Volume 8, No. 1, January 1998
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I have often lamented that the potential of IT has not been harnessed fully by organisations in developing countries. Many organisations do not care to assess the benefits derived from IT applications. However, I believe that these attitudes are changing. One of my recent surveys indicated that one third of top managers found returns from IT were inadequate. Many changes are also taking place in the economic environment in developing countries, which would help focus attention on better management of the IT function within an organisation. For example, in India, many different political parties have accepted the need for economic reforms and competition in the market place. This argues well for the IT industry as competition and reforms in governance are pre-conditions to innovative use of IT. One also notices a refreshingly new approach in formulating policies. The recently set up Telecom Regulatory Authority of India (TRAI) has adopted a very open and consultative process. TRAI developed an approach paper covering key issues and invited comments from various stakeholders. These comments are being discussed in open meetings in several cities. The paper will be revised and discussed once more. A more transparent regime of policy formulation and implementation is likely to encourage private investments. That would mean better telecom infrastructure, more internet users, greater spending on IT for building competitiveness. Consequently, skills in implementing large IT projects will be in great demand. Perhaps professionals like us can play a significant role. In February, WG 9.4 will be meeting in Bangkok and I hope will be able to define for ourselves a meaningful action agenda for the exciting times that lie ahead.
West Indian Seeks IT Insight in the East Stewart Bishop A chance meeting
in late September with Dr. Mohan Kaul, Commonwealth Secretariat, who was
visiting the University of the West Indies, Cave Hill Campus, Barbados,
convinced me that my attendance at two IT activities being held a few
months later in Ahmedabad would be very beneficial. Those activities
were The question of finance not unpredictably appeared to be the major hurdle. However this was resolved quickly as the Commonwealth Secretariat offered to cover costs whilst in India. Travelling expenses were readily assumed by PRT (Barbados) Ltd., a Barbados based Software Company which provides software services for major North American corporations. PRT had relocated from India a few years earlier and currently has a number of Indian IT professionals on its staff, a body shopping manoeuvre undertaken, while efforts are being made to recruit locally and regionally. PRT’s head of Operations, Vishi, I was to discover, is well known in the IT fraternity of India. Preparations for the trip were hectic. These included a one day visit to neighbouring Trinidad to secure the relevant visa. I duly reached IIMA on November 9 after more than 24 hours in airplanes and in terminals at London and Bombay. There I joined almost twenty participants from developing countries (DC’s) in Africa and Asia whose attendances were also supported by the Commonwealth Secretariat - a major contributor to COMNET-IT, one of the organizers of the Workshop. International Workshop The three-day workshop addressed such topics as:
A number of excellent presentations by IIMA’s faculty were followed by discussion among the participants who were able to identify particular problems or situations with which they were familiar. However it was the well-chosen and well documented case-studies from Indian and Singaporean corporations which definitely brought the issues firmly to our attention. These cases can be categorised as relating to Harnessing IT for Organisational Benefits Herein experience with IT utilisation at an Automobile company indicated the need to promote, within any organisation contemplating IT introduction,
Through its recognition of a dynamic IT environment, that company has been able to successfully plan its IT utilisation from the batch processing operations of the 1970s to the current Open Systems installation. IT for Competitive Advantage IT is increasingly being recommended as the vehicle to help firms outperform their competitors. However it must first be determined how their efficiency and effectiveness have been improved. Any competitive advantage from IT may result only from its utilisation in strategic projects. The case of a Bank in Singapore was utilised to demonstrate how a conscious effort had to be made to achieve strategic business growth. Innovative approaches were followed in various aspects such as the nomination of a Vice President, a non-IT person, as IT Project Leader. Business Process Re-engineering, for example, in its Share Custody System, was also instituted. Successful IT implementation According to Land, one very important factor determining the success of failure of an information system is how the process of implementation is managed. One IIMA professor asserted that, for him, “in IT, vision is 15% and the rest is implementation.” An essential element in this phase is the actual planning particularly, the management of the change process. The implementation of Electronic Data Interchange (EDI) at an Indian Airport was cited as an example of a successful one. This ultimate success resulted, to a large extent, from the prior streamlining of operations relating to cargo handling. Overall the most effective presentation at IIM, for me, dealt with “Managing IT Infrastructure”, for herein, one got an idea of the long list of IT aspects which have to be managed if IT is to be successfully implemented. In words ideally relevant to participants from DCs, the presenter cautioned that one must
A most pleasing feature of the Workshop was the quality and quantity of material that was made available to the participants. This contained not only presentations and case studies but also reprints of articles which gave a historical background to such issues as effects of IT on competition, IT implementation and common information systems mistakes made by organisations. This was an excellent Workshop with a collection of participants who cooperated well with each other. IIMA staff was very helpful and accommodating and thus enhanced the enjoyment of our stay there. Annual Convention (CSI-97) The Conference theme, “IT for Organisational Excellence” was most appropriate since it reflected the importance of IT in the search for improved performance within organisations in business or governmental sectors. Currently IT has been applied in the quest for public reform in both developed and developing countries. Activities at CSI-97 included tutorials, keynote addresses, invited papers, technical sessions, discussions and an exhibition. Social activities were also organised. However, due to a clash of events at IIMA with activities at the Convention and an inopportune go-slow involving domestic air carriers, my attendance at CSI-97 was severely affected. The published Proceedings has, to a large extent, compensated for this. Tutorials These pre-convention tutorials, held over two days and conducted by internationally recognized experts, were designed to address state-of-the-art topics through discussions, case studies and presentations. The topics were
