One particular segment of the IT population is driven by exuberance and other irrational motivations to automate everything; and they have reaped a lot of bottom-line victories over the last few years. But their ability to continue to deliver is tapped out.
That’s not to say the demented utopia in which all value-added processes are conducted by computers interacting only with other computers isn’t a sustainable model – for a minority of functions within a minority of organizations.
For the rest of the world, Automatopia is a delusional ideal in the service of a business model that has already crested and is now dissolving as precipitously as did the Soviet Union’s business model.
Exuberant automators who never question ifa process should be automated, but only how or when, are able to feed their obsession only through the availability of cheap labor which, in turn, raises the incentive for more countries to create cheap-labor IT shops.
Driving out labor costs and some minor paper costs has delivered some cost benefits, though with some quality degradation.
As long as everyone is playing the same game, quality levels that are tanking don’t affect market share, because the buyer comes to assume everyone’s quality (or lack of it) is the same.
That system is close to equilibrium, however. Far from being a good thing, equilibrium means there are only a few more cycles of juice left in what we anthropologists call “intensification” (doing the same thing but harder when returns aren’t growing).
The red flag signaling this end-stage is, well, a red flag.
Red China, which was building a market as an IT outsourcer by underpricing India, is itself losing some sweatshop contracts to cheaper sweatshops in Saipan, Malaysia and other Asian countries.
When U.S. executives feel free (or forced) to press slave labor providers to show more margin, there’s little left to squeeze out in the labor or hard goods areas.
Those who continue with this model are doomed to face-fault on The Tripping Point. Those who have the agility to move on to the Next Big Thing, on the other hand, stand to reap great competitive advantage.
That next big thing is rationalization figuring out what processes and parts of processes are more effectively done by human beings rather than computers, and integrating those human capabilities with automated processes rather than replacing one with the other.
Knowing what to dis-automate and how to work the transfer between carbon- and silicon-based workers will be the vital elements in winning and losing.
A winning example of rationalization is a rising company named Savage Beast.
When you read about it, you’ll assume it’s a special case. It’s not – it’s the first application in the inevitable wave of rationalization projects that will anchor the next profitable model for business technology.
