Benedict Evans, as usual, provides an insightful view of the “Digital Transformation” story. While crypto, machine learning, NFTs, and drones may generate the most headlines, we are also in the midst of a generational shift in how we do business. This shift is happening in boring corners of the B2B Enterprise software market but will have an impact bigger than some of the other, more alluring, technology trends.
Companies like UiPath (process automation) have successfully targeted the dull areas of enterprise software that are ripe for automation and streamlining. The software in “software eats the world” may include headline-grabbing items such as machine learning and distributed ledgers. But, much more significant changes are being brought about by the adoption of SaaS applications and workflows. Twenty years ago, you couldn’t add a new software application without going through procurement and IT. Now, all you need is a corporate credit card.
Demographic changes and shocks such as Covid are only accelerating the technology megatrends for which “Digital Transformation” is a catch-all term.
The concept of “generational shift” also works on multiple levels. Prolonged and painful migration projects can last for a generation (or longer). But we also have an entire generation of programmers and systems administrators who are now retiring, and you can’t find the talent to keep workhorse systems going.
I am thinking about the second-order consequences of this shift to a software-first world. There is going to be more efficiency, more competition, and a chance for aggressive upstarts to ride the technology wave and displace (rather than disrupt) less agile incumbents. But, we will also have a generational loss of knowledge that cannot really be replaced by software.
As every aspect of our economy is driven by software, we start seeing some of the characteristics of software show up. We have seen shortages of food, supply chain issues across industries as well as an incredible increase in ransomware attacks as overly optimized systems break under unexpected disruptions like the Covid pandemic, or insecure systems are targeted by malicious actors.
So, while I think this trend towards more Digital Transformation is good – in aggregate; there are also serious consequences that we may not being much attention to as we continue to be driven by software to optimize.