I attended the two tutorials on Internet/Intranet and WWW, and was particularly intrigued in the latter with the attention given to the precaution which had to be taken to ensure that “making money on the net” could become more than a cyberspace dream. At the end of the two days there was clear consensus that those two tutorials achieved the objectives of bringing these state-of-art topics more clearly to the participants. Here too the material handed out were of lasting benefits with the inclusion of WWW Frequently Asked Questions taken from the Web and articles on Electronic Commerce. Convention Presentations The Convention started on a high note with two plenary sessions, the second of which featured a video conference from Delhi in which the government’s plan for building an Information Highway was outlined. A discussion followed with prominent Indian corporate managers serving as panellists. The first plenary session featured two keynote addresses on:
Panel discussions were held in some of the Plenary Sessions. Unfortunately I had to default on the invitation to be part of the panel which discussed Experiences from Commonwealth Countries in the utilisation of IT for Organisational Excellence. Comment from Subhash Bhatnagar, coordinator of the workshop. Four participants served as panelists in this session which was attended by nearly 800 delegates. The presentations from the panelists were received very well. Several delegates found Mr. Henry Nyambu's witty presentation of his experiences in Gall Sheet Ltd Kenya to be one of the best presentations of the conference. In the concurrent sessions such topics as client-server systems, software development, end-user computing, artificial intelligence, education and training, intranet/internet and IT applications were discussed. Of particular interest to me was the topic of software development since India has much to demonstrate in the area. Other developing countries including Barbados have been striving to develop information services sectors in which software development has a prominent position. From the first plenary session it was stated that, to develop a world class software organisation, one needed high ambition, good technical, financial and personnel management, a good mix of business involvement and innovation. In such a dynamic field one had to be responsive to customers need and changes in technology in order to remain competitive. Software development is still much a people oriented business and most development organisations experience much difficulty fulfilling the demand for quality personnel. Education and training of the workforce should always be a major preoccupation and several presentations addressed this topic. One suggestion was the need to reengineer IT management education to assist IT management in
Internet/Intranet issues were discussed in several presentations. Electronic Commerce is being pushed as the new wave and hence security and correct approaches to Web advertising/marketing received some attention. Whilst the WWW has many advantages over other forms of advertising, much attention has to be paid to the design and maintenance of a company’s website. A potential customer must be compelled, through its design, to return to a company website. Examples of good and bad websites were demonstrated. The published Proceedings of CSI-97 contains forty papers and extended abstracts on a wide range of topics. Included therein are a number of invited papers on topics of current interest. Exhibition The CSI-97 Exhibition was held at a site approximately 10 minutes away from the Convention Centre. Whilst there was transportation provided between these two areas delegates were somewhat inconvenienced. However at the Exhibition IT ompanies displayed a wide range of their products. Insights Gained The two IT activities at Ahmedabad provided those participants from other DCs a wonderful opportunity to see how India has become a significant player in the global IT arena. The sessions at IIMA gave a good insight into the effective use of IT in organisations with an emphasis on the role management must play. The frameworks for achieving competitive advantage through IT were outlined and in the final session the example of a leading Indian newspaper complemented what we had discussed throughout the Workshop. IT associations have critical roles in DCs (i) to educate and enlighten citizens and (ii) to lobby governments to initiate sound strategies and projects for IT diffusion. The Computer Society of India is an excellent example of an effective association. Thus attendance at CSI-97 left many of us wishing that there was a similar association in our countries. There would then be an obvious forum in which IT professionals from public and private sectors could meet and seek to develop relevant approaches to IT diffusion for development. The visit to India gave me an experience of an Eastern culture. Whilst I had been warned that I was in for a “culture shock”, I still wasn’t prepared. The millions of people, the modes of transportation, even the spicy foods (although I managed these competently) all served to make the visit a memorable one. Many thanks then have to be extended to my Indian friends at Ahmedabad and at PRT (Barbados) who together ensured that I gained both IT and cultural insights. Besides the academic value addition to the participants, the workshop generated a considerable publicity for COMNET-IT. Write up about the event was carried in all the major Newspapers published in India through their editions from Ahmedabad. A write up was also carried in several Newspapers published in the local language. The contributions of the COMNET-IT and Commonwealth Secretariat were acknowledged in the CSI Convention inauguration, conclusion and in many other sessions. Many magazines are likely to carry a report on the workshop. One of the workshop participant, Mr. Rogers Okot-Uma was also asked to chair a session on Software Project Management in the Convention. The Brazilian Software Industry and Electronic Software Distribution Pierre Polzin Introduction The main objective of this article is to analyze the Brazilian software industry and relate it to the electronic distribution of software via the Internet. First, an analysis of the Brazilian software sector will be made. Then, some measures will be proposed for the government to stimulate the Brazilian software sector. In the end, the Internet and the changes related to the advent of the Internet - particularly the implications of the Internet to the software sector will be considered. Software in Brazil In terms of numbers, the Brazilian software market represents approximately 1% of the international software market, but it grew 42% (average annual growth) between 1993 and 1995 And in the last three years, the Brazilian software sector together with the hardware (computer and peripherals) sector grew at an average rate of 25%. As more computers push the demand for more software, together with the fact that the sale of personal computers in Brazil is expected