E-enabled and Performing

The Rs 501-crore Samsung Electronics India (SEIP)–a leader
in the color monitor segment with a total shipment of 451,000 pieces during
1999-2000–maintains an average inventory level of three days. And its shipment
has rarely got delayed.

The Rs 236-crore auto component manufacturer Sona Koyo
Steering has decided to go online with its suppliers in the development and
manufacturing process through an extranet accessible through a browser. The
company expects that with the system in place, the product cycle time will come
down by at least 40%.

Another
auto component manufacturer, the Rs 80-crore Hi-Tech Gears has decided to adopt
Windchill, a collaborative commerce (C-commerce) tool that shall help its
different departments work more closely and reduce the time-to-bid for global
OEM orders from eight days to two days.

These are just a few examples of what happens when businesses
incorporate Internet technology into their core business processes.

Today, companies, large and small, are using the Web to
communicate with their partners, to connect to their back-end data-systems, and
to transact commerce. This is e-business–where the strength and reliability of
traditional information technology meets the Internet. This new Web+IT paradigm
merges the standards, simplicity and connectivity of the Internet with the core
processes that are the foundation of a business. The new killer applications are
interactive and transaction-intensive, and let people do business in more
meaningful ways. The demand for such applications is rising in the country and
enterprises are eager to adopt this new business paradigm. The greatest
deterrent in India–a severely limited bandwidth.

In countries that do not suffer from a bandwidth crunch,
enterprises are successfully using the Internet as a new tool of business–allowing
electronic exchange of information, goods, services and payments. Globally,
e-business has really been picking up: Boeing booked spare parts worth $100
million over the Net in 1997; GE saved a fortune by electronically buying $1
billion worth of goods from its more than 1,400 suppliers, and IBM sold $1
billion worth of computer products in February 1999, through its Web site.

According to a Nasscom-McKinsey study, the global spending
through e-commerce is likely to touch $1 trillion in 2004. India too, has the
potential to create e-business worth $1.5 billion by 2004 and around $10 billion
by 2008. And the opportunity lies in both B2B and B2C arenas.

Working off the Web

But e-com is just a transactional component of e-enablement.
E-enablement is about using the networking technologies in such a manner that
most of the operations of an enterprise happen off a network–linking back to
the suppliers and transacting with the customers, for example. The promised
benefits are many–accurate deliveries, overnight order fulfillment, and
real-time, self-service information, all of which require very tightly
integrated business systems.

A typical example can be that of a sales person, in a
brick-and-mortar company, who is constantly on the move. He or she might carry a
laptop to make presentations to the clients, but when required to get in touch
with the office, there would be the telephone, or, worse, the courier for
sending a detailed report. Moreover, the visit to the local office to file an
activity report would always be there. A significant time lag.

On the other hand, if it is an e-enterprise, employees just
need to log on to the company Web site and update their activities, download
whatever information they want, check out for instructions and official e-mails,
as also apply for a leave or a salary advance. Also, in case an additional
information is required to respond to a client’s query or the need to consult
the head office before actually closing a complicated deal is felt, a sales
person can consult the office in real time, using either a chat or a
videoconferencing facility. It would be an anytime, anywhere device and any user
office in the true sense of the word. A near-zero
time lag.

A case in the point is Samsung, a company that is already an
e-enterprise. Its SAP R/3-based system is quite effective and helps it update
the activity report every five minutes. All its operations, including
transactions with the distributors are strictly done off the Web. However,
despite having deep pockets, the company has not managed to buy immunity from
the bottlenecks created by the low bandwidth. According to Vivek Prakash,
national sales and marketing manager, Samsung, “We do lot of data searching
and activity tracking and the system works perfectly well from any of our
offices, all of which are linked through the VSAT. However, when it comes to
accessing the network from a remote site, it is really a nightmare. Imagine the
plight of the distributors and channel partners who use the dial-up link to log
on to our site and spend hours placing orders or tracking their delivery status,
when suddenly the line goes down. Increase in bandwidth, or for that matter, a
more efficient, reliable and cost-efficient access to the Net will definitely
change the situation and make our operations smoother and cost efficient.”

