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Enterprise Software

Who watches the watchers?

Here's how to approach the predictions of those IT forecasters when they talk about the next big industry trend.

Trumped only by political and economic forecasters, IT has developed a vast cadre of industry analysts, benchmarking, and forecasting organizations. Every time a new technology appears on the scene, these groups produce reams of research reports, accompanied by astounding predictions about the future. In the 1980s, client-server computing (a term that will probably have you laughed out of the building if you drop it at a meeting) was set to take over the world by 2000. In those heady days of the Internet bubble, ERP was dead, we would be doing everything online, and all the major physical retailers would be shuttered in a matter of a few years.

Arguably it would be unfair to hold anyone to the fires for an inability to consistently predict the future and for activity fraught with risk under the blinding light of hindsight. However, in IT, the organizations we look to for guidance seem to trip over themselves to make the most dramatic and most outrageous predictions. Every industry needs futurists and prognosticators to push our thinking in new directions, but in IT, one seemingly needs more than a few grains of salt. In that vein, before betting your career and company on the latest forecast or article, I suggest the following:

Follow the money

Everything from this article, to the latest magic diagram from a research organization was done with some kind of financial motivation. In my case, as a provider of consulting services, my aim is to burnish my reputation and the reputation of my company. Some research is directly paid for by a product or service provider or might be done to "whet your appetite" for more detailed research. Even university and government-sponsored studies often are trying to make a case for or against a policy or technology and, therefore, are tainted. While we must "pay to play" for most things in life, and I am not suggesting research companies and consultants pack their bags, understanding the monetary motivation behind the industry watchers can provide a healthy counterbalance to some of their more outrageous claims.

Beware of the numbers game

Nothing helps lend forecasts credence like some impressive-sounding numbers, which give an air of authority to even the most inane predictions. Some of my favorites are impressive-sounding growth forecasts. We'll usually see a prediction laced with comments like "Even if current adoption trends of Technology X fall by 50%, Technology X is slated to be in 98% of all companies by next Tuesday!" The obvious fact that is glossed over is that most of these new technologies are starting from zero. If one person was using my product and then two more people buy it today, I've had a 200% increase. Annualize that, and we're looking at a 73,000% growth rate. Obviously these growth rates are unsustainable, although the research organization can argue that they are mathematically sound.

The second numerical game that seems to be making a resurgence lately is the "theory of really big numbers." You may remember this from the dotcom days, where many a business plan for an online company started with "If only 0.000001% of all internet users visit our site..."

While this logic may have roped in venture capital, it makes a single, fatal assumption: that humans are effectively amoebas that will randomly bump in to a product or service and randomly disgorge cash to acquire it. As the raft of failed companies built on this premise indicates, individuals and companies do not randomly "bump in to" companies and relinquish cash, rather they will buy only products and services that fulfill some need. Before you buy the latest social media software on the assumption that "billions and billions" will be exposed to your product, just remember that exposure doesn't equal sales.

Beware of the broken watch

The old saying that "a broken watch is always right at least once" frequently applies to the art of forecasting. Whether it is the economist constantly predicting calamity or the IT analyst constantly touting the next big thing, when one of these research organizations predicts something unusual, look at their track record. Is this just another case of guessing and hoping or have they been fairly accurate in the past, both in terms of what they are predicting and the impact it will have on the industry.

In IT in particular, few in leadership positions want to appear out of date or miss the next big industry trend. While this is admirable, approach these predictions with some of the tools described above and a healthy dose of skepticism. Forecasters and pundits invest little beyond their words in predicting the future, an activity far less risky than investing significant time, money, and talent into a questionable trend.

About

Patrick Gray works for a global Fortune 500 consulting and IT services company and is the author of Breakthrough IT: Supercharging Organizational Value through Technology as well as the companion e-book The Breakthrough CIO's Companion. He has spent ...

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