to grow at 30%, suggests that, although the Brazilian software industry is relatively small today, it is expected to be prosperous in the future. Some steps have been taken by the Brazilian government - federal, state and municipal - in order to guarantee the transformation of this positive expectation into reality. The government’s strategy for the Brazilian software industry from the middle of the 70`s until the end of the 80`s was basically to control software imports, promote the local software industry and promote the production and trade of packaged software. However, this strategy achieved limited results - the policy instruments adopted were not strong enough to cope with the complexities involved in fostering the sector (Gaio 1992). Particularly in the 80`s there were no effective stimuli for the development of the software sector (Pondé 1993). At last, in the 90`s a remarkable step was taken: the SOFTEX (National Program of Software Export) 2000 program was initiated in 1993 and is still in progress. Intending to stimulate the entry of Brazilian firms in the international software market, the main aim of this program was to increase the Brazilian market share through an increase in software exports. Coordinated by the CNPq (National Council of Scientific and Technological Development), with the participation of representations of the Brazilian software firms, and funded by the government - and by the United Nations Program for Development -, the program invests in private software development projects. The SOFTEX 2000 Program has become a fundamental tool for the integration of the Brazilian software industry, intensifying the cooperation between firms, government and academic institutions and the relationships between the Brazilian firms - and also between Brazilian firms and firms abroad. The contact with other countries is facilitated, making it easy to form strategic alliances between firms, provide access to distribution channels, facilitate learning of specific forms of marketing and encourage the participation of Brazilian firms in well-known trade fairs, like COMDEX. Other Important Measures Together with the SOFTEX 2000 Program, other measures should be taken by the government to strengthen the Brazilian software sector. The software sector is becoming a strategic sector, in the sense that numbers indicate that it is growing unprecedentedly all over the world. Future employment generation will depend on it, and it will represent a growing share of any country’s National Product. The Brazilian government should attend to three basic problems: 1. Education Education The educational system of the country should be the main point in a policy directed at the development of the software sector. Education and consequently the formation of human resources are the basic requirements for a competitive software industry. Software engineering courses in universities should be intensified in order to graduate qualified workers and prepare them to enter the job market. The government could also implement a procurement policy directed to the educational sector. The government could buy more computers for schools, universities and other public academic institutions with the condition that the software applications to be used in the computers received by these institutions will have to be produced by Brazilian software enterprises. This policy would guarantee an increase in the Brazilian sofware production. This policy would also stimulate a different kind of user-producer interaction. The users - universities, schools, research institutes, etc. - would help the producers - software firms - to detect failures, imperfections or other technical problems in their products more rapidly than normal users would, because these two groups can understand each other easily, since they share common technical skills. The user-producer interactions are, according to Gaio (1992), of particular relevance for the development and evolution of software. They function like a feedback mechanism, helping the firms to know if their products are being produced with quality. Intellectual Property Intellectual property is an important point to be discussed. Piracy - the use and commercialization of illegal copies of software applications - is difficult to control, given the characteristics of software, which is an intangible good (the physical part is the least important part). Although the software firms try to find technical solutions to protect their products against piracy, the illegal copies are easy to make, which is reflected in the high rates of piracy all over the world - particularly in Brazil. The rationale behind the protection of intellectual property is the protection of the stimulus to create. A firm creates new products - innovates - in order to gain benefits associated with the commercial exploration of these products. However, with illegal copies made by other firms or users, the benefits become divided and shortened. The result can be that the returns obtained by the firm that creates do not cover the investments made in the creation process. This would obviously eliminate any stimuli for further creation. In Brazil, the fight agains piracy is becoming stronger. There is a so-called Software Law, implemented in 1987, that established the protection of intellectual property. Since then, piracy is being reduced slowly. The Brazilian Association of Software Enterprises (ABES), trying to reduce software piracy with law suits against pirates, succeeded in decreasing the piracy in 1996 by 7%, which is a major achievement, considering the difficulties associated with the control over use and commercialization of illegal copies. Funding Funding is another problem. There are not enough funding opportunities for software firms in Brazil. There is lack of capital, particularly venture capital. In the US, in the Silicon Valley, US$ 5.5 billion were invested by risk capital investors in new ideas in the last four years. In Brasil, all the money that FINEP (Fund Institution for Studies and Projects) - a public enterprise from the Ministry of Science and Technology, that is the main public institution with the function of funding the technological development of Brazilian firms - has invested in technology during the last 30 years does not exceed US$ 1 billion. It is not a small amount, but it could be more, considering the importance of funding, particularly funding of research and development projects, for creation and innovation. The Brazilian financial institutions in general are still not prepared to fund high risk projects offering low interest rates, because there are practically zero guarantees to be offered by the taker in return. Also, entrepreneurs of small or new firms, that need to be funded, generally do not have the administrative capabilities required to negotiate funds with financial institutions and "sell" credibility to them. One positive expectation about the future of capital opportunities for software firms is the low inflation rates achieved during the last years in Brazil. According to Garcia and Chamas (1997), the macroeconomic stability stimulates the investment in high risk projects that offer potential high returns. The