Or simply discarded?

This isn’t the first time the relevance of IT has been challenged: the topic has been a fiery one for more than a decade. Traditionally, technology consultants, commentators and thought leaders have argued that using IT effectively gives businesses a competitive advantage. However, an article by Editor-at-Large Nicolas Carr in the May 2003 issue of Harvard Business Review called this viewpoint into question and ignited the flames. Carr persuasively argued that IT had become a commodity like electricity – available to all and therefore not a strategic competitive advantage. 

Fast-forward to the present, and the strategic value of IT is once again being debated in the age of the Cloud. But not everyone accepts the theory. Joe Weinman, a Senior VP at Telx and the author of Cloudonomics: The Business Value of Cloud Computing, argues that the flexibility and mathematical power of IT still provides unlimited possibilities and competitive advantages. He points to multi-billion dollar enterprises such as Google and Facebook. Both started as little more than an idea and a college project. But, as Weinman argues, both have IT at the core of their businesses, which is their competitive advantage.

During the years when industry pundits declared IT was becoming irrelevant, studies indicated that the opposite was true. Studies by the Federal Reserve and leading universities show that productivity and profitability are connected to the use of analytics and big data. Another recent study found that a dollar invested in IT leads to more than a $12 increase in sales per employee.

Furthermore, in a 2011 report the McKinsey Global Institute (the research division of McKinsey Consulting) estimated the United States (US) needs up to 190,000 more workers with deep analytical skills and 1.5 million more data-literate managers. Would the US need all that new talent if IT were irrelevant?

More proof comes from the 2012 World Economic Forum in Davos, Switzerland, where talk was all about Big Data. In their report Big Data, Big Impact, the Forum made the case that data is becoming a huge economic asset. Technology research company IDC estimates the amount of data is increasing at 50% annually and more than doubling every two years. With millions of digital sensors in industrial equipment, electric meters, automobiles, shipping crates and, very soon, in the clothing we wear, the volume of data collected will explode exponentially every year.

A Tata Communications global survey, conducted in summer 2014, suggests that people significantly rely on the Internet  – and it’s likely to increase in the years to come. At the same time, Google has announced their ambitious “Physical Web” project, which promises to connect us – and everything around us – to the Internet seamlessly, while helping data to be transferred without the need for additional apps. If your clothes could ‘talk’ to your washing machine about the precise water temperature to use, or report back to the manufacturer about a defect without the need for you to press any buttons, how would the nature of goods and services not traditionally viewed as ‘high tech’ change?

This is, of course, the promise of Unified Communications and Collaboration (UCC) unfolding before us now, as the Cloud enables a more seamless experience and real-time communication across devices, over the web and around the world. Now we can move more easily between voice and video at the click of a mouse. One click. One touch. Platform agnostic. End point agnostic. All of these are features that stem from current IT transformations which have created new opportunities for connecting and collaborating – on our own terms.

Clearly, rumours of the demise of IT are greatly exaggerated. In a article, Future Gazing: The Future of IT in 2020, Premium Content Editor Bill Goodwin states that the convergence of mobility, Big Data, the Cloud, collaboration tools, and the Internet of Things will bring about huge changes in business and IT. “The innovation cycle will get faster. For a lot of the techniques that people have used to slow innovation down, the brakes will come off”, says Alastair Behenna, Principal Analyst serving CIOs at Forrester Research. “We will have an explosion of creativity”.

We couldn’t agree more. From our vantage point, it’s clear that the world is on the verge of major advances across many different fields – from communications and education to medicine, manufacturing and more. Far from being irrelevant, IT will become increasingly important in the years to come as smart devices become ubiquitous. Similarly, people working in IT are likely to become valued more – not just for their technical know-how but also for their strategic thinking.

You could say, in fact, that CIOs are becoming ‘Chief Innovation Officers’, as IT – instead of fading away – is becoming a powerful agent for change.

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