Full Speed Ahead
Transforming Banks for a Digital Future: The Winners, The Losers, and the Strategies to Beat the Odds
Full Speed Ahead
Strong Economy, Low Threat Level
With the economy surging ahead, and the terrorist threat reduced at home and abroad, companies are pulling out all the stops in hopes of recovering any ground they lost over the past year. Central to this is the recognition that a robust global economy in which all nations and regions can participate is the strongest long-term antidote to the forces that create terrorists. All major governments are behind this and there is a new spirit of cooperation between the UN, major governments and corporations to make the rhetoric reality. With everyone wanting to look good, not all of these efforts are well though out or well executed so anti-globalization sentiment continues in many areas, but overall, innovative new government/private sector alliances are proving to be effective.
The US is the clear leader of this effort and is struggling to balance its economic influence with the need to accommodate the growing voices of other regional economic blocs, particularly the emerging Alliance of Islamic States (lead by Saudi Arabia, Pakistan and a newly rehabilitated Iran) and China.
US GDP is expected to grow at a sustainable 2.5% to 3% annually. Global trade is growing at around 6% as more national economies recover and join the new global economic initiatives. Global GDP grows at around 4.5%.
What are the main economic and social consequences?
With over $3 trillion back in the global equities markets and looking for productive investments, there is a moderate economic boom underway, tempered by memories of the tech bubble and a little less irrational than last time. Strong Fed and ECB action is keeping interest rates low and lenders are relaxing credit risks as new areas of economic activity open up and are shown to generate worthwhile returns. The Dow is at 12,500 and the Nasdaq at 3,000. The broad economy is also up.
Global leisure travel has yet to come back strongly (and airlines are reconfiguring their planes for the new business traveler), but regional leisure travel is back and the US economy is giving itself a prolonged party thanks to resurgent consumer confidence, low interest rates and hot new products. Inflation may be on the way back.
Somewhat un-noticed, the governments of the leading economies have implemented additional security controls and information monitoring protocols on their citizens and are negotiating closer security and law enforcement links. So far there have been no challenges and no obvious abuses. Businesses are being encouraged to participate in these efforts and the linkage of the largest governmental and commercial databases is underway.
The Aerospace and Defense industries remain strong as local and regional security remains an issue. Conventional defense industries are beginning to consider how to prosper in a world of cooperation rather than conflict.
Public health systems are major beneficiaries of new investment as governments respond to concerns about future terrorist use of biological or other weapons of mass destruction.
What would be the resulting business behaviors?
Businesses look to expand rapidly along the newly emerging "trade routes" the will define global trade for the next decade. There is a re-evaluation of global commercial capacity and a redirection of investment as new areas open up for raw material development, low cost manufacturing and the development of consumer markets.
Because of the new "climate of global improvement", innovative new consortia arise to respond to these development opportunities.
Businesses in general struggle to identify, hire and retain managers with the right blend of international, NGO and commercial skills.
What impacts will this have on the IT organization?
IT is "in" in a big way, and companies that once saw IT just as a cost to be managed now understand that it is a key business tool, powering their ability to respond in a agile and effective manner to the new landscape of global opportunity.
IT organizations are moving forward on technologies of all kinds as business units are given the green light to grab market share where and while the grabbing is good, although in the new context of sustainable growth.
CIOs are increasingly required to participate in key business strategy conversations and are consequently being forced to restructure their own management teams to align with the new level of business expectation.
In the new scramble to support the business, a lot of IT organizations fail to complete the clean up and reorganization that started in the post Y2K austerity cycle - a failure for which they may pay dearly in the future, but which doesn't seem like such a big deal now. The core platform vendors are in heaven and everything infrastructure is in short supply and/or subject to premium pricing. Whole sectors of the IT supply chain come back from the dead, including some whom probably should have died out.
What will be the smartest IT response?
While the good times roll, there will be a temptation to roll with them and avoid tough restructuring decisions. Nevertheless, this up-cycle portends and even more brutal selection process than the down cycle that proceeded it, as IT finally enters the mainstream of corporate influence on a broad front.
If the IT organization can't become as agile and efficient as the business it supports, the increasingly interconnected world of technology services, shared service consortia and utility service providers will rapidly marginalize it.
Smart IT organizations will try to adapt ahead of demand so that they can maintain a strong position as providers of critical business automation capabilities, however these capabilities are developed or delivered.
Click on a response above for further analysis of each scenario.
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