I was in this meeting the other day about a new product we are planning. The specifications and features of the product were pretty much defined, and the discussion was about how best to deliver it to customers. Usually, those sorts of discussions are mostly about IT, and this was no exception.
Now, our new product is nothing all that complicated. But it does need IT support, and some of the IT things needed are fairly involved. Significant enough, in fact, to cost several millions were we to do everything we might like.
When you start talking numbers like that, there is often a degree of incredulity from those without an IT background. How can it cost so much? I can buy a DVD down the road and install things at home myself, and that is more complicated that this!
Non-IT people rarely see how much complexity is involved in big systems work. Then again, the fact there is so much complexity is a huge problem for everyone, and things are getting worse, not better. The combinatorial explosion of things that can wrong whenever you touch anything sometimes makes it easier to just touch nothing.
That's where paper can be an out-of-the-box solution. I can't recall the last time I was in a meeting and someone actually proposed implementing a product using paper processes.
But for a new product, one that might or might not be big, and certainly won't be big in the next two years, what is wrong with using paper?
You can imagine the horror when it was suggested. The cost! The cost!
Less, actually, than doing a custom system and getting it to work, when one considers potential product volume over the first two years.
IT systems are now so expensive we are at an inflection point. The point where doing things manually is more economically efficient for certain higher value, lower volume products than doing them automatically.
Paper as an innovative solution requires political fortitude on the part of the proposer. It is almost always unpopular. We've all been so indoctrinated in thinking that people based processing is bad we no longer even put it up as an option any more.
But look at its advantages. It is quick to get going. Quicker than practically any kind of IT. It is robust, and can recover from unexpected failures with ease. And it is cost effective for startup projects that don't have all that much volume and don't know exactly how things are going to work out at the beginning.
IT has none of those attributes. And I doubt it will get them any time soon.
Consider this: you can put paper behind a web site or any other self service channel and have the most fantastic experience you can imagine. It is therefore a wonder to me why web startups invest so much in their backoffice IT when they could probably get by with a beautiful user interface and a bit of elbow grease.
It is a further wonder that banks, with hundreds of years of experience paper technology have forgotten it exists.
The logic is real, but its a sad reality. This is part of the reasoning I believe Banks' are bound for disruption from outside.
The maturity of internet technologies and open standards means that building your product is actually easy. The hard part is making it fit with the legacy systems, and spaghetti connects between the systems and the customer channels.
Posted by: Colin Henderson | July 25, 2008 at 08:50 PM
I'd agree with Colin. My mum was pointing at the computer and smiling yesterday. Her bank had managed to transfer her money between two ISAs (both at that bank). It took 3 months !
Computer -> P [1 month on pile] a [lost it] p e [found it] r -> Computer
Start-ups [tech-drive VC ones] can't really use paper other than for rare events and trials. Paper can't scale at 30-60% per year. That's VC cost-of-capital :-(
Maybe a better distinction would be between ad-hoc & engineered IT. On a cost/benefit basis, Excel/Access/MS Server *is* often a good starting point. It's also something a skilled Ops person can manage by themselves. But corp. IT generally puts its efforts into stamping these things out, rather than seeing them as a natural "breeding ground".
Posted by: Thomas Barker | July 25, 2008 at 10:13 PM
Thomans and Colin, I agree with both of you. The question in my mind, however, is whether our ability to move paper processing to low cost countries coupled with supporting technologies that help us use paper actually might make it cheaper to scale out a person based process than do a pure IT one.
Look at Amazon's Mechanical Turk...
Posted by: James Gardner | July 26, 2008 at 08:41 AM
no.
eBANK (https://www.swiftcommunity.net/blogs/blogDetail.cfm?id=502) or Paypal wouldn't be viable as paper firms. Even assuming an infinite pool of poor English-speaking clerks, those firms wouldn't be able to function on paper.
[offtopic]
I was going to write that the future belongs going to highly automated businesses with 1:8000+ staff:customer ratios. And for straight customer transaction handling, it will do.
But the service offerings of those firms are often very limited. To get past that, they'll have to find ways to link in human notaries, claims processors, accountants, etc where they are desirable. Probably by selling access to their systems, rather than by taking on those functions themselves.
[/offtopic]
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Posted by: Jules Viernes | July 31, 2008 at 12:39 AM
I've sent my comments about paper v electronic methods by post to everyone who reads this blog.
I know many commentators here will approve. Much more efficient... ...or maybe not.
Posted by: Neil Robinson | July 31, 2008 at 05:36 PM