Internet International Data Corporation (IDC) estimated in August 1997 that there were 42,3 million people connected to the Internet - the Web that interconnects simultaneously millions of computers around the world through telecommunication networks. Some say the correct number is 50 million, others say 55 million, but the exact number really does not matter. The fact is that this number is growing quickly every day. As the Internet adopters increase in number, the electronic commerce - commercial transactions made through the Internet - becomes more popular. According to analysts from UNCTAD, the value of commerce through the web is going to be between US$ 30 and 60 billion until the year 2000 and between US$ 200 and 250 billion until 2005. Last year, the transactions through the Internet summed between US$ 2 and 3 billion. The Brazilian numbers are small, if compared with the above numbers. The number of Brazilians connected to the Internet is approximately 2 million. Even with this small number of users, it can be said that the prospects for electronic commerce in Brazil are optimistic. According to a research done in August this year, although only 19% bought through the Web (which is a share less than the 25% of the users worldwide estimated by IDC), 62% showed interest in buying in the future. Another good sign for future sales is the percentage of users that have a credit card: 72% (52% have an international credit card). The Internet and Software Software, in general, has a very small physical part (diskettes, CD-Roms, etc). It is the content that matters. One advantage of software is: the costs of production (and development) are relatively low. As these costs are low, the biggest part of the total costs is formed by marketing and publicity expenses and distribution costs. And here is where the Internet matches perfectly with the software sale process. Internet reduces the expenses of packaging to zero, since the physical part is eliminated through an electronic software sale. It also allows marketing and publicity to be made through the Web, which is cheaper, and permits the software to be distributed through the Web, which is also cheaper. There are two main facts contributing to these cheaper opportunities for marketing and publicity and distribution: • Accessing the
Internet is becoming easier, and What is behind these two facts? The investments in telecommunication infra-structure and the consequent improvements of the telecommunication networks - like enlargement of bandwidths to quicken the transmission of data, and the growing number of Internet service providers and the improvement of their equipments. These are two of the most important points making the Internet access easier, and supporting and stimulating the growth of the number of Internet users, which in turn makes the prices of accessing the Internet and transmitting information fall. With more users there is a demand for more service providers that have to compete against each other charging lower and lower prices for Internet use. Telecommunication Infra-Structure Of course the telecommunication infra-structure varies from country to country. There is a concern in Brazil over its precarious infra-structure. The government has to make continued investments in telecommunication networks to widen the bandwidth of telephone lines and cables, improve them, and also improve the transmission via satellites in order to avoid data congestion and guarantee the competitive strength of Brazilian firms in this new form of world commerce. If a country does not keep pace with the world improvements in telecommunications, then it will face difficulties in exporting and importing through the Internet. Also, if the prices for accessing the Internet are high in a particular country, it will work as a competitive disadvantage. Having identified the main areas of investment to be made, there remain three other problemsto be tackled: • the security
in information transmission over the Web, Security and Surety The security of information transmission is closely related to the confidence of Internet users in the electronic commerce via the Web. If Internet users do not rely on the transmission of valuable information, like credit card numbers, then they will not want to buy something on-line and e-commerce will not launch. How can this problem be tackled? It is already being tackled, together with the surety problem. What is promising to be the solution is a security protocol called SET (Secure Electronic Transactions), which is beginning to be implemented this year (1997). It is becoming the hope for secure electronic transactions over the Internet. The first commercial transaction, which was just experimental, utilizing this protocol was made between Wal-Mart stores in the U.S. in June. The first sale of a Brazilian store over the Internet utilizing this protocol was made on 16th October, 1997, when the president of Visa from Argentina was in Puerto Rico. He bought a CD-ROM in a Brazilian store over the Web, with an Argentinean credit card. It was also the first transaction using SET between two countries. SET, besides guaranteeing secure transmission of information through encryption of the data being transmitted, has two other advantages: The use of credit card is not necessary. There are options like electronic money, electronic checks and automatic debts, and the surety of the existence of the agents is assured. SET guarantees the existence of the establishment who is announcing products on their home-pages with digital certificates, and it assures that the buyer is not a false buyer (the customer has to have a digital signature). With SET, there is also an expectation that software sales will be legitimate, in the sense that there will be nobody selling software applications from others without paying royalties to them. In Brazil, 50 commercial establishments are already prepared to utilize SET after January 1998 Taxation The question about how the governments can tax the electronic transactions still cannot be answered. Since the governments are spending a lot on infra-structure, they need to earn in return. The best way for them to earn is through taxation. Then why is taxation a problem? When intangible products are transacted over the Internet - digital objects, like software, images, sounds, etc. -, there is no way to track the transactions down. Someone in Brazil can buy a software from a German store over the Internet, no one will know, except the store and the buyer. Similarly if the German government decides to tax the German firms that have home-pages on German servers and sell their products through the Web, the firms can avoid taxes by simply moving their home-pages to servers located in other countries, where there are no taxes. There is still no solution to this problem. But this has a positive aspect because without taxes, the attraction of users is stronger. Knowing that there are no taxes being levied, people will be stimulated to access the Internet, helping the Web to be transformed into a mass medium. They will buy and sell over the Internet, intensifying the electronic commerce via the Web and the consequent economic growth. Conclusion The numbers show that the software industry is growing world-wide as also in Brazil. The numbers also show that the Internet and the electronic commerce via the Internet are becoming more and more popular around the world - Brazil included. As software sales and electronic commerce match together in a perfect way, it is likely that the commercial software distribution will increasingly be over the Internet, until may be this will be the only way to buy and sell software applications. This is what the Brazilian software firms have to keep in mind when directing their production efforts to other markets. Reference
