Tag Archives: IT

IT: bringing both growth and headaches for developing nations

By David Bicknell

A number of developing nations are turning to IT to drive economic growth and create new employment opportunities.

Rwanda in Africa recently attracted the interest of the US Carnegie-Mellon University to invest in the country. French writer Francis Pisani is also visiting Rwanda on his global innovation tour.

But investing in IT can create headaches for developing countries too. For example,  a lack of money is threatening to halt the implementation of a Government IT project planned to increase Vietnam’s e-Government capability.  

The project, originally approved by Vietnamese Prime Minister Nguyen Tan Dung in September 2010, has largely failed to get off the ground.

Part of the project’s plan was to apply e-Government at all State-owned agencies from communal to central levels.

But according to the country’s Ministry of Information and Communications, Vietnam News reported, to date, 31 out of 63 provinces and cities across the country have not developed plans to implement the project. Most local authorities say they don’t know where or how to start.

Cao Dang Phuong, head of the ministry’s representative office in Da Nang City, said only seven out of 16 provinces and cities in the central region had plans to carry out the project.

Ho Quang Thanh, director of the Department of Information and Communications in central Nghe An Province, said that the biggest problem for most localities was the lack of funds for implementation.

To Thi Thu Huong, deputy director of the ministry’s IT Department, said: “This is a big project and to bring it into practice is a challenge as there is no financial source for it.”

The ministry has registered to carry out part of the project in 2012 at a cost of VND55.4 billion (US$2.6 million), but the lack of funding has hindered its implementation.

Nguyen Van Hai from the ministry’s IT Application Promotion Department told Thoi bao Ngan Hang (Banking Times) newspaper that VND100 billion (US$4.8 million) had been approved to execute plans at different ministries and localities this year, but it seems that is much too small to drive the successful IT development Vietnam needs.

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Business need for reduced costs drives Cleantech demand

By David Bicknell

New research from audit specialist Grant Thornton has highlighted the change drivers behind the growing demand for cleantech products to reduce business costs.

Grant Thornton’s third annual International Business Report (IBR) report on the global cleantech industry shows that in general the adoption of cleantech products and practices is motivated by the commercial need to reduce costs and increase profits. It is no longer about being ‘green’.

For example, despite short-term fluctuations, the trend for key commodity prices continues upwards for example, Brent Crude oil recently rose back above US$120 a barrel. The outlook for nuclear energy is unclear following the Fukushima disaster – Germany, for example, has opted for the renewables route – and partly due to this uncertainty, cleantech is emerging as a suitable alternative source of energy or a means of reducing  consumption of expensive resources.

Over half of the business practitioners surveyed for the IBR who choose cleantech options do so to reduce their costs (52%); with 45% making the choice as a way to increase profitability. Corporate social responsibility (CSR) requirements and environmental concerns also remain important, but are not the main reason for adoption.

This increasing maturity of the sector is filtering through to expectations of cleantech business for the year ahead creating a bullish outlook for 2012.

Compared with companies in other sectors, the Grant Thornton report suggests that privately held businesses in the cleantech sector are now among the most confident enterprises in the world when it comes to future prosperity, far outpacing the optimism found in most global industries – and with good reason.

64% of cleantech businesses interviewed expect revenue to increase this year, up from 54% the previous year. 64% of respondents also expect higher profitability this year compared to 42% in 2011.  Cleantech providers currently see the greatest demand from the developed economies of Europe (51%), and US and Canada (39%).

Nathan Goode, head of energy, environment and sustainability at Grant Thornton UK said: “Interest in cleantech is no longer just about environmental concerns, it’s about whether it offers solutions that can boost the financial performance of companies. What we’re seeing is the potential for these technologies to compete with traditional forms of energy and the expectation that over time, they should.

“Governmental support remains key in many sectors and jurisdictions for cleantech to be successful, and fluctuations in this support are causing short term volatility for the cleantech arena. The mood of optimism in the sector appears to be driven by fundamental trends and reflected in broader indicators such as oil prices.

“Cleantech is a sector on the road to commercialisation but it is not necessarily all the way there yet. We’re at a stage now where the value proposition for cleantech is to save money and consequently demand for cleantech is set to increase meaning we could be on the cusp of something very big indeed.”

Cleantech and IT

The Grant Thornton report demonstrates how the cleantech sector is in transition. There are more companies involved in R&D (42%) and IT (29%) than in previous years (31% and 22% respectively).

