Waving not drowning

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BRW	THU 24 JUN 2010, Page 23

Waving not drowning


By: Phil Ruthven

The information tsunami is upon us, and our choice is to run for cover or try to float, sink or swim.

Any numbers about its volume boggle the mind. Next year, the world's digitised information is said to be poised to pass a zettabyte, which is 1021 bytes, or a billion trillion bytes.

The internet is moving a staggering proportion of this each year. By way of comparison, the volume of all words ever spoken by human beings in history has been estimated at 5 exabytes, or 1/200th of a zettabyte.

Welcome to the "infotronics age", a term coined some decades ago to describe the post-industrial age in which information and electronics have become pervasive utilities for business and society in an age dominated by service products and their industries, rather than goods. In the previous age, the pervasive utility was electricity, gas and water plus (analogue) communications, used also by both business and society.

So what does this convert to for business? In 2010, the average business will spend 5.6 per cent of its revenue on information that, hopefully, becomes business intelligence; across more than 1.6 million enterprises, this adds up to almost $200 billion.

Most of this outlay will be about the inside of the business, not the external environment.

Interestingly though, one-quarter of the total outlay will involve outsourcing the analysis and or value-adding of internal information to such service industries as accounting, legal, management consultants, consulting engineers and others. Yet 65 per cent of the total spending will be done internally, making a total of about 90 per cent spent on operational issues.
Just 10 per cent will be spent understanding external environments, the "outside world" so to speak.

This outside world demands much more understanding and monitoring in this age than in the previous one. It is made up of one's own industry, the immediate environment for a business and six operational environments involving money exchange. These are the marketplace (including competitors as well as current and potential customers), suppliers, the labour market, the finance market, government (as a legislator and taxer) and service providers (for outsourced non-core functions).

Further, Australia's external environment consists of four main influences, such as the economy (the business "weather"), the forever-changing community (of 8.6 million households), national resources (both natural and developed) and the world of another 227 nations.

Spending only 10 per cent on information gathering on the outside world is too little. But at the end of the industrial age, the figure was less than 3 per cent. We are heading for 20 per cent, perhaps even 25 per cent by the end of this new age in the mid-2040s.

IT corporations are developing sophisticated software and systems to make the analysis, value-adding, optimisation and integration of internal and external information a powerful force for lower costs, faster growth, new products and higher profitability.

International corporations operating in Australia tend to be at the forefront of users of such enhancing systems and their bottom-line performances reflect this fact. But plenty of Australian firms are now following suit.

Among other things, such sophistication helps turn the tsunami of information to one's advantage rather than destruction (through ignorance). And such technology moves the playing field up out of the hearsay and data levels of information to great leverage such as vision and strategy.