Information Technology - The New Cargo Cult? Roger Harris The publication of Paul Strassman’s research results, that there is no correlation between spending on IT and corporate results, in his latest book, “The Squandered Computer”, as well as in earlier books, Datamation and this newsletter in October 1997, threatens to slip by the developing world unnoticed if its implications are not given more attention (Strassman, 1997). Strassman has his critics, certainly, but his argument is highly compelling and should be heeded by the developing world which simply cannot afford to squander computing resources in the way that, according to Strassmann, the USA does. Strassmann claims that the world spent US$ 1 trillion on IT in 1996, more than half of this by the USA, contributing to Roche and Blaines’s MIPS gap ratio of 26:1 with the bulk of the developing world (Roche, 1997). It is essential that the developing world avoids what has become the cult of IT, characterised by the blind belief that technology alone will bring it into the “information age.” In the early 1900s, tribesmen in New Guinea observed that European administrators only had to cable an order or write a letter in order to obtain the goods they needed, which were generally delivered by aeroplane as cargo. If the tribesmen used the right rituals, they believed the cargo would also come to them, so they constructed crude airstrips, warehouses and wireless houses, installed office chairs and tables and began passing around pieces of paper to each other. Such behaviour became known among anthropologists as “cargo cults”. History is in danger of repeating itself on a massive scale with regard to our fascination with Information Technology (IT). The rush by governments and organisations to bring society into an “information age” resembles the blind belief of the New Guinea tribesmen, that mere installation of the technology will magically deliver the expected benefits. There is a lesson that it takes more than mere spending on IT in order to achieve its benefits. There is still no evidence to support the popular myth that spending more on IT will boost economic performance, says Strassmann. The best computer technologies, he says, will always add unnecessary costs to a poorly managed firm. If mere spending on IT does not improve performance, what does? The answer seems to be that it’s not how much you spend on IT that matters, but what you do with it. Strassmann has introduced a novel measure of management productivity or “value added” which he claims can isolate the effects of spending on IT. In this respect, IT makes a good manager better and a bad manager worse. Organisations with higher levels of management productivity allocate more of their IT to systems which have a direct and favourable effect on the generation of revenues. Organisations with inferior management productivity allocate more of their IT to management information systems. Strassmann concludes that vast amounts of computing resources are squandered on the automation of unnecessary work. Spending more money on the most sophisticated technology will not increase revenues or market share without changing how the organisation runs its business. Some organisations find it easier than others to change the way they function. Organisations which adapt quickly to new opportunities and new methods of business stand to reap the associated benefits of IT. For many organisations though, inbuilt factors serve to prevent them from changing their operating methods. The more inhibitors to change which are embedded in an organisation, and the more it relies on spending alone to bring it into the “information era”, the greater will be the disappointment with the result. This of course assumes anyway that the organisation will care to devise measures of what return it actually gains from its IT investments. In most cases, the very characteristics which prohibit organisations from implementing the structural changes which would allow them to make the most of their investments in IT also serve to inhibit their ability or willingness to take a reality check on the benefits which they have been led to expect from them. It’s a computer salesman’s dream come true. Organisations such as those in government, which contain institutional barriers to innovation, will suffer the most without realising why. Inflexible bureaucracies, rigid hierarchies, suffocating committee structures and traditional reliance on outdated principles of division of labour tend to dilute innovations down to those minor corrections in current methods which can be accommodated within existing power structures and organisation charts. At the same time, a lack of questioning of ever-demanding IT budgets, based on the belief that IT spending is the only requirement for achieving IT’s benefits, serves to deepen the cult and plays into the hands of those whom it benefits most. Executives may think that their Information Systems (IS) professionals will save them from this dilemma. After all, they’re highly qualified people aren’t they? Think again. Recent research has revealed the extent to which IS professionals are able to introduce the type of changes which organisations require in order to benefit from IT (Markus and Benjamin, 1996). Apparently, although IS staff believe themselves to be the agents of change, they differ enormously with regard to how they interpret such a role. There seem to be three types of change agent in the IS field. Many traditional IS professionals view technology as the real cause of change, believing that it alone can make a big difference. They consider themselves experts in technological matters, but believe that the goals of technological change should be set by others. Some IS professionals consider themselves the facilitators of change, believing that it is people (their clients) who create change. They intervene in organisational processes in ways intended to increase the capacity and skills of their clients to create change. They are less concerned with a specific technological implementation than with the client’s ability to assess the merits of alternative solutions. Finally, a few IS professionals advocate specific implementations by recognising what needs to be changed and finding ways to make other people think similarly. They hold that people, not technology, are the causal factors in change management, but they regard people as the targets of change rather than as clients with purposes of their own. The majority of IS professionals, it seems, hold to the traditional perspective of IT, that technology itself is the