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What to Do When the Next-generation of IT is Already Here

May 25, 2016


In IT circles, it’s common to talk about next-generation technologies, business transformation and the rapid pace of change. Usually, those discussions are in the future tense. It’s clear, however, that the next generation is unfolding now — and not just at leading-edge tech firms. Enterprises and organizations of all types and sizes are being swept up in digital-driven transformation. Disruption really is the norm, and new business models are emerging whether planned or not.

These trends were reinforced at the recent MIT CIO Symposium May 18, where academics and business leaders checked the state of the digital economy and determined that it is roaring ahead.Among the examples: Amazon is a search company as well as a retailer; old-line financial services like Principal Financial Group and BNY Mellon see themselves as data companies, not insurance providers or banks. Rapid, agile experimentation is standard procedure, and open APIs are the rule. CVS Health and JetBlue are customer-focused tech companies that use data and analytics for competitive advantage. At JetBlue, the boundaries between business operations and technology are blurring and job titles may be the next old-school vestige to disappear.


Tech Soars at JetBlue

“We’re a customer service company that happens to fly planes,” Marty St. George, JetBlue EVP, said at the CIO Symposium. Partnerships are more important than silos and “we need great digital experiences” in everything we do, he said. In fact, earlier this year JetBlue entered the VC business with an office in the heart of Silicon Valley so that it can “own the products that we develop” and encourage faster innovation of all types including call centers and customer service.

During a Symposium panel discussion, Gary Scholten, a 30-year veteran of Principal Financial Group, and now VP and CIO, noted that “Banks have to change or risk obsolescence.” Their physical presence is diminishing, while robotic advisers and smartphone transactions are becoming commonplace. Suresh Kumar, BNY Mellon Senior Executive VP and CIO, said that the bank may be more than 200 years old, but it has to “think like a startup and build on our strengths.” Nothing is taken for granted when startup firms like Kabbage — described by its CEO and founder Rob Frohwein, as “a data company” that can approve small business loans in seven minutes — is nipping at your heels. Frohwein shared the stage with Kumar and Scholten at the Symposium

And these profound changes don’t even touch on one of the most disruptive upheavals of all: the on-demand economy. Moderating a panel discussion, MIT IDE Director, Erik Brynjolfsson, said that the on-demand economy is growing at 50% annually. Though it still only represents four-tenths of 1% of the overall economy, it’s rapidly accelerating. Uber, for instance, has over 1 million users, and new cities are being added every day.Yet, as proof of the constant change taking place, even while pundits analyze the success of Uber as a digital economy platform, the company is quietly testing out driverless cars, according to General Manager Chris Taylor, so it can stay ahead of the next wave of disruption that’s bound to follow.

IT has certainly caused business disruptions in the past, but it seems that deeper shifts are under way this time. MIT Economics Professor, David Autor, said that “old norms no longer apply. We are a transaction/services economy, but transaction costs are falling and boundaries are widening.” This creates new dynamics between workers and employers where special skills are highly valued, but other workers face risks and insecurities, he said.

Paul Osterman, MIT Professor of Human Resources and Management, also sees a “Fundamental shift in how employers view labor.” Rather than taking care of workers for extended tenures, employers are replacing them with subcontractors at a rising rate. There are benefits from these changes for workers who want flexibility and for employers who can lower their costs, he said, but there’s a dark side, too. Public policy needs to step in and the courts need to enforce laws that will protect workers, Osterman recommends. Otherwise, workers may become the collateral damage of the rapid-fire tech disruption now under way.