February 12, 2015

Third Wave of IT – what can you learn from forward-thinkers?

In my previous blog post, I discussed Michael Porter's idea of the “Third Wave of IT” in the Harvard Business Review. This concept proposes that the third wave of IT puts service at the center of everything.

Now, I want to talk about more details, especially how this affects your business. The reality is that whether you like it or not, your business is evolving toward software and service-centric models.

This is because if your business isn’t directly linked to Third Wave of  IT, or Internet of Things, your peers in business and customer transactions surely are.

Here are a couple of examples from different industries

  • Next-generation healthcare businesses, such as FitBit, Jawbone
  • Next-generation transportation businesses, such as Tesla, Über, Google
  • Next-generation education businesses such as Kahn Academy

To be ahead of change, one must bear in mind that:

  • Change in customer behaviour and competition is inevitable
  • The third wave of IT needs new ways to predict future business models and new capabilities in the IT department.
  • You either be in top of the change by changing your business accordingly, or try to cope with change with “laissez-faire” -strategy, ignoring the change and hope for the best.

It's all about software, stupid

During the last decades, IT departments have become experts at managing data center infrastructure and implementing ERP systems. “In the next decade, almost every industry will be re-defined by software – and much of that software being surfaced on mobile devices – on smartphones and tablets for sure, but also in cars, aircraft engines, running shoes and human beings!" wrote Jeremy Burton, President and Products & Marketing EMC.

I could not agree more.

Package softwares, which IT departments are used to buy, has been mainly seen in past a privilege for multinational software companies (such as IBM, SAP or Oracle). With the wave (or tsunami) of “software-as-a-service”, or “SaaS” based services from wide range of companies (TESLA, NIKE, Über, Google…), the need for rethinking the role of IT department as growth enabler is one task every company should now take on the decision making process.

Forward-thinkers in companies will recognize the need for fundamental change. For now, the rest will hate the idea of agile management elements when needed.

Anssi Pakkanen is the Director working in Telco, Media & Energy at Tieto. You can follow him on Twitter and find him on LinkedIn.

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