cause of change. Such a view is rapidly becoming unviable for IS departments, whose credibility among their user-clients continues to diminish. It stands in the way of positive organisational change by promoting technical interests over business concerns. It would seem that IS specialists have not effectively coped with the human and organisational issues in IT implementation. As Strassmann points out, computer planning by experts from the MIS function cannot hope to come up with actionable strategic programmes to improve business profits. The failure to fully exploit IT resources is further exacerbated by line managers who exhibit a preference for clinging to the familiar as opposed to venturing along new and uncertain directions. Proposals for innovative changes are always mediated by their context, which consists of social constraints, changeable personal inclinations, authority structures and culturally determined attitudes and value systems. It is a myth to believe that technologies prescribe their own course of action. The responsibility for technological outcomes resides within the social order - in individuals, groups and the institutions through which they organise their lives (McC. Adams, 1996) Any organisation, or country, wishing to enter the information age must address these issues: that substantial benefits are derived only from changing the methods employed to achieve objectives; that technology without change results in the automation of unnecessary work; that it is people, not technology, that cause change and that technology professionals are rarely the most appropriate people to introduce effective change processes. If these lessons are not heeded by the developing world then the new cargo cult of IT will strengthen its grip on society and cripple its attempts to remain competitive. References
Impact of Corporate Telecom Networks on Entrepreneurial Competitiveness Introduction These preliminary notes are related to work in progress, which seeks to discuss the expected impact of corporate telecommunications networks on the competitiveness of firms working in brazil. Three questions are raised in relation to the impact of telecommunications networks on competitiveness: their effect on productivity growth, the international relocation of internal productive activities and the outsourcing of entrepreneurial functions. The main conclusions related to the first question are that the expected impact on productivity is positive, although there are important asymmetries in the corporate network dissemination process, which allow one to propose public information and dissemination policies. As to the international relocation of productive activities, the choice was made to analyze the internal data processing activities of firms. The available data shows a trend toward a higher concentration of Latin American data processing in Brazil. There are also cases of a relocation of data processing from Brazil to developed countries. Finally, the paper discusses the demand for international network outsourcing services. It shows that there is a strong propensity to outsourcing which, given the sector’s supply structure — made up of foreign firms — may have adverse consequences on the creation of better jobs and the performance of high-level technological activities in Brazil. The impact of information technologies on expected productivity growth As is generally known, there has been a rapid increase in Brazilian productivity levels this decade. Saboia & Carvalho (1997) show that, between 1990 and 1995, labor productivity in manufacturing industry grew around 7% per year. Between 1970 and 1995, in comparison, the average annual growth rate was 4% per year. The same study also suggests that Japanese management methods and techniques are among the main causes of productivity growth. This seems to be greatest among large enterprises, particularly those in the transport material, electric material, communications material and chemicals sectors. Other papers, such as Prochnik’s (1991) on the shoe industries show that other industries have also progressed in the same direction. Besides this trend, there has been a noticeable progressive computerization of the productive system. It is thus worth asking what its possible effects may be on productivity growth. At an international level, after many years of discussion (known as the productivity paradox debate), more recent academic works, such as Brynjolfsson & Hitt (1993), have found positive effects from information technologies (IT) on American productivity growth — see also Brynjolfsson & Yang’s (1996) summary. According to Brynjolfsson & Hitt (1993), one possible explanation for the favorable results found in the previous research work is the fact that in this kind of aggregated study the IT impact on the quality of processes, products and services and also on the variety of product and services offered is not considered. Another possible explanation is the restructuring and cost cutting needed to benefit from IT effects. Insofar as the dissemination of these methods, as mentioned above, is a feature of recent developments in the Brazilian economy, one might suggest that in the near future IT will also find a more propitious terrain in Brazil in which to become a relevant cause of productivity growth. Another argument is the rapid spread of IT in the entrepreneurial system, shown in a recent survey of 974 medium and large firms. In fact, between the first (1988) and the last survey (1997), enterprises have increased IT expenditures from 1.4% to 3.1% of their total revenue. Although well below the average value found for American firms — estimated between 6% and 7% by the research coordinator, Prof. Fernando Meirelles — future prospects seem favorable. A word of caution, however, might not be amiss due to the possible existence of asymmetries between the computerization of firms in Brazil and in other countries. For instance, there are only about 400/450 robots operating in Brazil, while South Korea has 27,000, Taiwan 4,500 and Singapore 3,500 (these numbers, however, may have been estimated using different robot definitions). Another result is presented in graphic 1, showing the ratio between employees and computer keyboards, clerks and number of micros and clerks and number of computer keyboards. This graphic shows the number of employees per computer keyboard declining, converging to one. Thus, productivity gains associated with the work process become dependent on the evolution and modernization of digital technology. Meanwhile, a survey among 1,212 micro and small enterprises has shown that only 16% of the firms considered themselves to be totally computerized, 41% partially computerized and 43% as non computerized. Among the firms, 46% had at least one local network and 22% were connected to Internet. Meanwhile, a survey among 1,212 micro and small enterprises has shown that only 16%of the firms considered themselves to be totally computerized. Among the firms, 46%had at least one local network and 22%were connected to Internet. Available data on the extent of IT dissemination suggests that the impact on productivity is not only large and positive, but is also expected to grow. The spread of networks, however, is quite asymmetric, opening the way for public policies directed at promoting the spread of information technology. The increasing adoption of Intranets may diminish productivity differences between large and small enterprises, although in this case there are also applications that are better suited to larger firms, such as the so-called Extranets. The impact of corporate telecommunications networks on the international location and outsourcing of productive activities Field research methodology To discuss international location by productive activities and demand for outsourcing services of international corporate networks, this paper uses research data covering 30 large enterprises operating in Brazil, selected from among the largest international telecommunications service consumers. The sample composition is presented in Table 1. Table 1 Sample Firms: Economic Sector and Origin of Capital
