The Third Industrial Revolution: An IT Perspective 

When I recently picked up my copy of the The Economist, I was blown away by the cover story discussing the third industrial revolution.  Wow, where had that come from?  I couldn’t wait to talk to Digital Manufacturing Report editor John Kirkley about the implications it had for small to medium sized manufacturers.  In fact, DMR had just published a ShortTake about The Economist  feature that included links to the several articles in the publication covering the topic.

I want to take the next step and explore how this revolution may impact your IT departments. 

For the last several years, the IT press has been predicting the reduced role of IT in the modern corporation.  This process was exacerbated in 2003 when Nicholas Carr, then an editor-in-large for Harvard Business Review, penned an infamous article entitled “IT Doesn’t Matter.”  Carr’s thesis was that as companies implement ERP systems into their companies all IT operations would become similar and eliminate any competitive advantage that IT could provide.  I totally disagree with Carr’s premise and I had a chance to debate him several years ago at a Canadian IT conference.  Despite the resistance from the IT community, his thoughts had a lasting impact on the IT profession.

In the wake of this theory, many companies and CIO’s have been outsourcing their data centers, their staffs, and in some cases, their entire organization.  Some CEO’s believe that IT is a utility that can be plugged into just like electricity or water or natural gas.  If you cannot achieve competitive advantage, why spend the time and resources to make IT specific to the company.  Lets just do IT in the cheapest way and work hard in other areas where we can differentiate.

As Mark Twain famously said, “The reports of my death have been greatly exaggerated.”  The same thing can be said about IT, especially in the manufacturing industry if The Economist report is true.  Essentially the article indicates that the shop floor will continue to be automated and operated not by the historic blue-collar workers but by highly skilled engineers, accountants, logistics experts, marketing staff and customer relations managers working in an adjoining office block.  Additive manufacturing techniques, advance robotics and nanotechnology is ushering in an age where customization is the rule rather than mass production.

As this happens, labor costs will go down and the need to have people on-hand to produce this customization will cause jobs to be repatriated into the shops that will increasingly be situated close to the markets.  Since software will have to be sensitive to this individualization of product, IT will have to be on-site and very close to the process to insure that the correct products are being developed. No longer will we be able to use common software that could be used by anyone in a similar business. This changing environment could usher in a new IT age of custom development not seen in IT shops since the 60’s and 70’s before the advent of vendor software.  There was a comment in the article predicting that automobile assembly lines will someday be able to make any model car that is ordered.

These changes will have an enormous impact on the competitive advantage that can be gained by a company.  How the technology is implemented will be a major part of this transition and will destroy some manufacturers and enable others to fulfill their grandest objectives.  The change in the playing field will be rapid and life changing.  So read the article, discuss it at your next strategic planning meeting (include the CIO) and plot the future.  It should be exciting.