Goode said: “Judging by this analysis, cleantech appears to have parallels with the biotech industry in that R&D is being used to explore new concepts and applications for existing technologies. As a result, R&D and IT is receiving greater focus as companies exploit advances in areas such as storage and smart grid technologies. In addition, the sector is adopting a broader base on which to apply its learning, putting greater focus on areas such as waste and water.”

In contrast, manufacturing activity has become relatively more subdued. The number of businesses citing involvement in manufacturing of energy efficient products has decreased over the past year from 26% in the 2012 survey to 19% in 2011, although manufacturing of products for cleantech energy generation has increased marginally to 17%, up from 14% the previous year.

There could be a number of reasons for this, but the Grant Thornton report stresses that the issue of capital constraint represents a big challenge for the sector and as a result, governments.

Goode added: “Manufacturing items such as wind turbines and waste processing plants is an incredibly capital intensive business.  However, what we’re seeing is a slowing in the pace of growth as a result of constraints on raising capital.  This continues to be an issue, especially in European economies where credit is constrained.

“Governments must be mindful of acting as a brake on investment, as it will quickly become a barrier to achieving carbon reduction targets and the desire to supply businesses and households with alternative supplies of energy – and at a time when it’s really starting to compete.”

Fast-growing BRICS countries face IT challenges, says economic think tank

Much has been written about the economic potential offered by the BRICS countries: Brazil, Russia, India, China and South Africa.

And yet, despite improvements in many drivers of competitiveness, the BRICS still face important challenges to more fully adopt and leverage IT, according to the latest  Global Information Technology Report 2012: Living in a Hyperconnected World, published by the World Economic Forum.

Despite efforts over the past decade to develop information and communications technologies (ICT) infrastructure in developing economies, a new digital divide in terms of ICT impacts persists,  the Forum says.

Even for the fast-growing BRICS, an insufficient skills base and institutional weaknesses, especially in the business environment, present a number of shortcomings that stifle entrepreneurship and innovation.

It’s not unreasonable to argue that they may have something to learn about delivering successful IT projects too, as developed countries have had to do. Alternatively, they may have some insight to pass on.

When it comes to leadership in IT adoption and usage, it is the usual suspects, Sweden (1st) and Singapore (2nd) that top the rankings in leveraging information and communications technologies to boost country competitiveness.

Switzerland (5th), the Netherlands (6th), the United States (8th), Canada (9th) and the UK (10th) also show strong performances in the top 10.

It is equally perhaps no great surprise to find that ICT readiness in sub-Saharan Africa is low, with many countries showing significant lags in connectivity due to insufficient development of ICT infrastructure, which remains too costly.

Even in those countries where ICT infrastructure has been improved, the Forum suggests, ICT-driven impacts on competitiveness and well-being trail behind, resulting in a new digital divide.

China

At 51st place in the rankings, China leads the BRICS countries. Yet, the report says, “this should offer little consolation in light of the important challenges ahead that must be met to more fully adopt and leverage ICT.

“China’s institutional framework (46th) and especially its business environment (105th) present a number of shortcomings that stifle entrepreneurship and innovation, including excessive red tape and long administrative procedures, lofty taxation amounting to 64 percent of profits (124th), uncertain intellectual property protection—it is estimated that almost 80 percent of installed software in China is pirated—and limited or delayed availability of new technologies (100th).”

In terms of readiness, the country ranks only 87th in terms of its infrastructure and digital content, mainly because of its underdeveloped Internet infrastructure.

In terms of actual ICT usage, although the figures remain low in absolute terms, they should perhaps be considered in light of the sheer size of the country.

ICT usage by businesses is significant (37th). China is becoming more and more innovative and this in turn encourages further and quicker adoption of technologies. The Chinese government is already placing significant hopes in IT as a catalyst for future growth, because more traditional sources of growth are likely to dry up.

The efforts of the government in promoting and using IT are reflected in China’s strong showing in terms of government usage (33rd). For the time being, though, the overall impact of IT on the economy remains limited (79th).

India

However, contrast China’s position with India and you find that India, ranks nearly 20 places behind in 69th position.  India delivers a very mixed picture, with encouraging results in some areas and a lot of room for improvement elsewhere, notably in the political and regulatory (71st) and business and innovation environments (91st).

Extensive red tape that stands in the way of businesses and corporate tax is among the highest of all the countries analysed by the Forum. For instance, it typically takes four years and 46 procedures to enforce a contract in India. Starting a business is longer and requires more paperwork than in most countries. Other variables fare better, such as the availability of new technologies (47th), the availability of venture capital (27th), the intensity of local competition (31st), and the quality of its management schools (30th).

