The Big Change

Subscribe by email

Subscribe by rss

The Big Change Feed What is a RSS feed?

Where IT will take you in 2002

By Steve Nossel

The Country Manager for Intel South Africa provides his vision of the key IT trends and issues for business in 2002…

THE major challenge facing IT departments this year is to get the right IT infrastructure in place to ensure they can successfully address five critical trends:

* taking full advantage of web services;

* realising true supply chain integration;

* getting customer relationship management to work;

* implementing security policies throughout the organisation;

* and providing true mobility to staff through full integration of wireless devices and mobile PCs.

This year we’ll begin to see high-end servers take on the might of mainframes as organisations realise the cost efficiencies of back-end clustering on open industry standard servers. The cost benefit is too compelling to be ignored in today’s economic climate.

Web Services will bring a whole new dimension to e-business. They will transform the speed at which organisations can develop applications and will redefine what good supply chain management is and what good customer knowledge is. Web Services will be like fuel-injection for e-business and anyone sticking with the old ways of working will find themselves stalling in the slow-lane.

2002 will see us redefine the way we think about mobility – if you thought the growth in mobile phone usage was phenomenal you ain’t seen nothing yet! Watch out because the mobile Internet will influence every moment of our waking day. And the impact on businesses will be even bigger – we’ll see organisations change their entire business models to take advantage of the new services that will be available and IT departments will face the huge challenge of integrating and synchronising a multitude of different devices.

E-learning will be on more and more people’s timetables in 2002. Companies will realise the benefits of interactive, multimedia training as well as the potential cost efficiencies from reduced travel expenses and reduced time out of the office. Intel itself has saved thousands of dollars this year through using e-learning globally.

The weakest link in most organisation’s security systems is that they insist on a ‘fortress mentality’ yet 80% of security breaches come from the inside. Implementing security at many different levels (in hardware and in software) is vital and just as importantly companies must develop policies for their staff to adhere to. Security must be treated as a strategic priority, and over the next year we’ll see auditors start to insist on it.

Next year I think the IT industry will have to change the way that it looks at the issue of power. Instead of thinking of it in terms of computers overheating we’ll all have to consider making efficient use of power for environmental reasons and to save money. The debate about how best to manage resources is set to grow throughout the IT community.

2002 will be the year that companies get CRM to “do what it says on the tin”. The mistake many companies have made is to invest in lots of technology but to continue collecting data in vast stove- pipes of stand alone data. Next year, we’ll see companies address this by integrating CRM information to make the data work for them – after all you can’t provide a service if you don’t know your customer.

Standards will play an increasingly important role in e-business as organisations realise the real difference which they can make.

The acceleration of broadband deployment will be one of the most exciting things that will happen over the next year bringing as yet unimagined new capabilities to PC users. I believe that broadband will create a more global sense of community and will help us all to have a better understanding of what is happening in our world through providing instantly available information and communications throughout the world.
In ten year’s time we’ll all be natural users of computers – right now there’s a long way to go before computers are truly intuitive but in the future the power of the PC will be ubiquitous, like electricity.

No discussion yet

Posted in the category: Trends

Time for real-time, but …

By Arthur Goldstuck

The custodian of the American economy, Alan Greenspan, set the scene for a tough year in the world economy when he presented his outlook for the year in a January 11 speech in San Francisco.

Amid the complexities and commentaries that emerged from his speech (full text available at www.federalreserve.gov/boarddocs/speeches/2002/ ) , one concept was ignored but in fact was central to his prognosis: “real-time”.

“A possible significant contributor to (the) emergence of stability – if that is what it is – may be the very technologies that have fostered coincident global weakness: those that have substantially improved access of business decision makers to real-time information,” he said.

He explained real-time in his typical methodical style: “Thirty years ago, the timeliness of available information varied across companies and industries, often resulting in differences in the speed and magnitude of their responses to changing business conditions. In contrast to the situation that prevails today, businesses did not have real-time data systems that enabled decision makers in different enterprises to work from essentially the same set of information. In those earlier years, imbalances were inadvertently allowed to build to such an extent that their inevitable correction engendered significant economic stress. That process of correction and the accompanying economic and financial disruptions too often led to deep and prolonged recessions.

