The fundamental driver across the technology landscape is digitisation once things move from atoms to bits, or analog to digital, it becomes possible to do a wide array of transformations which previously were not possible. For example, take music. For a long time, as the industry has shifted to digital content, it has become possible to not only time-shift consumption via customised playlists on devices like Apples iPod, but also to distribute it via the Internet for nearly zero-cost, fundamentally undermining the business model of the industry. Something similar is happening in telecom with voice-over-IP. Traditional telcos are realising that the ability to digitise voice and transmit it not over proprietary networks but over the Internet threatens their core business and customer relationship.
The digitisation of information and business processes means that countries like India can use their low-cost advantage to offer outsourced services to global organisations. The process that began with the availability of the personal computer a quarter-century ago is now cutting across the value chain, creating an end-to-end integrated digital flow. From our homes to enterprises, digitisation is the starting point for many disruptive innovations as part of creative destruction, driving significant changes across industries, bringing not just change but also opportunity in a world thats becoming smaller and smaller.
Thomas Friedman wrote recently in the New York Times about Globalisation 3.0:
The first era [of globalization], from the late 1800’s to World War I, was driven by falling transportation costs, thanks to the steamship and the railroad. That was Globalization 1.0, and it shrank the world from a size large to a size medium. The second big era, Globalization 2.0, lasted from the 1980’s to 2000, was based on falling telecom costs and the PC, and shrank the world from a size medium to a size small. Now we’ve entered Globalization 3.0, and it is shrinking the world from size small to a size tiny. That’s what this outsourcing of white-collar jobs is telling us and it is going to require some wrenching adjustments for workers and political systems.
Globalization 3.0 was produced by three forces: First is the massive installation of undersea fiber-optic cable and bandwidth (thanks to the dot-com bubble) that have made it possible to globally transmit and store huge amounts of data for almost nothing. Second is the diffusion of PC’s around the world. And third (what I missed most) is the convergence of a variety of software applications from e-mail, to Google, to Microsoft Office, to specially designed outsourcing programs that, when combined with all those PC’s and bandwidth, made it possible to create global “work-flow platforms.
Tomorrow: Digital Convergence
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