One of the weakest aspects of India’s performance lies in its low penetration of ICT. The country ranks 117th in terms of individual usage, with 61 mobile subscriptions for every 100 population, a relatively low figure. Only 7.5 percent of the population uses the Internet; just 6 percent of households own a PC and broadband Internet remains the privilege of a few, with less than one subscription per 100 population.

“The big story is how India is falling behind in relative terms as far as its overall measure of technology and competitiveness is concerned,” says Soumitra Dutta, Roland Berger Professor of Business and Technology at INSEAD, a co-editor of the report. “A few years ago, India was ahead of China.”

Brazil

Another member of the BRICS, Brazil, positioned in 65th place, benefits from  strong levels of business ICT usage (33rd). These, combined  fairly advanced levels of technological capacity (31st) in particular segments of its industry, allows the country to achieve one of the strongest performances of ICT-enabled innovations in the Latin American region, both in terms of new products and services (29th) and more efficient processes (34th).

However, despite these strengths, its overall business environment with burdensome procedures to create new businesses (138th) and high tax rates (130th), in addition to its high mobile phone tariffs (133rd) and poor skills availability (86th), hinder the potential of the Brazilian economy to fully benefit from IT and shift toward more knowledge-based activities (76th) at a faster pace.

That said, Brazil is now the seventh largest ICT market in the world, with £106bn spent in 2010.

World Economic Forum Global IT Report

IT is from Venus, the Business is from Mars

By David Bicknell

Monday morning and another week for IT and the business to work together in the best interests of the organisation – though if you were to read this article from the Wall St Journal, you might think otherwise.

The  piece, “IT is from Venus, non-IT is from Mars”, by research scientist George Westerman from the MIT Centre for Digital Business, suggests  that in many companies, the relationship between IT and business leaders is a very troubled marriage. Miscommunication is rife, leaving executives struggling to figure out what’s working for the company, what’s not, and how to improve the situation.

The article argues that ‘the marriage’ can be saved, provided IT and business executives have a clearer understanding of the needs of both sides, how they work and the challenges they face. That means business leaders and IT executives must talk with each other about their operations and about how IT can help the company fulfill its goals, instead of talking past each other about how one side or the other is preventing that from happening.

The article cites four separate studies by researchers at MIT that show that transparency—clear communication about IT performance and decision processes—is the best predictor of the business value of IT. These studies all show that transparency creates an environment that improves both IT performance and the IT/Business relationship.

The article discusses four areas where IT and non-IT executives fail to understand each other clearly, and how transparency can help bridge the gap between two completely different interpretations.

On IT Cost and Performance:

The Business says: “IT costs too much; we’re not getting the service we’re paying for.”

IT says: “Given our budget constraints, we’re doing really well.”

On Risk Management:

Business says: “I want it this way.”

IT says: “We can’t do it that way.”

On Prioritisation:

Business says: “I need this right away.”

IT says: “Sure, but three other executives just told me the same thing.”

On Accountability:

Business says: “Why do you make me go through all of this bureaucracy?”

IT says: “Our methodologies are how we make sure everyone does the right thing.”

The article concludes that “creating transparency takes extra time and effort on everyone’s part, especially IT’s. But this is one project that definitely pays. Transparency around performance and decision processes improves the business value of IT and builds trust between business and IT people. As everyone learns to work better together, IT becomes part of the company’s business-level decisions and initiatives, not its own world. When that happens, the marriage of IT and the business side is really working.”

IT and Climate Change: out of sight, but not out of mind?

By David Bicknell

There isn’t a much bigger example of fundamental change than climate change. And there aren’t any bigger examples of breaking down the barriers to change than trying to get some meaningful action to cut greenhouse gas emissions. At a time of economic autumn, there is a risk of climate change and sustainability heading down the business/government ‘must-do’ pecking order.

So it’s good that the United Nations conference on Climate Change has come round this week to concentrate minds. This year, it’s in South Africa, in Durban.

I liked this blog written by Colin Curtis, director of sustainability at Dimemsion Data, who sums up some of the issues and discusses how the company’s own IT department has performed in reducing the organisation’s carbon footprint, notably through virtualisation.

I suspect with the travails of the Euro, we may hear less about the UN conference this week than we did a couple of years ago in Copenhagen. But out of sight needn’t mean out of mind.