“Today, businesses have large quantities of data available virtually in real time. As a consequence, they address and resolve economic imbalances more rapidly than in the past. At the same time, firms are largely operating with the same information set, and thus resolution of imbalances induces parallel movements in activity. Contractions initially may be steeper, but because imbalances are more readily contained, cyclical episodes overall should be less severe than would be the case otherwise.”

In other words, inventory and cost control are critical to the financial health of corporations, and these need to be managed on a real-time basis. When inventory is not forecast accurately, and the warehouses are filled faster than sales can be closed and fulfilled, excess inventory becomes a dead-man’s-hand on a company’s short- and medium-term performance.

Sadly for Greenspan, for the corporate world and for the American and global economy, real-time is not all its cracked up to be. As Greenspan himself acknowledges. “In the current situation, inventories, especially among producers and purchasers of high-tech products, did run to excess over the past year, as sales forecasts went badly astray; alas, technology has not allowed us to see into the future any more clearly than we could previously.”

But, he says, technology did facilitate the quick recognition of the weakening in sales and backup of inventories.

“This enabled producers to respond forcefully, as evidenced by output adjustments that have resulted in the extraordinary rate of inventory liquidation currently under way. Inventories in many industries have been drawn down to levels at which firms will soon need to taper off their rate of liquidation, if they have not already done.”

But real-time was never meant to take months to elicit a forceful response. The case study everyone is watching is that of Cisco, which almost invented the use of hi-tech for this form of inventory control. As Business Week reports this week (see under Case Studies), Cisco was supposedly using the Internet to bind together its suppliers and contract manufacturers into a seamless whole. Yet, this “network organisation could not “save Cisco from the disastrous inventory build-up”.

The main problem was that the systems Cisco had created may have worked wonderfully well when sales were constantly on the up. But Cisco’s famed real-time data, it turned out, could not handle a sudden downturn. And, it turned out, many customers who had grown tired of waiting for shipments while everyone was buying, buying, buying, had been placing double and triple orders and then cancelling the backup orders when the primary shipments arrived. Before long, inventories were growing faster than sales. Suddenly, the orders stopped, and Cisco was stuck with the inventory. In April last year, they wrote off $2.2-billion of excess stock, and fired 8500 employees.

An expensive and damaging flaw.

And if Cisco can get supply chain management wrong, anyone can. No wonder Greenspan wants us to get to grips with real real-time. Not only must we be able to punch a button at any time and see how sales stack up against inventory, but also what it would mean to inventory if sales suddenly dried up. And what it would mean to the workforce.

Even more important, we must know how to react and how not to react to this information.

Here lies the greatest danger of real-time.

The temptation is great, when the front wheels of demand come off, to get rid of as many of the back wheels of supply as fast as possible. Typical real-time strategy would suggest that cancelling manufacturing orders and laying off workers would be the first response. it certainly looks good on the balance sheet. But long-term scenario-planning, on the other hand, would show that your ability to respond to improving market conditions would be severely handicapped by such actions.

This is hardly a new argument. Short-term responses should always be made in the context of long-term planning. But the danger exists that now, especially with the shadow of all that excess inventory falling over the economy, real-time will become a goal in its own right. The stock market, with its moment-by-moment responses to moment-by-moment developments and rumours, rewards that kind of thinking.

But in the long-term, as the economy improves and hiring again becomes the number one corporate priority, no one is going to look at the cost of firing, paying severance packages, and then, perhaps a year of two later, rehiring and retraining. Because of the immediate perceived benefits of real-time, these long-term costs tend to be overlooked. As a result, real-time in fact becomes a veil over long-term. Short-term cost control is embraced at the expense of long-term cost control. The corporate strategic roadmap becomes an optional extra instead of the blueprint for the organisation.
* Arthur Goldstuck is editor of The Big Change and author of more than a dozen books on the Internet and urban legends. He heads the independent consultancy and research house, World Wide Worx.

No discussion yet

Posted in the category: Trends

More Posts

About

The Big Change is a business strategy blog and newsletter published by Arthur Goldstuck, managing director of World Wide Worx, a leading technology research organisation based in Johannesburg, South Africa.

Read more ...