Oracle had an Executive Briefing in Toronto and Forbes magazine publisher Rich Karlgaard gave a splendid summary of the Cheap Revolution (too bad Rich as publisher has only seen fit to editorialize this concept and not do a major Forbes special report on the Cheap Revolution and what it means to businesses world wide). Rich argued that the Cheap Revolution is at the root of a number of economic and social phenomena including a continually spooked stock market, jobless recovery in the industrial countries , and the outsourcing pall overhanging the North American IT job market.
Basically the Cheap Revolution is about economic inevitability – if you sponsor free trade as assiduously as industrialized economies have done – you have to accept the consequences. And the consequence is that there are huge pools of well educated talent in India, China, SouthEast Asia, Eastern Europe and other parts of the world who through the Backside of Moores Law can now afford the computers and Internet connections to market their functionally competitive and lowest cost services into industrialized markets. Think call centers and radiological interpretation in India, programming shops in Eastern Europe, and state of the art engineering expertise in China and Southeast Asia. Just goto Elance.com or Rentacoder.com and get a bid on your creative project and prepare to be astonished at how low in price and generally high in quality the work will be.
Second, corporations worldwide are literally moving their businesses to where labor costs are cheapest. Work is migrating to the lowest paypoint. A key enabler of this migration is the fact that IT and computing has made the process of innovation, design, creation, and building ever more cheap and faster such that rip and replace – rip that ball bearing plant out of Ohio and literally re-place it in Shanghai China – is not only feasible but is being done. Third, IT systems and a Worldwide Always Up Internet provides the backbone for communication, command and control – such that it is possible to virtualize any or all parts of an organization and effectively manage it for just about any company anywhere in the world. So now until wages and salaries plus environmental cost provisions reach near parity throughout the world, multinational corporations will be engaged in more effective “foreign aid” in the next 5-10 years than 50 years of prior governmental programs. Work and wealth will be going from developed to the “undeveloped” world.
Finally, lets return again to point 2 – that computing has made the process of innovation. engineering and design implementation in just about every field of science, engineering and business faster, cheaper and more reliable than ever before (some IT project managers might want to argue this point – but that is an issue for change management). This means products can become commodities faster than ever before – especially given the ability to set up a virtual greensite plant wherever the cost savings and overall ROI are greatest/fastest/most secure. Today pricing well down the learning curve means commodity, low margin prices within a year or two for most new products if not sooner.
“IT Does Not Matter”
Nicholas Carrs famous Harvard Business Review article takes a new pallor given the above arguments. IT technology certainly does appear to matter as it is becoming the agent of global change and economic equalizing among countries. Even though Nicholas Carr is partly right – there are some historically huge segments of the IT industry like desktop PCs, Office Suites, basic server machines and many others that have become commodity markets; he does not give credit to the very labile nature of computing. Carr fails to describe how relatively easy it is for software to change the basic functionality or “demeanour” of a system. And while Open Source is reducing prices and costs in major software segments; there is a whole world of embedded smarts percolating with market changing innovation. See for example how IT technology is transforming the camera and video businesses, mobile communications, and teaching/training/learning among a range of large sectors. In essence, IT technology does matter and computing will be a profound transforming agent in society for as long as Progress is Our Most Important Product.