Mutuals: IT group’s white paper response warns of risk of ‘fragmented and disconnected IT systems’

By David Bicknell

In its response to the Open Public Services White Paper, Socitm,  the association for all IT professionals working in local authorities and the public and third sectors, has said it welcomes the prescription for strong local government set out in the White Paper.

“Greater freedoms from central control, devolution of functions, funding following the individual, power and control to neighbourhoods, enhanced local democracy, community budgets and commissioning combine to create a vision of the future” consistent with its own strategy for IT-enabled local public service reform launched by earlier this year.”

But, it argues, “this liberating, optimistic future is at variance with much of the current commentary about the future of local public services which is based on analysis of the likely impact of actual policies that have been put in place.”

For example, it says, the recent NLGN report, Future Councils, envisages four types of council emerging by 2020:

Clustered – federations of local authorities sharing many services;

Residual – councils that have followed strategic commissioning to its logical conclusion, divesting themselves of all direct service provision;

Commercial – entrepreneurial councils, selling services to other local authorities and the private sector;

Lifestyle – local authorities which establish a particular brand for their area and focus their energies on promoting that brand.

Socitm’s view is that all these models would have a detrimental impact on the ability of local politicians to shape local services in response to local needs in the ways envisaged in the Open Public Services White Paper. None, it argues, would enthuse local government employees with a sense of purpose nor, consequently, commitment to the proposals presented.

It insists that it is not arguing for maintaining the status quo. On the contrary, it says, change is essential if the relationship between the public and public service is to be rebuilt. Reform would be founded upon greater collaboration, redesign and innovation in which local public services organisations continually renew themselves. Local authorities would play a key role by becoming ‘reforming’ councils.

However, Socitm doesn’t appear to be too keen on mutuals and new service providers playing a role. Its response says, “Reforming councils recognise that much of their ability to transform is enabled by developments in information handling and technology deployment. Merely implementing technology is not in itself the change needed. Fundamental changes to processes, organisational structures, job roles and cultures are also required across localities and public service organisations. This will be essential if citizens and neighbourhoods are to be empowered, rather than confronted by a plethora of fragmented and disconnected information systems run by mutuals and other new and existing service providers.”

In the past, Socitm has criticised central government ICT strategies for being too focused on central government and for failing to include local government effectively enough in its thinking.

Socitm says, “Socitm supports the principle of anytime, anywhere, any place availability of public services referenced in section 7.9 of the White Paper.

“The new Government Digital Service (GDS) is presented as the agency that will drive this development. However, the scope of the GDS, as set out in the White Paper, spans central government only; this is at odds with our understanding that the intention of GDS is to cover all public services.

“Four billion of the five billion citizen-government transactions that take place annually are estimated to involve local public services. Consequently, devolution of central government services and their digital delivery will require close integration with local public services if they are to make any sense to the citizen and other service users in localities.

“This issue not mentioned in the White Paper and Socitm is aware of a number of current initiatives supporting distributed service access and digital by default where the centralist, top-down, large scale, standardised, single supplier approach to implementation continues to dominate.

“The hugely important ID authentication and Universal Credit projects fall into this category – local public services have not yet been consulted on these projects despite the extensive experience and know-how they have in establishing service users‟ identities and of taking benefits to the most vulnerable and excluded in our society.”

Could mutuals provide an innovative model for public sector IT delivery?

By David Bicknell

What are the implications for IT delivery of creating public service mutuals and what part might they play in the public sector?

One public sector IT director I spoke with recently suggested that there are areas where mutuals will work exceptionally well. And some  are already beginning to do so. Some may get private sector sponsorship, while others will get charitable status.

These, however, are smaller scale mutuals or social enterprises, and a distinction must be made between those and large scale organisations where, for example, you could set up a mutual company for the whole of IT in a county or region.

There is a belief that the oft-quoted ‘John Lewis co-operative model’ could be an effective one.  One possibility is a shared services model along those lines  as an alternative to outsourcing or a private sector partnership.

That offers the prospect of developing a public service partnership of different organisations, effectively a sort of mutual or co-operative, where everyone who joins the co-operative has a slice of the cake irrespective of their size. The co-operative shares common infrastructure and services, but operates on a semi-commercial basis, possibly working with a private sector partner. Although the model doesn’t yet exist in IT, it is said to work well in agriculture.

Arguably the model overcomes a number of the issues raised by outsourcing and big public-private sector partnerships where there has been financial pain when things go wrong.  The mutual model offers the prospect of a better way, though there is a large difference between this scale of model and smaller mutuals in terms of risk outlook and management.

