Digital technology alone is not the solution to the low productivity evident across many organizations, says Citrix CEO Kirill Tatarinov. Its adoption needs to be complemented by a rethink of how work gets done.
Business productivity around the world has stagnated ever since the global financial crisis started in 2007. In the US and UK, for example, annual growth in worker output has been stuck at around 0.5%, in sharp contrast to the fairly steady rate of 2.2% maintained in the decades leading up to the recession.
Paradoxically, the years since the crash have seen information technology become a central pillar in the growth strategies of most organizations. So how come technology is creating more effective business models and increasing efficiency yet productivity is still flatlining? That is a question that perplexes Citrix CEO Kirill Tatarinov.
“Productivity growth in the 1990s and up to the middle of the last decade was pretty phenomenal,” says Tatarinov. “And then something very odd happened. Productivity growth stalled and it has continued to decelerate. A huge gap exists between technology innovations and the productivity of the world’s businesses,” he observes, quantifying the business shortfall. “Economists estimate that $2.7 trillion is locked in this gap.”Overdue process renewal
Interviewed exclusively for I-CIO’s Big Thinker video series, Tatarinov cites two possible reasons for the paradox. The first he attributes to the technology waves of the 1990s: company-wide adoption of ERP and the reimagining of business processes that accompanied it; and the embracing of the internet as a new business platform. However, what followed, he argues, was an extended consolidation period in which many organizations showed a reluctance to renew their business processes and technologies.
“Having taken those tremendous benefits, many organisations simply said, ‘we’ve got the core technology and processes to carry us for several years.’” He says. “The business processes enabled by ERP and supply chain have a very long life span. In many cases the renewal cycle for ERP is 20 years. But it means organizations that embraced those techniques and technologies in the 1990s are only now approaching the end of that technology cycle. So organizations need to be looking into the renewal and reimagination of existing business processes.”
That, he says, could be one fillip to productivity. “It’s about time to processes that may not been reimagined for 15, 20 years, to see how apps-driven business can change the way people work and the way solutions are delivered to people.” Indeed, he issues a call to action for organizations to continuously re-examine their business processes and look to modern techniques that will connect legacy systems the modern world.
That points to the second reason behind the technology/productivity conundrum: the complexity of dealing with hybrid IT. Tatarinov explains: “The fact that very few legacy systems are being retired as new techniques are introduced is certainly slowing things down and is having an impact on the productivity gain within organizations.”
Technology alone, however, is not going to close the productivity gap. “By itself, technology cannot fully address the productivity gap issue. It’s really the mind-set of the business leaders who embrace technology and put it to productive use in their organization that needs to change,” he says. They need to be much more knowledgeable about how and where different technologies can affect workforce productivity, and continuously measure the progress improvements across the organization.
Businesses are often guilty of making technology purchases before mapping out how the tool can help meet business objectives. Arguably, this is more evident when other members of the C-suite have wrestled control over the technology budget from the IT organization. “We see it across the board, organizations deploying things like CRM to improve their customer engagement who don’t think about the related business process,” says Tatarinov. “They think that once they’ve purchased the tool, magic will happen. But magic only happens when somebody thinks about the bigger picture first and then uses the tool to support it.”
Another key step in ensuring productivity gains from technology investments is measurement. Businesses must continuously measure how the adoption of different technologies influences workforce productivity across the organization. As Tatarinov says: “Technology always needs to be looked at within the context of a particular business process. That’s really where both CIOs and the leaders of the business itself need to be focused.”
- Photography: Jason Nuttle