Going the MAPS way

According to Anil Menon, director marketing, Citrix Systems
India, organizations will have phenomenal benefits in an unlimited bandwidth
scenario. The ready availability of bandwidth will set the pace for e-enablement
of companies in India. This will also hasten the process of connectivity at the
secondary level, viz extranets linking organizations to their suppliers,
customers and channels. An era of extended organizations and B2B commerce shall
arrive.

Menon also feels that with bandwidth in place and companies
working off the Web, networking will undergo major changes. “Today
networking talks of connectivity only. This will not be the case any longer.
There will be a service-driven network with services being delivered by back-end
servers. The classic changes that will happen will not be restricted to thin
clients only. The kind of devices that will connect to access applications may
be thin clients, particularly in transactional environments like railway
reservations, hotels and factory shop floors. But, they can also be wireless and
handheld devices and set-top boxes,” he says. According to him, the browser
will be the access point for true anytime, anywhere computing, with even the
common desktop applications like word processors and spreadsheets moving on to
the Net–desktops giving way to Webtops.

Experts feel that the server-based computing model will help
organizations save 35%-65% of their costs depending on the environment. Other
than cost benefits, users will get better security, centralized management,
higher IT adoption rate, and fast access to applications from anywhere. In
short, the increase in bandwidth will usher in an era of MAPS–management,
access, performance and security.

Apps on the tap

More bandwidth will also mean more ASPs on the Web, with the
apps-on-the-tap model determining the way we acquire applications. Users will no
longer need to choose an up-front IT acquisition route, which is restricted by
capital expenditure budgets; they would be able to hire server farms and
applications or get into service-level agreements. In fact, it probably will
work like the telephone system where users get an invoice at the end of the
month, listing the applications and the time used. Businesses will be able to
adopt a more centralized IT model to reduce complexity.

A no-bandwidth-constraint environment will also mean that
companies do not have to spend on costly network technologies like VSAT to gain
uninterrupted and smooth connectivity. With ASPs providing apps on the tap,
applications hitherto restricted to large corporates on account of high costs of
their acquisition, could well percolate to the SME and SOHO levels though the
pay-by-use model. A classic example would be cyber cafes that today charge
around Rs 30 for an hour of access. The new model may well bring down this cost
to Rs 5-10 for an hour of usage, for a given application. Organizations will be
able to provide their employees a roaming computing profile–doing away the
need for carrying a desktop or laptop.

Apps ahoy!

While present day users, limited by the bandwidth, are able
to afford only mission-critical applications on their networks, the increase in
bandwidth could mean that they would be able to access more applications and
that too at lower costs. But according to Menon, though specialized applications
like videoconferencing would become a reality, only few corporates would deploy
it and that too for few users. The predominant applications would be office
suites, messaging, HR/payroll, CRM and supply chain management, mainly due to
their importance for the enterprise as a whole. Through ASPs, companies would be
able to get the latest applications on a pay-by-use basis, with automatic
periodic updates.

Increase in bandwidth will also mean that businesses run live
video for conferences and training seminars, not bothered by the slow
transmission speed and poor video images that have so far restricted such
practices. Live demos and presentations will become closely entwined with
e-commerce, as consumers will expect companies to give them ‘real’ feel of
products before they purchase one. Improved bandwidth situation will see on-line
retailers competing with each other to provide customers with ‘better shopping
experience’ by allowing them to browse through three-dimensional shelves of
their inventory or watch brief clips of their products.

The concerns

Jim Shepherd, senior vice-president, AMR Research warns that
the notion that a company can transform itself into an e-business by simply
buying a piece of software and adding it to its existing infrastructure is wrong
and dangerous. Talking about e-business strategies and trends in an article in
The Executive Way, Shepherd says, "Companies must instead incorporate
e-business concepts into their overall business strategy. Besides, they also
need to carefully assess the impact of new e-applications and Internet commerce
services on the IT environment and the overall business."

When the bandwidth is not an issue, the traditional
brick-and-mortar Indian enterprises will probably need to heed to this warning.
A mad rush for becoming e-enabled, with a casual approach towards technology,
may land them into trouble. They will need to carefully choose and adopt
e-business models that efficiently address their prioritized requirements,
through appropriate enabling applications and technologies.

Shubhendu Parth
in New Delhi

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