Falling cost of digital infrastructure
Falling cost of digital infrastructure
We frequently receive information of a new technique or a new invention that amplifies our sense of constant technological progress: 3D printing, nanorobots, 5G, Artificial Intelligence, the internet of things; to name a few.
Beyond the collective consensus that technology and its derivatives are continually expanding, most of us do not understand at what pace they are actually doing so: we believe the phenomenon is happening at great speed when in reality it is happening at a much more accelerated rate. These concepts of speed and acceleration sound more appropriate for physics than for explaining such a phenomenon. However, they are useful here because people understand better those phenomena that grow linearly (at a constant speed) than those that grow exponentially, in an accelerated way.
Linear vs. exponential
What has been happening since the 1960s is that technological disruptions are occurring at an exponential rate where the number of innovations is constantly increasing for equal periods of time.
In turn, most organisations that could apply such technologies to their processes plan for change (at best) at a constant, linear speed, creating the gap shown in the following chart under the area of "disruption". Organisations that fail to quickly and effectively incorporate technological innovations lag behind those that do, and fail to capture the benefits of the digital economy.
This exponential growth is based on the observation of 3 fundamental laws of digitalization:
- Moore's Law: an observation made by Gordon Moore, suggesting that every 18 months the number of transistors contained in a microprocessor doubles, resulting in increased processing power and an economy of scale that makes such processing equivalently cheaper.
- Butter's Law: Gerard Butter was able to "predict" how communications and the speed of information transmission will evolve. He predicted that fibre optic capacity would double every 9 months. This, as in Moore's case, leads to significant cost reductions.
- Kryder's Law: Mark Kryder postulated in 2005 that the amount of data stored per square centimetre of hard disk doubles every 13 months.
The capacity to produce the basic technological elements to process, store and transmit information is constantly growing, which has a strong impact on the scalability and costs of the digital infrastructure, given that, after only 18 months, the operational capacity of our technology doubles; the process of obsolescence of the existing technology begins rapidly.
It is important to keep in mind that the production costs of these components are only a part of the total final cost of the equipment and services that are developed based on them. For example, the cost of bringing connectivity to mountainous or rural regions differs fundamentally from that of extending connectivity in the city for physical reasons, but also for reasons of concentration of demand.
In short, the cost of developing technology is systematically reduced at regular intervals. This is no guarantee that we will get products at (in absolute terms) ever lower costs. From the vocational training perspective, it is important to take this decoupling into account in your planning for digitisation and digital transformation projects.
