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Notes on the Productivity Paradox

Many years ago, the Productivity Paradox theory appeared to try to explain/understand/predict the impact of IT in business. What the theory suggested was not at all encouraging, since it posed a counter-intuitive idea: investment in IT has a negative correlation with business productivity.

There have been many studies that provided empirical evidence to support this theory ever since it saw the light around 40 years ago, as well as many criticisms about why those studies may not be capturing productivity fairly, and thus suggesting reasons for the Paradox being difficult to prove.

The truth is that the theory survives today, more than 40 years after its creation, and attracts the attention of many prestigious professionals, across many of the most prominent companies, universities, consulting agencies, amongst others.

Working in the IT business, and witnessing this massive disruption era, where the cloud imperative comes to “change everything”, suddenly the echoes of the Productivity Paradox come in and make me think about which IT companies today could be the ones feeding, if true, this theory, and which ones would stand out as “Productivity Advocates”.

I don't intend to discuss the theory as a whole. A discussion like that would require a lengthier investigation touching on the concept of productivity itself and how it applies to business and IT, or how the law of diminishing marginal returns in economics has an interesting take on this matter. Rather, I would like to explore the way in which companies have approached their IT during the last decade, how the on-prem/cloud shift looks like today, and how productivity suffers, or gains, meanwhile in the background.

One of the ideas that first comes to me, is how companies today spend in IT:

Of course they don’t choose explicitly to do so. In the end everybody knows it is nicer to spend money and time “innovating” rather than patching. But it is the consequence of the approach they had for years, when building their IT. Siloed. Fragmented. “Leave the integration to us”. “As many vendors as layers in my IT infrastructure”. But IT is complex, and the consequences of this strategy are the ones shown above.

One resounding explanation for the Productivity Paradox goes around complexity in IT. Basically it raises the idea that IT can bring endless business advantages, but if as you grow your IT you also create an underlying complexity that multiplies your growth, then the overall result may not be the one you expected. One step forward, two steps back.

This complexity takes different shapes that amount to the spending above: Patching, Security, difficulty meeting SLAs, multiple support contracts, different manageability, no end-to-end visibility, among others.

Enter Integration.

The market reacted, and some vendors began offering their versions of convergence, or integration. Some were more “integrated” than others, some were mere reference architectures, now in oblivion.

Oracle Engineered Systems were, by far, the products representing the most integration out there. With them, you can deploy private elastic clouds, database machines, “extreme” analytics appliances, as well as others, within a single rack, in a fraction of the time you did before.  You can have end-to-end visibility, new security standards, mainly because patching Engineered Systems is a different game. Painless. Almost transparent. You can deploy a level of simplicity you just didn’t before. Resources are freed to shift towards different, hopefully more innovative, tasks. Your TCO goes down, your risk goes down as well. And all this with unseen levels of performance. Start talking real-time, taking batch to on-demand, waiting-times to working-times; be ahead of your competition, innovate faster, improve your margins. A clear example where you can improve your business performance, with shrinking underlying complexity. Welcome Productivity.

We are now beginning a new era, where the future is cloud-shaped. Will this jump be a step towards, or away from our productivity idea? We won’t bring up now all the advantages of the cloud, but we should rather question the complexity its existence may present if approached incorrectly.

An optimum cloud deployment should be hybrid, and this requires both the public and private portions to be inter-operable and integrated. What happens if they are not? Almost all IT shops out there, have either a public or a private cloud offering. Then you as a customer will have to put together two different worlds for your on-premises base, and your public cloud one. But then you’ll probably find difficulty meeting the SLAs for the app you tested on the cloud, and deployed on prem. You’ll probably find administrative difficulties when dealing with different support, billing, contracts. The movement from the cloud to the datacenter and vice-versa, will require lots of time and resources -let’s remember; these two weren’t made to talk between each other, you are responsible to enable that dialogue-. Ironically this is the cloud future that almost all cloud providers are making companies think of. Are we then in a good shape to increase our productivity on our journey to the cloud?

Oracle’s cloud strategy is different:

The Hyper-Convergence concept spans from your datacenter up to the public cloud, covering the same Oracle Hardware and Software both on your datacenter, and on the Oracle Public Cloud. You have a single pane to monitor and manage both instances as one. You can choose either to deploy in, or move from one place to the other; seamlessly. All your hardware, databases, middleware, apps, on-premises, and on the public cloud. You lower your total cost, you reduce your overall risk, you meet aggressive service levels, with an integrated solution. Again; Welcome Productivity.

So; why should we care about being more productive? Because productivity means that we spend time and resources on more value-adding tasks. It means better performance with less effort. Our operating margins go up, as we have a more efficient use of our resources, and we are enabled to execute our business strategies, and go-to-market faster, thus generating more revenue. Our risk shrinks: we are deploying proven solutions which take advantage of a community effect, as there are other companies like yours all over the world, collaborating towards a common error-free solution.

Many years have passed since the Productivity Paradox saw the light. The IT business is changing dramatically, just as so many other industries are. Unfortunately we stand today with more-than-desired, accumulated levels of complexity on our backs, that many companies bear every day. The question I raise, with the change in paradigm cloud is bringing along, is if companies will think about how productive their IT strategy has really been during the last decade/s, and if that answer will make them, this time around, decide towards simplicity, integration and true productivity.

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