Infratech reality or marketing plot.

Infratech seems to be a new buzzword in our world of technology. It covers the area of convergence  between technology and infrastructure.

I have been involved in this market since its early beginnings, some 25 years ago (since the internet became mainstream) and I have seen first-hand how difficult it is to marry the two in successful products and services, often because of entrenched market positions, with strategies aimed more at protecting incumbency than at embracing innovation.

Nevertheless,  IT, and in particular software, has become a dominant element in all forms of technology (manufacturing, agriculture, transport, finance, government, communication, mining, etc). Cloud computing, AI, robotics and big data are some of the most important developments here. In our highly connected world of people, buildings, equipment and civil and private  infrastructure,  communications infrastructure has become the connected horizontal conduit, cutting through vertical market structures, government departments, businesses and many other silo-based structures. This has often been a disruptive process, with lots of resistance from the parties involved, and implementation has not always been easy and/or strategic.

There is now an increased understanding that these merged technologies are  becoming critical platforms for developments such as smart cities, smart energy, smart buildings, campus networks and so on. So companies are jockeying for positions in this emerging market and hence the term Infratech.

Communication infrastructure is the horizontal layer that makes it possible to utilise technology in the most effective and efficient way, across organisations, government, infrastructure assets. Without IT, infrastructure  can no  longer operate effectively. Furthermore, without being connected through infrastructure technology would, in most cases, no longer be a viable option in our modern society (both on social and economic  levels). New developments such as smart cities, smart energy and smart buildings highlight the critical relationship between technology and infrastructure.

It is true that in such cases IT can’t successfully operate without infrastructure, and most certainly that applies the other way around. However, because of its very complex nature, and often very specific applications, I am somewhat sceptical of organisations calling themselves full infratech providers.

So far we have seen that potential customers are wary of proprietary infratech products and solutions. Often what is needed is more a collaborative process between companies involved in technology on the one side and infrastructure on the other. Interoperability is a far better approach to development of large-scale projects. This is often a difficult process and requires leadership from the customer to make it happen. There have been many unsatisfactory outcomes when the infratech company took on that leadership role.

Over the last decade we have seen that IT has been well and truly integrated in telecoms infrastructure. Most of the time infrastructure is a commodity, and investors need to be aware that some of these technologies are following that same course; and as such they are also becoming a commodity (eg, data centres, cloud computing, big data), and this combination is then offered to potential customers.

As long as it is clear what sort of infratech we are talking about and for what purpose it is used a proper investment assessment can be made; some infratech can be truly value-add, and can be assessed as being potentially more valuable. However, in general I would argue that most infratech would tend to move closer to commodity than to ‘value-add’.

I do see great potential for investment companies to become involved in large scale infratech projects, as many of these projects do require very large investments, often in the billions of dollars. Some super funds in Europe are looking at such opportunities.

Because of the complexity of Infratech, and its often large-scale operations, there is a strong need for leadership at the highest levels. This applies to cities, utilities, construction companies and developers.  Similar leadership is needed at the level of technology vendor companies as cultural changes are needed to operate in a collaborative ecosystem. Collaboration rolls easily off the tongue of these leaders, but doing it successfully in practice is something quite different.

And smaller companies (innovators, specialists) need to be included in the complex infratech platforms that will be developed as a result.

So, while infratech is indeed needed for many large-scale projects, making it work depends on the leadership and collaboration of many different organisations, and often requires very large investments. Around the world organisations are still struggling to make these projects work, but we are slowly starting to see progress.


Paul Budde

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