Investment in IT Brings Market Changes

According to the Harvard Business Review, “the link between technology and competition has become so much stronger since the 1990’s”.

Our industry in the mid 1990’s began experiencing unprecedented growth. This rapid expansion has had a ripple effect not only in the realm of internet technology but across the manufacturing and services landscape of the global economy. Since that time the per worker expenditure of companies on IT has gone up by $4,500. That level of spending has fueled a technological revolution within commerce that has not been seen since the beginning of the industrial age.

BUSINESS TECHNOLOGY

As I look at the broad spectrum of commerce today there are a few things that strike me.

  • Competition – The heavy investment of companies in IT has inadvertently been the driving force in a serious uptick in the level and ferocity of competition between companies. It seems to me that much of the attitude of commerce has changed from “there’s enough of the pie to go around” to “it’s winner take all, and I’m going to win.” In truth, there are big wins to be had, but because they are tech driven they are generally short-lived. A company has to stay on top of IT and invest in it in order to get ahead and to stay ahead.
  • Concentration – With this new attitude firmly ensconced in modern commerce, the level of competition has driven out many of the smaller players in the marketplace. This has led to today’s scenario where the sales – and thus the power – are concentrated in the hands of a few companies.
  • Performance Spread – The combination of fierce competition and concentration of power has led to a vast chasm or a “performance spread” between the big boys in any particular niche and those who are their competitors. I have watched as this heavy investment in IT has made the leaders more powerful and the losers in any particular category more desperate.
  • Turbulence – Fortunately for our economy, there is a new information technology idea being born every day. Some of these are duds, but others have within them the promise to upset the apple cart. This is what we are calling “turbulence”. Turbulence happens when the leaders in a particular sector of the economy jostle for top position and repetitively replace each other. This is unsettling for the markets, but is generally positive for the consumer. Think about how quickly the big social media players change. In a few short years we went from MySpace to Facebook. After that other players like Twitter and Instagram got into the game and began to draw market share. The game of top dog is always at play.

So, if investment in information technology is driving competition in the global economy, how is this happening? As I look at this issue I have come to several conclusions:

  • Information technology implementation is no longer only for the tech company. – More and more we are seeing the integration of IT into the businesses of Main Street. Whether it is internet marketing, sales, or service, the small to mid-sized business has come to grips with the fact that they can save money and be more competitive by investing in IT.
  • Investment in IT has changed the model of business. – You remember forty years ago? No one wondered what a company half a world away was doing. IT has changed all of that. It has shrunk the world and bumped-up the level of global competition. This has necessitated a replacement of historic operating models for business and has forced an implementation of models that are heavily reliant on IT.
  • Investment in IT has moved entrepreneurial enterprise and innovation into the fast lane. – I remember when the entrepreneur would work themselves nearly to death trying to get just a few customers. They would put in the hours and put thousands of miles on their vehicle. In the warp-speed of the IT business age this is no longer necessary. Any entrepreneur with an idea and a pocket full of money can hire IT professionals to “buy” customers for them. This cost of customer acquisition is directly built into the new model. The speed at which one can get a product to market today is lightning fast in comparison to what it was just a few years ago.
  • Investment in IT has driven the pace of growth and scale. – Not only has the IT boom affected the startup, but today’s mid-sized company that is looking for growth and scale is now looking to investment in IT as a growth strategy – and it is working.

As I have worked within the IT industry over the past number of years, I have seen that companies that wisely and effectively invest in information technology can move ahead more quickly than can their competitors. Enterprise software and network technology appropriately applied moves both large and small companies closer to and more quickly toward their goals.

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