Businesses are on the cusp of a new IT revolution that will open a path to prosperity for some and disaster for others, says technology thought leader Phil Simon. (See our interview with Simon here.) In the first of our 3-part series of extracts from his book "The Next Wave of Technologies: Opportunities in Chaos" (Wiley, 2010), Simon profiles the emerging enterprise systems that will shape finance and management in the new decade.
The worlds of technology and business are colliding faster and more intensely than ever. Organizations today are facing increasing pressures with respect to innovation, operational excellence, and financial performance while concurrently keeping costs at an absolute minimum. Relatively recent technologies provide enormous possibilities for organizations to confront everyday and long-term business challenges. The need for organizations to understand how to use these new technologies—and then actually utilize them effectively—has never been greater.
At best, organizations slow to embrace these opportunities often cost themselves money, via reduced revenue, profits, and market share or via higher expenses. First-mover advantage has arguably never been more pronounced, as organizations such as Google, Twitter, and Facebook can go from anonymous to ubiquitous almost overnight. At worst, technological laggards may no longer be around to eventually get with the program. Along these lines, Jim Collins's latest book, How the Mighty Fall: And Why Some Companies Never Give In, addresses the five stages of organizational decline. This prompts the question: What, if anything, can information technology (IT) do to stop an organization's demise?
Enterprise 2.0: What's in a Name, Anyway?
Examples of 1.0 technologies included Enterprise Resource Planning (ERP) systems, relational databases such as Oracle and SQL Server, client-server applications, email (arguably the era's killer app), and corporate web sites and intranets. In short, Enterprise 1.0 represented the first technological wave that allowed organizations to do the following:
- Increase the level of enterprise integration.
- Allow employees to access information away from traditional mainframes.
- Begin to knock down organizations' information silos.
- Embrace email and the Internet.
- Dabble with different communication and collaboration tools.
Conversely, Enterprise 2.0 represents the next wave of technologies. In this book, I define Enterprise 2.0 as organizations' efforts to deploy and utilize emerging technologies, systems, applications, platforms, social media, and software development methodologies. Examples of these technologies include: cloud computing, social networking, business intelligence (BI), software as a service (SaaS), enterprise search and retrieval (ESR), and open source (OS) applications.
In other words, for the purposes of this book, Enterprise 2.0 means going beyond the basics. It assumes that organizations can already accurately run financial reports, pay employees, communicate with customers and employees, track inventory, and the like. (At a high level, this was the entire point of Enterprise 1.0.) Note, however, that there is almost always room for improvement, as many organizations may not be performing these activities in an optimal manner.
Enterprise 2.0 consists of three general and intertwined principles:
- Managing systems and data in a better, more integrated fashion.
- Interpreting data to allow for higher-level analytics.
- Enhancing communication among organizations, vendors, suppliers, employees, and customers.
Enterprise 2.0 versus Web 2.0
Enterprise 2.0 should not be confused with Web 2.0. The latter presently consists largely of social networking sites such as Twitter and Facebook, wikis, and mashups that people use for entertainment or personal reasons. Families, friends, and strangers can communicate online and share information outside of organizational walls. For their part, Enterprise 2.0 technologies exist inside organizations— though this is a far cry from being closed off from the rest of the world. The primary objective of Enterprise 2.0 technologies is not to connect family, friends, or strangers. Rather, these technologies aim to improve productivity and enhance communication and collaboration among vendors, suppliers, customers, and employees. As such, emerging technologies need to provide greater security than Web 2.0 technologies. What's more, they should enforce business rules, provide for audit capability, and improve end users' access to key organizational information.
I use the term Enterprise 2.0 a bit sheepishly and with two caveats. First, I am very aware that the term smacks of consultant-speak. I am not a fan of jargon and favor a constitutional amendment outlawing the abuse of words such as "synergy" and phrases like "thinking outside the box." However, it's simply easier for this book to refer to these concepts by one umbrella term. Second, I am very well aware that many of these emergent technologies are in reality hardly new. Examples include SaaS, BI, and ESR. Think of them as children. While many may not have been born recently, they are only now hitting puberty. In other words, as of mid-2009, most organizations had yet to implement most of these technologies—much less utilize them effectively. This is certainly not to imply that every organization needs to use every technology. In some cases, individual systems or applications may not make sense for different companies or industries. Still, foolish is the organization that believes that social networking or BI would offer no benefits.
Displacing the Displacers
All organizations are at risk of displacement at the hands of technology.
Creative destruction seemed to be all the rage during the dot-com boom of the 1990s. While that era seems quaint today, the few remaining and successful dot-coms are facing increasing pressure from nimble and hungry start-ups.
Consider LinkedIn, the six-year-old social networking site geared toward professionals, which has been making significant inroads against traditional job boards. In a recent BusinessWeek article, Matthew Boyle writes that Monster.com CEO Sal Iannuzzi recently acknowledged as much, saying, "We are not done," hinting that acquisitions could be forthcoming. But even Monster's architects see the writing on the wall. Bill Warren, the founder of an early job board that morphed into Monster, is now executive director of the Direct Employers Association, a consortium of corporate employers. He's partnering with the owner of the ".jobs" domain and will launch job sites under that domain later this year. Says Warren: The days of the big, expensive job boards are over.
It seems like that just yesterday, online job boards replaced newspapers' classified ads. To paraphrase Jim Collins, it doesn't take time for the mighty to fall.
The LinkedIn example underscores two main points:
- Every technology is potentially ephemeral. Eventually something may very well replace LinkedIn and social networking sites.
- No organization can rest on its laurels. New technologies can be used quickly to displace industry leaders.
Reprinted with permission of John Wiley & Sons, Inc. Phil Simon, The Next Wave of Technologies: Opportunities in Chaos, 2010.
Click here to read Chapter 1 of "The Next Wave of Technologies."
Phil Simon's latest book is "The New Small: How a New Breed of Small Businesses is Harnessing the Power of Emerging Technologies" (Motion Publishing, 2010). More information here.