PURPOSE

This report was created to help businesses innovate.  Over the next ten years information technology developments will change, profoundly, the way business is conducted.  Early planning, and response, to these developments is critical to sustained business performance.  It is intended for people in all types of roles—CEOs, innovation managers, strategists, financial officers, product managers—to equip them with knowledge, creativity and foresight as they try to plan for the future and turn this change into opportunity.  It is also intended for government executives and policy makers, and to be used by managers in technology companies and R & D organisations with responsibilities for developing new market opportunities.

In order to provide as much value as possible in this context, the Future of Business:

• Focuses squarely on business outcomes, with the technological details playing a supporting role. 
• Is written in plain English, with a minimum of technical jargon, to make it as accessible as possible. 
• Provides a single, comprehensive framework to cut through the millions of pages written on IT & business that no manager has time to assimilate, and to elevate the manager past ad hoc learning via news items, conversations and occasional seminars.
• Spans all types of business processes, with examples across all types of industries, to introduce as many different ideas and innovations as possible.
• Takes a far-reaching view to equip the business person to think beyond the developments already well known to competitors.  

USING THIS REPORT

Part I

Part I sets down the key information technology trends, their relative importance and their rate of progress. Business readers may choose to skip directly to Part II, but wherever time permits they are encouraged to review this section, as the underlying technology trends provide a foundation for adapting ideas and plans when breakthroughs occur, or when developments take an unexpected turn. Part I has been written as concisely as possible with the business reader in mind.

Part II

Part II is devoted exclusively to forecasts about industry, organisations and work.  From the point of view of the business innovator, this is the most valuable material: each prediction offers a point that can be communicated and debated, and which can trigger new ideas about opportunities and emerging challenges.  Managers are encouraged to discuss and workshop predictions with colleagues in the context of the products, services, markets, competitors and goals that apply to their business.  The content is organised into sections grouped under business themes. Rather than conforming to a rigid taxonomy, the sections have been selected to communicate the most important changes that lie ahead.  The sections may be read consecutively, or selectively to match current business priorities.

SCOPE

Forecast horizon

The scope of this report is the next ten years.  The goal is to make forecasts based on real information, even if the information is occasionally very thin, and to avoid stepping into the realm of pure speculation. Ten years is a reasonable limit to forecasts based on known developments in computer science, business and society.  Equally, short term forecasts dealing in months rather than years are excluded because they fall into the realm of conventional wisdom, and are of little value to an audience seeking to innovate and build lasting competitive advantage. Furthermore, the market for short term analysis is already well served by stock analysts and consultants.

A small number of predictions beyond the ten year horizon have been included where they clarify or emphasise a particularly important trend. 

Geographic focus

This edition of the Future of Business is focused on three countries—the United States, United Kingdom and Australia—which share many common characteristics and contain most of the audience for S2 Intelligence research conducted between 2002 and 2007. Except where otherwise specified, all trends and predictions apply to the future of business in these countries.  Readers with a focus on other geographies are encouraged to re-interpret or adjust predictions based on their knowledge of the local context.

Organisational focus

Although a variety of predictions are included that deal with small and medium sized businesses, the organisational focus of this report is on large organisations (enterprises employing more than 200 people).  Except where otherwise specified, all of the trends and predictions apply to the future of business in large organisations. 

PREDICTIONS

Predictions are powerful because they force the researcher to distil complex ideas into best guesses, based on what is known now, and they present the lay person with a single crystallised picture of a likely future. 

Each prediction communicates, in a single concise statement, expectations about a new development, the rate of change, and in most cases a specific industrial context in which it will be important.   When several related predictions are presented in series, they also communicate a rich picture of how developments will expand and co-evolve across different businesses and industrial contexts.

The predictions draw on evidence available today in businesses, universities and research organisations.   Speculative technologies—those not already the subject of an active research or development program somewhere—have been excluded.   

For clarity and simplicity, each prediction is written as if a factual statement about the future.  Regardless of the presentation style, each prediction is a best estimation, on the evidence available, of future outcomes.  Many assumptions—about the pace of technology development, commercial value, social acceptance and rate of deployment—lie behind each, and the real outcomes will always vary in scale, detail and timing.  The predictions will be updated annually based on the latest developments and thinking.

BUSINESS THEMES

A significant difference in this report is its organisation of predictions around themes that are common to all businesses, with industry-specific examples scattered throughout each theme.  The usual method is to organise everything by industry—publishing, insurance, banking and so on—but this is too restrictive because it tends to automatically narrow the focus to products and services that characterise each industry, and discourages readers from exploring many different contexts.  Such designs are not ideal for fostering innovation when most of the best business innovations (the ones others are not already thinking about) come from crossing traditional boundaries and borrowing novel ideas from elsewhere. The business themes approach also allows important ground to be covered in ‘back office’ themes such as asset management and staff retention, topics that are usually ignored in industry-centric reports. 

TECHNOLOGY THEMES

To build up a logical, step by step picture of the technology trends, I have begun Part I by detailing more fundamental developments in digital information, computer hardware, software and networks, before moving on to ‘composite’ developments that have elements of all these things.  Of course, information technology is never really that tidy.  Network improvements, for example, are also driven by improvements in chip production and smarter compression software, and the boundary between hardware and software is fuzzier than it first appears (firmware, after all, is only software encoded in silicon).  In keeping with the business focus of this report, therefore, some compromise has been made on categorisation in order to keep things simple and readable.

BROAD ASSUMPTIONS

The following assumptions, distilled from more than a decade of research into the adoption of information technologies by businesses, have been applied in preparing this report. 

• Organisational and technological change is coevolutionary.  Organisations tend to adopt technologies and adapt business processes incrementally, in a mutually interdependent fashion.
• Adoption of new technologies is driven from the bottom up at least as much as it is driven from the top down.  Very often, new technologies arrive in organisations in an unplanned fashion, brought in by individual departments or workers. Similarly, top down introduction is no guarantee of adoption and frequently fails when front line workers resist change.
• Social factors such as trust, history, politics and power are inevitably critical in determining when, where and how quickly a technology is adopted. Technological availability and cost are often incidental compared to these. 
• Regardless of rapid advances in information technology, there are many biological factors that remain constant and greatly influence adoption, including the need for a regular, minimum amount of sleep (a limit on 24×7 work practices), limits to how much information we can assimilate and act on, limits to the number of tasks we can juggle simultaneously, and the need to interact socially with others.
• Demographic shifts will play an important role in determining adoption.  As more people enter the workforce that have interacted with computers their entire lives, expectations will change accordingly.
• Global warming and environmental sustainability issues are real, growing and significant.  They will influence all economies and all types of business activity.  
• Information technologies that remove complexity, make life simpler or eliminate business processes are always highly valued. Conversely, added complexity acts as a strong inhibitor to adoption.  Successful new interface technologies, for example, will always simplify human-computer interaction and be easy to learn.
• Technological inertia—the difficulty of abandoning technological solutions where large investments have already been made financially, politically and organisationally—is a strong inhibitor of adoption of new technologies.
• Adoption of new technologies tends to follow a progression, with early adoption in contexts where perceived value and available budgets are highest. Defense and healthcare, therefore, often act as leading indicators for other sectors.  A similar progression occurs across departments within organisations. Adoption broadens as technologies fall in price and become proven known quantities.
• Wherever information technologies are associated with exponential growth we can expect dramatic implications for business, and wherever significant new pools of digital information are created we can expect new business opportunities to follow. 

SOURCES