The rise and rise of software substitution

Michael Billimoria looks at the last decade of technology advancement and related digital disruption, where this trend is leading, and what that means for your organisation.

©iStock.com/alphaspirit

©iStock.com/alphaspirit

Back in 2005 while studying for a postgraduate degree, I was asked to write a paper on how web-based technology will change everyday life or business.

I chose newspapers since that shift had already started. Core to my argument was that while technology would slowly make the newspaper obsolete, the tactile feeling of holding the paper on Sunday morning while eating your brekkie was something that would not be easily replaced. The newspaper still had some time left, but was inevitably on the way out. Other industries would suffer similar fates but it would be a slow burn.

Ten years on, paper-based circulation continues its steady decline, however, as the following table shows, there are still 1.5 million copies in daily circulation.

Figure 1 - Source: Roy Morgan Research Newspaper Cross-Platform Audience, 12 months to March 2015

Figure 1 - Source: Roy Morgan Research Newspaper Cross-Platform Audience, 12 months to March 2015

But technology disruption has not been a slow burn and appears to be rapidly accelerating. In its wake lies the charred remains of those industries which have not been forward-thinking enough to embrace the transition to digitisation. In the newspaper business this has led to a rapid decline in the number of journalists required as news becomes syndicated and globalised.

More disturbingly, we seem to be approaching a critical crossroads. We’ve seen the rapid change in manufacturing over the past 30 years where more and more physical labour jobs have been automated. This made sense: physical labour is slower, is often less precise, and isn’t great for the health and safety of individuals over an extended period of time.

But this transition doesn’t stop there. Not by a long shot.

Significant amounts of human work have been replaced by ‘hardware substitution’ where machines take the place of people. Now, ‘software substitution’ is rapidly taking place. While this can be viewed as a liberating development, it has scary implications from an economics point of view.

This change is happening in distinct stages, or iterations:

Iteration 1: Data processing

Data based jobs are those which are transactional in nature, where actions are often based on business rules. A classic example is retail sales: Stock management, sales process, cash handling, ordering etc. are all based on clear, repeatable processes.

This kind of work is ripe for being picked off by digitisation, as we have seen over the past 10 years. Online shopping is now standard practice. Traditional ‘bricks and mortar’ shops won’t all disappear any time soon, but the change in numbers, sizes and types of outlets means less employees in the retail industry in future. This is particularly true for those selling standardised products.

Other examples of data based jobs include bank tellers, market researchers and call centre workers.

Iteration 2: Information processing and analysis

Data based jobs have been in danger for a while, but information based jobs are now in jeopardy. Consider roles in which it is the individual’s task to take data and turn that into usable information or output.

Such roles include journalism, as described above, but also many sales based roles, administrative management, accounting, marketing, financial/insurance management and brokering. Each of these jobs requires a degree of skill and capability, which on the surface appears tough to replace by automation. However, many of them also use repeatable rules to manipulate data, transform it, and then present it as a usable output.

This kind of automation will not make the accounting profession obsolete. However, instead of needing ten accountants to complete a particular job, perhaps that work could be done with only one. Furthermore, smarter data and analytics solutions can provide valuable insights for increasing volumes of data quicker than ever before.

Individual consumers have access to this information, anywhere and anytime, further reducing the need for expert help. All in all, this means fewer jobs over time.

Iteration 3: Knowledge creation and development

Can knowledge based jobs be given to machines? It’s a scary thought, but to some extent the answer is yes. Not necessarily the actual knowledge part of the work, but automation allows knowledge-based workers to be more productive by helping get to the creative thinking faster.

The flexibility of digitisation makes everyone potential entrepreneurs. Consider the power at the disposal of a single knowledge-based worker:

  • Need a CRM? SalesForce.com
  • Want to create your own website with a shopping cart experience? 30 minutes with WordPress and Paypal and you’ve got it.
  • Want to create your own e-newsletter or magazine? Sign up to Adobe Creative Cloud, take a few tutorials and you’re on your way.
  • Want to develop your own iOS app? Buy a few books on Amazon.com or take a cheap course at udacity.com and it’s done.
  • Want to store and then analyse massive amounts of data to help make better decisions? Tableau + AWS + Hadoop/Spark combined with Machine Learning.

It used to take a small army of people to build a business around this kind of work. Now it can be done quickly, and fairly cheaply, by an individual with the right software solution. This kind of ‘software substitution’ once again has some serious long term economic implications.

So. . . . what does it all mean?

For organisations working to differentiate themselves from their competitors this can be the difference between being best-in-class, or simply being outclassed by the competition.

For government agencies, it means finding new and innovative ways to engage with consumers.

Whatever your organisation, an intelligent digital strategy should be based around automation, data and analytics, customer experience, and strategic sourcing. IT, and the business it enables, must adapt to this changing world or risk becoming irrelevant to their customers.

A focus on talent management, innovation development and inspiring the organisation to higher levels of thinking and creativity is the next step. This change will be, at times, stimulating, painful, and maybe generational.

About the Author

Michael Billimoria is a technology thought leader and is currently CTO CSC Consulting. Prior to this he was the National Practice Lead for IT Service Management. 

Michael has a proven record of successfully delivering technology projects realising tangible business benefits in complex environments.