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Information Technology And The Coming Economic Boom Ray Hammond, March 25th 2009
Whilst most commentators are focussed on the problems and progress of the current recession, little thought is being given to the global economic boom that is certain to follow hard on its heels. This new boom, which will be far greater than any previous bull market, will be triggered and fuelled by the arrival of super-powerful information technology. As a result, new forms of monetary control and global financial regulation will be needed to prevent another (and far bigger) economic bubble developing – a bubble that would inevitably be followed another massive bust. The development path of information technology has reached a critical point. As many computer scientists have observed, information technology development is continuing on an accelerating exponential curve and this curve has reached the point at which the graph line of development has become almost vertical. Over the next few years – the period during which strong growth will surge again in the world’s major economies – smart ‘phones’, cloud computing, ‘aware networks’ and enhanced automation will arrive to transform commercial, industrial and personal productivity. At the same time financial trading systems will become far more automated than they were during the creation of the recent credit bubble. Stripping ‘Friction’ From Business Processes A vast amount of ‘friction’ still exists to be stripped out of business processes and to be eliminated from professional and personal activities. It is not the arrival of any one of these improved information technologies which will create new and additional wealth, but it is the combination of these interacting technologies which will hugely enhance productivity. ‘Phones’ and networks are just becoming truly smart – and they will get much smarter very rapidly. Of course the mobile ‘phone’ is now the new personal computer and all of the white heat of technological development that was once focussed on the PC is now focussed on these devices and the networks that serve them. Over the next few years these ‘phones’ (we don’t yet have a good new word or phrase for these devices) will become our wallets, our credit cards, our IDs, our personal health monitors, our navigation aids and our safety guardians. Already ‘mobile phones’ are contact databases, text devices, still and video cameras, photo libraries, music players, web browsers, email systems, TV and video players, radios and GPS locating systems. Add all this together – and then add in super-smart high-speed networks – and it becomes clear that by 2012 every human with a smart ‘phone’ will be in constant contact with ‘The Global Brain’ – which is what Google and the other search engines are rapidly becoming. The removal of ‘friction’ in professional and personal life will be astonishing. People meeting will be able to provide each other with a real time link to their actual geographic location. Goods in transit will broadcast their location to the networks and mission-critical systems – such as bridges, aircraft engines, cranes, trains and level crossings will broadcast their position and condition to the networks at all times (aircraft engines are already doing this during flight). The supply chain still has a lot of fat to be removed before it can really be called lean and green. Cloud Computing Cloud computing – the provision of virtual computing and data services within a ‘cloud’ of processing power – will transform and enhance IT functions within all organisations. The old models of desktop applications and corporate data centres will disappear to become ‘on-demand’ secure and fault-free network-based services provided on a just-in-time and lowest-cost basis. Specifically Cloud Computing offer companies and organisation six major benefits: Reduced Cost Increased Storage Highly Automated Flexibility More Mobility Allows IT to Shift Focus (to next column) |
Aware Networks – And ‘Business Process Intellectual Capital’ ‘Aware’ corporate, NGO and government networks – coupled with smart phones and cloud computing techniques – will allow new forms of value to be created, dramatically enhancing corporate balance sheets (and public purses) as we come out of the current recession. Specifically, aware networks will capture ‘BPIC’ – business process intellectual capital; i.e. how an organisation does what it does Every company and organisation has its own way of doing things, whether that is designing a new golf course, planning a PR campaign or building a new factory overseas. Over the next few years aware networks, smart phones and cloud computing will combine to allow organisations to capture these processes in vast unstructured databases –and the use of new software tools able to deal with unstructured data will mine real value from that knowledge (see my 2003 paper ‘The Reality of Intellectual Capital’). Previously the value associated with capturing business processes has been loosely wrapped up in the notion of corporate ‘goodwill’, but in the next few years every organisation will be capturing BPIC and adding it as a new asset to its balance sheets (Procter and Gamble plc was the first company to do so in 2007). Automation And Sustainability New forms of low-cost, enhanced automation – especially for energy management and for control of sustainability issues – will allow companies and organisations to reduce both operating and manufacturing costs significantly. Once again, enhanced automation is dependent on other new technologies – cloud computing and aware networks – to deliver real benefits. As companies struggle to make their operations wholly sustainable, low-cost automation will enable real-time energy audits to be carried out and deliver low-carbon solutions whenever possible. Operating as part of aware networks, automated smart sensors will control heating, air conditioning, lighting and power supply throughout the supply chain, delivering real cost savings and reductions in greenhouse gas emissions. For many organisations the key to sustainability will lie in the deployment of smart automation and aware networks. ‘Narrow AI’ In Financial Markets ‘Narrow Artificial Intelligence’ systems (i.e. systems focussed on one particular task) have been used in financial trading for some years. Typically, humans develop computer algorithms which tell computers when to buy and sell assets, and then leave the computers to work autonomously at very high speeds. Though the development of ‘algorithmic trading’ may initially have been prompted by decreasing trade sizes caused by asset decimalization, computer trading has reduced individual trade sizes even further. Jobs once done by human traders are now being switched to computers. The speeds of computer connections, measured in milliseconds, have become very important. A third of all European Union and U.S. stock trades in 2006 were driven by automatic programs, or algorithms. By 2010, that fraction is likely to be over two thirds of all trades. There is a current debate about what role, if any, such systems might have had in creating the recent stock market crashes, but most commentators accept that human greed and stupidity far outweighed any damage caused by machine intelligence. However, Narrow AI is a field which is also developing exponentially and future trading patterns are very likely to be driven by machine decisions being made at speeds and margins which are beyond human comprehension. There is currently no regulation, either national or global, about how autonomous machines may be deployed within financial markets. In the past regulators expected market forces to apply regulation automatically but, as has been shown in the last two years, market forces cannot be relied on to protect important financial institutions. As institutional money (banking) is a virtual concept once humans lose faith in financial markets collapses follow. It seems clear that AI systems should not be given full and unfettered autonomy to conduct financial transactions. In Conclusion In the coming decade the capabilities of information technologies will double every couple of years and this exponential development will drive the production of previously unimagined wealth within the developed and developing economies. Whether the new ‘gold rush’ created by the arrival of super-smart information technology will result in further cycles of boom and bust depends on human control. It depends on how well our politicians, economists, bankers and regulators are able to understand and control the contribution to wealth generation that new information technologies are about to make. Ends |