What Has IT Ever Done for Us?

Let me start with a disclaimer. I’m no economist. That said – these two graphs feel self explanatory…

This graph shows the trend in output (think GDP) per worker since 1990. It is sourced from the Office for National Statistics and can be found here https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/labourproductivity/timeseries/a4ym/prdy

The graph clearly shows the impact of the pandemic. You can also see the impact of the 2009 financial crisis (sub prime/Northern Rock/RBS etc). Beyond those bumps you can see YoY growth but that growth is declining.

Here’s another.

This graph – also from the ONS – shows quarterly change on output (GDP) per hour worked. You can clearly see that the rate of growth is declining. Before 2008 output per hour worked regularly increased by 2.5% or more in a quarter. Since 2008 (apart from a couple of bounces through Covid) we’ve not seen that.

That’s depressing.

Why so?

1. Because this output is important. It really speaks to take home pay and the quality of infrastructure and services that UK taxpayers enjoy.
2. Because we’ve come a very long way since 1990. By way of quick reminder – in 1990 businesses were still using telex and fax. Industrial automation had only just begun. Mobile phones were a novelty – and only made expensive telephone calls - nobody was using an “app”. The internet was still in its infancy and “the cloud” didn’t exist. Meetings were always physical – never virtual. Compare that with where we are today, All that change. All that investment. All that “progress”? Am I the only person who hoped we would have seen more benefit – evidence that IT increased the rate of growth in output per worker. I’ve seen no evidence to support that claim.

It might be that adoption of IT has been accelerating growth in output per worker – but that other factors have been bearing down on the numbers. I’d suggest that we should stop kidding ourselves. Much safer to assume that our use of IT hasn’t had the impact on worker productivity that we were looking for. So let’s try to understand why – and then do better.

My Reflections?

The IT market is dominated by vendors. When I joined the industry, it was IBM, DEC, HP. Now it is Microsoft, Google and Amazon. They all behave the same way:

1. Talk “open” but then do everything they can to lock you into their platform – to diminish choice and strengthen their negotiating position
2. Justify their pricing on the basis that it is the functionality of their product that delivers the business benefit, the ROI, the productivity improvement that the customer is looking for – not the deployed, adopted, well supported solution.
3. Invite a channel of “Partners” to deliver services around their product – implementation, training, and support. This has lots of advantages for the vendor – the most significant of which are that it creates the illusion of price competition; gives the customer someone else – someone smaller to try to squeeze in any negotiation’ and; delegates credit risk,

No Vendor product, in and of itself, delivers an improvement in worker output. It is the Vendor product AND the implementation services/training/support delivered by the Partner that come together to create a deployed/adopted solution. It is the solution that delivers the business benefit. However, as a result of a), b) and c) above customers often squeeze the budget they plan to spend on the implementation/training/support. Worse still – having been squeezed – Partners often under deliver on the implementation/training/support they are responsible for. This creates a doom loop. The project fails to deliver – so next time the customer comes to budget for a new IT project – they shave the spend on services, training and support – because they didn’t see the value last time around.

The net of all of this is that, in my view, not enough IT projects deliver enough of the benefit that they should – because they go long, over budget and then fail to secure the required user adoption. As a result, the solution isn’t used in the way that was anticipated/hoped – so resources don’t get redeployed onto other higher value tasks. It is this that has diminished the impact that IT has had on worker output.

My Recommendations?

Vendors.

Vendors spend lots of money on customer research. They know that customers don’t blame failed projects or poor ROI on their product and brand. They get the answer they want to hear by asking the wrong question. They need to take a more holistic view.

That said - I don’t think that Vendors are going to change the way they behave any time soon. Partners and customers need to make their own plan. They need to work together to achieve MORE (greater ROI) by doing LESS (projects).

Customers.

I’d always encourage customers to:

1. prioritise projects more rigorously – stack rank them on an objective assessment of their potential to improve productivity, no other.
2. manage your own people and the scope creep they bring. This creates a surprise last mile that is always the most expensive.
3. properly fund the implementation services that projects require – and place a high value on ongoing training and support. People will leave, Skills do erode.

Partners.

I’d encourage Partners to:

1. prioritise customer satisfaction ahead of vender recognition – the latter is illusory.
2. wean themselves off commission. Commission incentivises behaviour that undermines project success/customer satisfaction. By way of example – the early purchase of licences, under quoting of services and reliance on change control.
3. manage the customer and the scope creep their people bring. The opportunity to extend the project and do more work may look attractive – but is corrosive.

How TSG Can Help

We’re honest, straightforward and focused on:

1. giving great advice – help you prioritise the right projects and execute them successfully
2. delivering fabulous support. We measure NPS assiduously. We consistently score over 80.
3. eliminating any obstacle to your people acquiring the skills they need to get value from your IT spend. We offer a wide range of training FOC.

We’re clear. If you see the ROI – you’ll come back to TSG to do more.