for IT -- Sept -27
for IT -- Sept -27
;JP; ANPAc..r.. IT-infrastructure-needs JP/ /
Infrastructure: Trend, need, cost or investment?
By Paulus Bambang WS
JAKARTA (JP): In the face of AFTA, just 16 months away, every company in this region, like it or not and ready or not, despite internal problems such as debt restructuring and capital expenditure limitation, will have to compete with global players.
Forms of competition will change rapidly and will often be unprecedented. Many previous theories will have to be reviewed due to the huge differences in speed, velocity and complexity compared with those of the decade before.
There will be at least three conditions during the implementation of AFTA in 2003 and APEC in 2010 that will have to be carefully anticipated by businesspeople, as follows:
The first is that customers will be totally in control. With Internet technology, they will have more choices than ever before. While their behavior, wants and needs will be carefully tracked and observed by companies, likewise they will also track and scrutinize every movement of each product, including its innovations and substitutions in the entire industry.
Customers will become smarter and possess more complete information prior to decisions of purchase. Interconnectedness between customers will become more prevalent, so that success in serving one customer will be of paramount importance and failure to serve one customer could bring fatal results. Zero defect or at least "6 sigma quality" will be a must if you want to become a real global customer-centered organization.
Second, speed and velocity of information and transaction is just one click away. This means the entire business process will radically change to become "real time at the speed of thought". Inventory management, cash management and manufacturing facilities will be more open and transparent to customers. Each requirement must get an immediate response, otherwise consumers will quickly move to another source. This will be made faster by the Internet technology, which is currently at its initial stage.
The third very important trend is that innovation and product development cycle will become shorter and shorter. Unlike before new products and services will be introduced to the market in months rather than years or decades. Hence, the capability to blend the strength of knowledge management with Research and Development capacity will become very vital.
From the above three conditions, it is obvious that IT will play a crucial role for the survival of businesses in the coming new era. It is irrefutable that, despite the Dot Com and Nasdaq crashes, IT will no longer be a luxury item, but a major artery for the lifeblood of businesses in the competitive era in the near future.
IT readiness
Although AFTA (ASEAN Free Trade Agreement) is getting close, many Indonesian companies are not able to do much. They have not been able to make final and full settlements of debts incurred in the precrisis period, let alone think about IT development. Other ongoing problems that increase their burden are the unstable exchange rate and political situation; so many doubt our readiness to compete in AFTA. Businesspeople, economy observers and the government should be fully aware of this condition. Otherwise Indonesia, the biggest market in Southeast Asia, might experience a second colonization -- an economic colonization -- without being able to rise as a reliable manufacturing nation.
Executives should be bold enough to end this vicious circle by selecting the correct priorities to achieve superiority in the coming competition, namely by a fundamental straightening-up.
Phase One. Looking outward and realizing that the competition is real and severe. The three conditions mentioned above will have a major influence on the ways businesses are conducted in the future. We must start to think in the wider scope of ASEAN rather than the narrow borders of Greater Jakarta. We should not think about protection but competition and we must be honest with the realities: whether our company will survive when AFTA is implemented.
Phase Two. Looking forward. Carly Fiona, both the former and current chief executive officer of Hewlett Packard, is a monumental example in finalizing the mega merger between Hewlett Packard and Compaq some time ago.
Carly wrote: "Looking forward is about how we can extend our core assets and apply them in new adjacent markets. We can fuel and capitalize on change by providing access to information and communication technologies where it currently doesn't exist to create growth opportunities in the global ecosystem. As entrepreneurs, we are always asking: 'Where will the next fast- growing market come from? Where will new ideas come from? Where will our customers come from?' We can begin to think about the answers to these questions by thinking about imbalance in the global ecosystem."
To prepare a correct strategy based on input from "Looking outward" and "Looking forward", an internal straightening-up becomes inevitable. This takes us to the next phase.
Phase Three. Looking inward. This activity is similar to looking at oneself in the mirror, seeing the truth and acting on the truth. Courage is required to change old styles with new styles, with new technologies, with new competence and if necessary, even with new blood.
Gary Hamel said: "In order to survive, companies need to mirror the internet itself. They need to be open, democratic, tightly networked, experimental, endlessly adaptable and utterly restless."
This becomes easier when our IT infrastructure is well organized. For example, hardware that includes multiuser systems, servers, single-user system, PC and workstation as well as data communications equipment like local area network, internet design and intranet access.
These are "must-have" items which must be continuously adapted to business requirements. The software should include software infrastructure system, application tools and application solutions that fit the new business processes and match the new rules of the business game.
A consultant is needed so that the hardware and software function to the optimum requirement. The consultant should cover the following areas: consulting, implementation, operational services, and training and education as well as support services.
If budgeting is the problem, then leasing should be an attractive alternative. For the past few weeks quite a number of companies have been offering financing facilities for both hardware and software. Cost wise it becomes higher due to the interest, but it is a big help to cash flow and it changes capital expenditure investment into operating expenses.
Another alternative, which is also today's trend, is outsourcing, meaning a company pays only costs according to a certain scheme, such as pay per usage, monthly payment, time and material costs, joining fee plus per user cost. This alternative will help a great deal though not giving the most sophisticated solution due to limited funds and human resources. The weakness is, of course, in its high dependability on the supplier of outsourcing services.
There are several factors to be taken into consideration in choosing the budgeting alternatives and implementation of IT infrastructure:
Factor number 1. Speed and complexity of program. The faster its requirement and the more complex its infrastructure, in today's financial and economic condition, companies are well advised to be more cautious. Here, risk sharing becomes preferable, therefore, leasing, subcontracting and outsourcing are correct choices. Risk sharing will also make the vendor more careful in designing a whole concept and in choosing the hardware and software. Unarguably the total expenses will be greater than a direct purchase but when deducted by the risks of malfunctioning programs as well as obsolete technology, the difference in the cost can then be considered as "insurance to get the best".
Factor number 2. Limited capability of human resources and an urgent requirement for a competitive edge ("a must-have investment"). In this situation a reliable Application Service Provider is recommended, such as the use of BCA's ATM and internet network to speed up distribution and communication with customers. This type of payment per usage will reduce total cost of ownership in the long run considering the high costs involved in hardware, software and brainware.
Factor number 3. Branding to strengthen company position. In this case it is better to use strategic alliances with a profit sharing scheme or Application Service Provider (ASP). Normally this is done with a renowned vendor, so that such synergy will indirectly enhance the company's image for example an airline using Singapore Airlines' Krisflyer as its ASP or an automotive company in conjunction with Astra Group as the ASP famous for its cost effectiveness. Comparably the costs in this scheme are higher, but the difference should again be considered as marketing and promotion costs.
Factor number 4. Need for total integration. Here, an experienced implementor and an entire software package are required. A single direct purchase is advised and should anyone offer a joint financing and operation venture, such can be given consideration if the total cost of ownership is lower in the long run.
The question that remains is whether there is another way to anticipate the future competition based on "outward looking" and "forward looking" concepts, aside from the maximum usage of IT.
The answer is a "yes". The manual system will still exist.
But for how long?
IT is the accelerator to succeed in the fast lanes of the global competition era. Your investment today will decide the survival of your company in the future.
(The writer is the managing director of Astra Graphia IT Solution).