National Capital/ Total lines Column Totals
316
30 Source: field research, Prochnik (1996) There was also observed a large concentration of highly specialized telecommunications personnel in the firms. The six largest enterprises have on average more than 50 telecommunications engineers (one very large state enterprise pushes the average up). Others have on average about five engineers each. These results are explained not only by the sophistication of the networks and size of the firms, but very much by the origin of their capital. Foreign enterprises concentrated technical know-how in their head office. The local person responsible for the network is a global executive, who reports to the head office and respects the norms established there. This survey confirms some of the previous findings. The expectation of average annual growth in telecommunications traffic varied from 9.5% to 22.5% — Prochnik (1996). Even among this group of large enterprises, a strong heterogeneity in network composition was observed. For instance, among Brazilian Banks there were cases ranging from total international service integration to one example of incredible inoperativeness, in which communication protocols wouldn’t “communicate” with each other and, if they did, the network still would not work, as the available software in the different countries was incompatible. Effect of Corporate Networks on the International Location of Data Processing Activity Using data from the above-mentioned survey, let us now examine the effect of telecommunications networks on the international relocation of a firm’s productive activities. For the purpose of analysis, data processing activities have been chosen. Only among the transnational corporations in the sample is international relocation possible, due to their geographically more dispersed operations. The outsourcing of entrepreneurial functions, examined in the next section, in contrast, is important only for national enterprises, since in this respect subsidiaries of transnational firms are coordinated by their respective head offices. The literature on transnational corporations brings out the fact that the location of productive activities depends not only on the attractiveness of the host country, but also on characteristics of the economic sector and the investing firm’s strategy. As for the latter, among other features, the centralizing of activities in a few countries favors economies of the scale, while the dispersion in a greater number of sites benefits interaction with the local market. The effects of adopting a modern corporate telecommunications network cannot be anticipated. On the one hand, such a network facilitates the international centralization of data processing. On the other hand, because it allows greater control over subsidiaries (reducing for instance the time needed to calculate global stocks or the financial situation), networks allows head offices to grant greater autonomous action to their subsidiaries. In this case, regionally or locally differentiated operations are encouraged, leading to a more diversified geographical location of data processing activities. Among the seven industrial transnational enterprises that answered the question, five considered Brazil as a kind of regional center, as the following excerpts from different interviews carried out by Prof. Jorge Britto indicate: Brazil is currently responsible for the control of the group’s activities ... in Latin America, with the president of the Brazilian subsidiary also answering for the units in Argentina and Venezuela. The strategy of the group for Latin America is based on an attempt at regionalization, with Brazil and Mexico as the central bases. The Brazilian subsidiary fits into the “Latin America Region”, within a regionalized strategy plan which directs the organization of the firm’s activities on a planetary scale. The autonomy level of the Brazilian subsidiary in terms of defining the general orientation of its competitive strategy is, however, very high. The same can be observed in transnational firms not included in the sample. IBM, among them, has created the concept of Panlatino Americanization, regionalizing its activities by function and geographical area. “With the changes, the IBM Brazil president,..., has seen his functions extended. He is responsible not only for the country business, but also for the infrastructure segment in Latin America (logistics, purchases, distribution, factories)...” see IBM faz Reengenharia e Centraliza Decisões na America Latina — Gazeta Mercantil January 18th 1996. In the same interview, the communications and HR Vice-President declared: “For instance, it doesn’t make sense anymore for each subsidiary to have its own financial or human resource structure ... the new business profile requires increasing agility in decision-making.” The same kind of observation was made in many other interviews. Administrative activities or activity segments are being/will be transferred to Brazil, where the data processing will take place. Among the three foreign banks and three foreign consultancy firms, four carried out data processing in the country. But it is the other two that are important (one bank and one consultancy firm), because their processing structures were much more advanced than all the other 28 interviewed firms. In these two cases, data processing was performed at a world level. The consultancy firm uses a data bank and electronic mail system developed with Lotus Notes software. The firm, with 37,000 employees, has more than 1,000 Lotus Notes servers distributed among more than 100 subsidiaries. All tasks, in any country, are undertaken inside the network, in connection with similar tasks already completed and with special In the foreign bank, in an interview with this author, the following was said: “many processes are operated at a world level. The data processing in the whole international commerce area, for instance, ‘runs’ in Singapore with back-up in Hong Kong. A leer of credit generated in one of WallMart’s three offices in Brazil and authorized by the head office in the USA, for instance, ‘runs’ in Hong-Kong. In this way, the bank sees the client as a whole and the client can also easily see himself. According to the same interviewee, the