Overtaking Moore’s Law

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For the past 50 years, Moore’s Law has been one of the key barometers of technology development around the world. However, its status is fast diminishing as other factors are set to dominate changes in the IT landscape in the years to come.

Moore’s Law is not actually a law at all. It could be better described as a market forecast. Back in 1965, Gordon Moore predicted that the compactness and power of technology’s underlying computer chips would double every one to two years. Since then, Moore’s Law has been used to predict the significant changes in the industry from mainframes to minicomputers, then to laptops, handheld devices, and now to the Internet of Things. For five decades, Moore’s Law has been the regular heartbeat of change in the IT industry driving further development and miniaturisation.

However, the problem with Moore’s Law is that it can focus too much attention on the underlying technology and completely miss more significant changes that are being realised through increased business productivity, innovation and through the increasing connectedness of our society. It is no longer as important that technology is getting smaller, but that is has entered every conceivable part of our lives.

Moore’s Law might very well live on for another fifty years, but there is a very good chance that hardly anyone will notice. Today’s focus on the digital enterprise provides a significant opportunity to re-evaluate this traditional thinking and to break free from the simplistic constraints of cost containment.

Moore’s Law has tended to focus too much attention on cost-cutting and commodity IT, rather than technology as a disrupter and agent for change. In many organisations, IT managers have become hamstrung by Moore’s Law based expectations about cost containment, rather than value creation driven by innovation and speed to market. Bound by legacy systems, restrictive procurement and shrinking budgets, some IT managers have turned into reluctant gatekeepers tasked with limiting the growing array of devices, and the technological exuberance of hopeful staff. But the gatekeeper role is a no-win position. It places IT as an arbitrator, charged with holding back the use of technology rather than encouraging its use.

Kevin Noonan, Ovum

In many organisations, IT managers have become hamstrung by Moore’s Law based expectations about cost containment, rather than value creation driven by innovation and speed to market. Kevin Noonan, Ovum

Fifty years ago, Gordon Moore’s now famous speech presented an optimistic perspective on the future of IT development. In those early days, IT managers entered the corporate workplace as advocates of opportunity and change, at a time when organisations were largely rules-based and deterministic. Today, IT managers must take care not to become typecast as the enforcers of rules and determinism in a workplace that is fast becoming populated by technology advocates.

The cost of IT is no longer just about internal hardware, software and implementation costs. Instead, it needs to focus more on the savings opportunities that can be realised by leveraging the power of many people using many devices. The IT cost/benefit equation can better be described as a triple bottom line involving a combination of internal IT costs, the cost to the organisation, and the cost to the broader community. If we consider IT costs from this perspective, the traditional accounting view of internal cost/benefit analysis needs to be supplemented with a broader look at the subtle art of cost shifting.

Consider the following example where an old expense claiming system might be up for renewal. If viewed through a traditional lens, the cost/benefit analysis would be pretty simple. It would consist of software costs (which go up over time) and internal hardware (which goes down over time due largely to the effect of Moore’s Law).

However, the value equation changes significantly when the potential for cost shifting in the digital enterprise is taken into consideration. Relatively inexpensive mobile apps are already available to capture invoice information at source, on each staff member’s mobile device. This enables processing costs to be shifted to the staff member, leaving a significant reduction in the work to be performed centrally. In this particular example of cost shifting, staff members also come out as winners through improved services and less bureaucracy.

The same logic can be applied to shadow IT, which is seen as problematic by traditional management theory. However, if seen through a lens of digital cost-shifting, shadow IT is about moving costs to a part of the organisation closer to the point of value creation. Moore’s Law is just one small part of a much larger discussion.

Kevin Noonan (kevin.noonan@ovum.com) is research director, public sector, at Ovum

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