Singapore is a beautiful city, so long as you stick to its urban limits; the
suburbs are not as easy on the eye. Similarly, the success of e-business
initiatives in enterprises make for beautiful case studies, so long as you stick
to the ones that succeed; stories of millions gone to waste in countless others
don’t quite make for inspiring reading. These were the two driving lessons
learnt at Planet Singapore, one of the world’s largest e-biz events.
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driven home at Planet Singapore was an eye-opener–out of all corporate
spending, as much as 50% goes into inefficiencies. "Making a business
venture successful is not so much about creating new profit avenues as it is
about removing existing inefficiencies. Across the world, most companies have as
much as 50% of inefficiency built into every product and service. Of every $100
you spend on any purchase, about $50 is the cost of in-built inefficiency. What
companies need to do is embrace the new B2B maxim–back to basics–for that is
what will help them survive," says Sanjiv Sidhu, CEO and founder of i2
Technologies.
In other words, what Sidhu is saying is most goods can potentially be
purchased at half the price, it is the inefficiency of the producing company
that jacks up the costs!
What about ERP?
Sidhu surprises with a view opposed to most other tech-heads. During most of
the nineties, large manufacturing units, even service organizations, poured in
pots of money into automating enterprise-processes–installing what are
popularly called ERP systems. "The ERP era was one involving the new
economy look, Y2K, fledgling IT initiatives–there is no reason that ERP should
be adhered with anymore, ERP is dead," says Sidhu.
According to him, ERP has a host of faults. "ERP packages are
accounting-driven, meant to allow faster closure of accounting books. They
ignore customers and focus only on history. It is a bit like driving looking at
rear-view mirrors," the i2 Ceo says, highlighting the case of Dell, which
abandoned an ERP implementation after spending over $50 million.
"After the ERP phase, we had the e-craze of the last two years, aimed at
garnering the highest possible valuation, leading to market capitalization. We
call it e-lipstick," he says. According to him, companies invested in
adding a customer interface through the Net, without bothering about critical
issues like availability and pricing flexibility, which the customer really
wants. "Now that is dying out. Everyone thought e-commerce was the
get-rich-quick mantra. What no one realized is that e-commerce can never be the
answer to corporate success; strong planning resting on an e-commerce platform
is the only workable methodology. So 80% of IT budgets were spent on what the
customers didn’t really care about. In an ideal situation, the ratio will get
reversed, as 80% of tech-spend should be customer-centric.
So, is the picture as dismal as it sounds? No, if Sidhu’s conviction and
optimism are anything to go by. "Executive sensitivity to what technology
can do has gone up in the last two years. Worldwide, and especially in the
Asia-Pacific region, hi-tech is emerging as the most important contributor to
business success and turnaround. Cutting costs is the answer to creating greater
profits and streamlining the functioning of any organization," says Sidhu.
Customers ride on TradeMatrix
The i2 Tradematrix Promise
- Ordering products from enterprises over the web will be more accurate, convenient and efficient than any other method
- Enterprises can provide customers with an online shopping experience tailored to their needs
- Enterprises can enhance trading relationships with both suppliers
and customers - Enterprises will have better forecasting capabilities, dramatically increasing responsiveness to customer demand
Toward this end, i2 propounds the use of Trade—Matrix solutions to
transform and optimize the supply chain process. The complete suite of
TradeMatrix solutions is targeted at addressing enterprise needs in the supplier
relationship management, supply chain management and customer relationship
management, along with a content and technology platform that enables
enterprises to make decisions faster in every phase of business, regardless of
how far they have progressed with an e-business strategy.
"Three years ago, we started our commitment-to-customers drive. We set
ourselves a target of creating $50 billion in customer wealth–through savings
arising out of rooted-out inefficiencies–by 2005. A year ago, we upped the
scales as we were doing far better than we thought. Having achieved over $16
billion in customer savings already, we pushed the target up to $75 billion. We
have focussed so far on horizontal industry segments, but now we will also push
into vertical sectors like banking, construction and insurance," Sidhu
says.
Customers appear to vindicate the bullishness. At Planet Singapore–an
e-business event organized by i2 Technologies and co-sponsored by many of i2’s
partners–were a host of companies that have been using TradeMatrix solutions
for some time, with tangible dollar savings. While most companies desisted from
putting their finger on investments made or returns therefrom, all admitted that
investments were being realized as savings of equal denomination within a year’s
time. "i2’s solutions combine B2B exchange technology with proven
best-of-breed supply chain planning tools. The result is a highly intelligent
B2B exchange where buyers and suppliers can procure indirect and direct goods,
collaborate on the design of products, automate the order fulfillment process,
and anticipate shifts in market demand," according to JP Morgan.
What TradeMatrix does?
An observation made at Planet was "the TradeMatrix model of supply chain
management is collaboration taken to its absolute extreme". Nothing could
explain it better. The software is aimed at transforming and optimizing the
supply chain process, buoying bottomlines and resulting in better value for both
suppliers and customers. It connects an enterprise with suppliers (SRM) at one
end and with the market (CRM) on the other in an integrated value chain. This
helps deliver customized services to customers and source customized services
from suppliers with great speed and efficiency by squeezing out the wastage.
Pallab Chatterjee, executive vice-president of i2 Technologies, says this
solution package should work strategically in the Asian region, especially in
India. "The global market for SCM solutions is worth $5.4 billion and is
set to grow rapidly in the years to come, especially in the Asia-Pacific region,
including India. Asia-Pacific is the region that was hit badly by the meltdown
and cost-cutting and delivering value will form the core of a makeover. The fact
that Planet has moved out of the US for the first time and to Singapore
signifies the growing importance of Asia as a market for e-business
products," he adds.
According to Chatterjee, the market should be worth $100-150 million in three
to four years’ time. "The growth rate in Asia is two-three times that in
the US. The driving force for manufacturing companies in Asia is visibility and
velocity. Multiply the two and what you have is extreme velocity with clear
vision. Admittedly, there is a blip in investment at the moment. But look at it
historically, these conditions always go away in two-to-three quarters.
Inventories have piled up, let them squeeze them out and you will see a
resurgence."
Asked about competition, Chatterjee chuckles and insists that all i2 is
concerned about is partnerships, because it is teams that will power i2’s
march towards its dream. His CEO is more candid when asked about rivals. Says
Sidhu, "The only competition I see is the lethargy of those chaps at
companies’ IS departments who take months to decide and move files. They are
our number one and only competition!"
Rajeev Narayan in Singapore