If we shift the context from the developed markets to the emerging markets, then much of what Nicholas Carr says is not very relevant. This is because IT adoption in these markets has barely scratched the surface. IT is not being used in many of the enterprises and industries as infrastructure, it is a luxury for the most part. In a country like India, the installed base of computers is only about 8 million 1 computer for every 125 people. My estimate is that of the 3 million small and medium enterprises which employ over 30 million people (an average of about 10 each), there is only 1 computer for every 10 people. What can these emerging markets and enterprises learn from what Nicholas Carr has to say?
The first learning is that IT needs to be treated as infrastructure by these emerging enterprises. Without technology, the situation is akin to the wars the US fought in Afghanistan and Iraq the enterprises have little chance of survival over the long-term when competition invades their territories. IT in the emerging markets is a disruptive innovation that can help redefine industries. IT must become part of the DNA. This needs management vision which looks at connected computers as not just machines to be given to typists and accountants, but a productivity tool that needs to be given to every employee.
The second learning is that business processes need to be re-thought and re-engineered around IT. The question to ask is: how can my business be done differently if everyone in my organization had a computer connected to the Internet on their desktops? This is where the efficiency and productivity gains will come. In these enterprises, there is plenty of scope for IT-driven optimisations. It is possible that, taking Carrs views to their logical end, that every enterprise would have IT as part of its fabric. This is good because then the entire industry becomes more competitive and better placed. It moves from a low-equilibrium of non-consumption of IT to another, better equilibrium, as described by Carr.
The third learning is that enterprises must focus on the affordability aspect of IT. Just because IT has become cheaper in the developed markets does not mean it is affordable in the emerging markets. The basic desktop software (MS Windows and MS Software) can cost almost as much as the annual per capita GDP. The solution is not non-consumption or piracy, but seeking out affordable solutions which make IT a utility. This is in fact where the next set of opportunities for technology companies lie.
The fourth learning is to see what opportunities the commoditisation of IT in the developed markets opens up for organisations in the emerging companies. Indias software and BPO (business processing companies) have so far done well to capitalise on this trend. As the US and European companies seek to cut costs, they are looking to outsource non-core processes to lower cost markets. This is where the emerging markets have an opportunity driven by the telecom revolution. More such opportunities are like to come their way in the future.
So, as IT becomes less a source of competitive advantage and more a source of competitive equivalence in the developed markets, enterprises in the emerging markets need to think about how IT can help them catch-up and even leapfrog. Even among these enterprises, there will be winners (the innovators and early adopters) and losers (the laggards).
Tomorrow: Affordable Tech Utilities
TECH TALK IT’s Future+T