If annual global economic output is $73.8 trillion – as estimated for 2015 by the WorldBank – then Oracle CEO Mark Hurd’s statement at a briefing in London last week is about right.
He said that IT is not so big – it is a couple of trillion dollars with half of that in consumer that has ‘grown like crazy over the last dozen years’ and the other half in enterprise IT.
Growth in Enterprise IT on the other hand has low CAGR, especially over the last couple of years when it has been ‘flatish,’ says Mr Hurd. Read the report on Mark Hurd’s views on when cloud spending will peak and whether industry consolidation will continue.
The numbers are important because it points to where the next wave of investment on the supply side is going. But on one level whether the numbers are are truly accurate is almost irrelevant.
What really matters is whether IT is important. And how important will it be to business going forward.
Spending $1trillion for businesses to keep records, issue invoices, and generally reduce general admin costs by streamlining and digitising processes is great as it drives efficiency, helps productivity and provides the tools to accurately report data.
The slightly less than $1trillion in spend cited by Mr Hurd sounds about right. Other data says companies tend to spend between 2% and 4% of revenue on IT – so we’re probably in the right ball park.
The question going forward is whether the Enterprise IT industry spend will become bigger as a percentage of revenue generated and grow in terms of global output. To do so it must become become strategically important.
The message from inside the tent on whether this will happen is a resounding yes.
Digital transformation is driving the agenda for CEOs around the world. Digital disruption of markets is forcing established industries to change their strategies. In the commercial space digital disruption is the threats posed by either large scale ‘born on the internet’ disruptions or shoals of nimble piranha-like agile entrants nibbling away at markets and the existing customer base by offering web type services, better value and personalised customer experience.
Data is key. This is a data revolution.
As Pure Storage EMEA CTO Alex McMullan told me, it is all about fidelity – getting at the truth.
Where is this truth coming from: Structured data being interrogated and analysed as never before. IOT data being generated at unprecedented scale. Unstructured data (mostly consumer mobile ) being shared instantaneously across more and more platforms.
At the moment the buzz is machine to machine learning and Artificial Intelligence based big data analytics. This will drive business intelligence.
So can IT become strategically important to business?
The short answer is yes.
But one of the key challenges is that inside the enterprise IT practitioners must realise that being the curators of the infrastructure on which data resides is a cul de sac. It is yesterday’s game – unless you work for Google, Amazon, Microsoft, Oracle, Facebook, Apple or Alibaba.
It is by keeping ahead of the curve on the technology developments to provide deeper understanding of the value of the data that resides inside the organisation that will allow IT to become strategic.
For the IT supply side that means cloud. Selling boxes for compute, network, and storage of data and the software to run them with no understanding of what the data is and why is it important to the business will see the IT industry facing the same issues faced by traditional telecoms whose customers are wont to say “thanks for keeping it ‘fat and flat’ but we’re paying too much for it.”
IT has no strategic future by providing massive over capacity and dumb pipes to push data from here to there.
IT must get into the data or face being pushed out of the game.