The IT director said he believe there is an opportunity for mutuals to insist, ‘We’re better than the private sector. We are very responsible about the risks, and we have a public service ethos.  For us ,  it’s not just about making money. We have the discipline of commercial business rigour and the safety net that protects vulnerable adults, for example, in the case of care homes.’

Some local authorities are already considering using mutuals to provide some ICT services. For example, the London Borough of Hammersmith & Fulham has become a Mutuals Pathfinder and proposed a pilot scheme with partners Kensington and Chelsea and Westminster to set up an employee-led mutual to deliver IT services to schools and the council, with the council planning to commission some services from the mutual for a four year period.  The scheme is due to get underway early next year.

Why corporate sustainability strategy is now part of the CFO’s role

By David Bicknell

The organisational politics around sustainability are an ongoing issue. So far the need for a  sustainability strategy has touched those responsible for corporate social responsibility (CSR),  marketing (because of the brand and reputation implications of Carbon Reduction Commitment (CRC) league tables) and IT and Facilities who are having to manage and measure energy usage.

Now, an Ernst & Young report recommends, it is the CFO’s turn to pick up the baton.  As this piece suggests, sustainability trends are shifting the role of the CFO in three key areas:

  • Investor relations:  “Shareholders are speaking much louder and much more stridently than they did just a few years ago.  During the 2011 proxy season, 40 percent of shareholder resolutions were related to ESG issues. And over a quarter of ESG-related resolutions gained a 30 percent “Yes” vote, which Ernst & Young describes as a critical threshold (other observers say anywhere from a 10 to 20 percent vote can motivate companies to rethink their policies).  Mutual fund companies are paying more attention to sustainability related issues, and the rating companies (which have received, ahem, a fair bit of scrutiny lately) are directing more focus towards ESG matters as well.  All this leads to a shift in the duties of companies’ investors relations staffs; and CFOs, according to Ernst & Young, will lend more than a few hands with the demands placed on IR departments.
  • External reporting:  More than 3000 multinationals issue sustainability (or CSR or ESG) reports, and many of these companies now provide more than static or trite glossy PDFs.  Companies including UPS, Timberland, and Microsoft are raising the bar in offering frankness while encouraging increased stakeholder engagement.  To that end, more companies are having their sustainability reporting audited by third parties (such as the Carbon Disclosure Project for carbon emissions performance).  And that experience with third party performance falls into the CFO’s lap because they know how to balance the challenges and opportunities that arise from third-party verification.
  • Operational controllership and financial risk management:  Early last year, the Securities and Exchange Commission issued guidelines to companies on how to disclose risks possibly related to climate change.  Carbon data, and more frequently, water data, is becoming financial data because of these resources increasing price.  What was once tangential to the costs of running businesses has and will be central to the financial risks that come when running a company.  Whether evaluating the costs of large capital projects or ascertaining the reliability of sustainability data, CFOs and the departments they head will be careful when ensuring that all this data is accurate.”

Admittedly, currently this is probably a more US-focused development. But then it’s probably only a matter of time before CFOs here have to start considering the sustainability implications of their job, if they are not doing so already.

Here are five immediate actions CFOs can take to enhance corporate value through sustainability:

• Actively pursue a sustainability and reporting program.
• Ensure that those responsible for sustainability matters do not operate in isolation from the rest of the enterprise — especially the finance function.
• Enhance dialogue with shareholders and improve disclosure in key areas, particularly those related to social and environmental issues.
• Ensure that directors’ skills are relevant to the chief areas of stakeholder concern, including risk management tied to social and environmental matters.
• Consider using nontraditional performance metrics, including those related to environmental/sustainability issues.

Ernst & Young report: How Sustainability has Expanded the CFO’s Role

Aftermath of the riots: lending SMEs a helping hand

With the pictures of the aftermath of  last night’s riots still embedded in the memory and  with dozens of SMEs literally picking up their pieces of their businesses, perhaps it is time for the large to offer help to the small.

Larger business have IT facilities and premises that could be utilised in the short term to help SMEs get on their feet in the affected cities  and London boroughs.

IT suppliers could do their bit in tiding over SMEs who need IT facilities, perhaps provided by Cloud-hosted systems. Now is the opportunity for the Cloud to deliver a solution which is up and running and available quickly.

In addition, the government could be putting some of its array of IT  to good use, giving London-based business a leg up. Insurance will help, and the Federation of Small Businesses has already been pointing out the urgency today.   But SMEs need more. And they need it now.

If you can help, we suggest you contact the Federation of Small Businesses on 01253 336000    http://www.fsb.org.uk/