Sunday, September 27, 2020

Is IT Productivity Slowing?

Industry disruption now has a familiar pattern. It starts with a cheaper, simpler version of a familiar product, which has some structural advantage. The product improves cumulatively, until the traditional industry can no longer compete. 


This illustration from Consensys shows value added in the financial services sector, compared to some more “physical” industry verticals. The broader point is simply that, by some accounts, either cloud computing or artificial intelligence are the forces leading productivity change.  


source: Consensys 


Technology optimists and pessimists tend to wage an unending war about the value of technology improvements. Some believe we are reaching an era of limits, such as the end of Moore’s Law, while others believe we will simply find other ways to keep pushing ahead. 


Optimists might counter that productivity now is shaped by software or cloud computing, not hardware.


This visualization by Deloitte shows the percentage of top 500 technology firms in Deloitte’s Fast 500 index. About 78 percent of the firms are in either the software or “digital” categories. About 10 percent of firms are in the hardware, devices or networking categories. 

source: Deloitte 


Nor is that an especially new trend. In consumer computing markets, new hardware has not propelled innovation advances as much as new cloud-based software and applications, for example. A study by Logic Monitor found that 74 percent of information technology executives in the United States, Canada, United Kingdom, Australia and New Zealand expect 95 percent of all software to be run in the cloud within five years. 


source: Logic Monitor 


The point is that pessimists might tend to see hardware limitations as negatively affecting rates of productivity growth. Those who see software, artificial intelligence or cloud as the drivers might tend to be optimists.


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