data processing of current bank transactions in Brazil has been transferred to Florida (USA). As a consequence, Brazilian system analysts and the mainframe computers were moved to the new unit. Currently, the bank operates only with workstations in Brazil, which perform less important tasks. Outsourcing of International corporate telecom networks and the competitiveness of enterprises. The literature on the outsourcing of telecommunications activities falls between two opposite poles. On one side, some authors, like McFarlan and Nolan (1995) see the process as an extremely complex activity which affects considerably the firms day to day activities. They coherently agree on the need to form long term partnerships and joint work schemes between clients and service providers. On the other side, authors like Lacity et alli (1995) emphasize a recent trend toward the simplification and commoditization of the outsourcing, as well as the possibility of segmenting data transfer activities and, consequently, partial processes of outsourcing. It follows that the clients have to segment the activities to be outsourced, look for different suppliers for each segment and encourage competition among them. As the services become more and more commodities, the search for the lowest price, in this interpretation, should be given priority in relation to the cooperative work. Partial or total outsourcing of international corporate telecommunications networks is a growing trend among transnational firms and, to meet this development, one can notice the formation of a world oligopoly of service providers, in which the main current participants are the Global One (France Telecom, Deutsche Telecom, SPRINT etc.), Concert (British Telecom, MCI etc.) and World Partners (ATT etc.) consortiums. Other international firms, like IBM and SITA, also supply the same services. Many small firms supply outsourcing services for corporate networks in more restricted geographical areas. Three quarters of interviewed firms expressed a potential interest in partial or total outsourcing of their telecommunications services. In almost all of them, the comparison between the price of the services and internal costs was the main analysis criterion. The research data thus lends greater support to Lacity et alli (1995). In any outsourcing process, the technical expertise of the clients declines in favor of a greater use of the know-how of firms offering outsourcing services. When the interest in developing a partnership with the supplier is low and the service price is the main contracting criterion, the technical capability that remains in the client firm tends to be even smaller. In this sense, the net effect on national technical capability may rest in the supply structure. As this is largely composed of foreign firms, important activities such as, for instance, network planning, software production etc., may migrate overseas. It should be noticed, however, that some of the more efficient firms have been more reluctant about outsourcing their networks and, in other cases, showed a preference for partial outsourcing, in this case encompassing activities less intensive in know-how, such as computer maintenance and equipment rental. The decrease in the country’s technical capability may also be less if the network outsourcing service progressively becomes a standard service, opening up space for national enterprises, starting their activities from more restricted geographical niches. Conclusions The article begins by discussing the effects of IT dissemination on productivity growth. It was seen that the result is a positive one and tends to be increasingly more important. IT dissemination, however, is quite asymmetric, it being pertinent, therefore, to propose the adoption of information and technology dissemination policies. A discussion then follows on the international location of productive activities with internal data processing activities being the case analyzed. In foreign industrial firms there is a migratory trend of data processing activities from other Latin American countries to Brazil. Although favorable to Brazil, this is also not a very interesting prospect from the broader economic development viewpoint. The available data also indicates that there are also cases of corporate data processing services being relocated from Brazil to more developed countries. The sample is too small to reach final conclusions. It should be noted, however, that there is no mention of contrary examples. Finally, the paper discusses the demand for international corporate telecommunications networks. A strong propensity to outsourcing is clearly discerned. The question raises one of the most serious problems for IT dissemination in Brazil, the weakness of the supply structure. Supply is not only relatively small considering the country’s needs, implying an significant volume of imports, but there are also other problems which need to be addressed. In particular, the high participation of foreign capital should be discussed more, as relatively more attention has been given to its advantages than its disadvantages. Among the latter, for instance, one may point to the location of planning and R&D activities, where the best jobs are and where the most dynamic effects on the economy have their origin. Bibliography
The Impact of Multi-Media Technologies and GIS on the Labour Structure in India Editor's note: We reproduce a note written by Dr.Marco Corsi, Via Marradi 146, 57126 Livorno, Italy (E-mail: corsim@sysnet.it) outlining his research project. For years now I have been committed to the problems concerning Social Policies as regards the Asian area, with particular reference to the Indian sub-continent. I have studied issues related to the socio-economic impact of development policy on Indian society. These studies had particular regard for modernisation processes (compare “the green revolution”). My Ph.D. project involves the impact of new multi-media technologies on work organisation in India: I intend to concentrate the research on (a) the results
related to regional use of “new technologies”; I am training with an Austrian GIS software society which is going to start a joint venture with an Indian society and which provides MS-Windows based GIS and related products. My research, is principally aimed at gathering information on the restructuring and delocalising forms of organisational and productive cycles that many European companies are following on a global scale in the attempt to recover productivity and competitiveness. This entails understanding the forms that such strategies take and the effects that they produce with respect to job opportunities and, in a collateral sense, the dynamics and the availability of labour in spacially and traditionally distant contexts. I am also obviously very interested in the consequences of the application of GIS technology in India, how could they be used to resolve social issues, in what ways might this technology influence the effective development of the Sub-continent. I would be very grateful for every suggestion which will enable me to install a connection’s network for discussions, exchange of opinions, comparisons, suggestion. |