QuickREAD

October 25, 2006

Hey, You're Not Alone. Most Billion-Dollar Companies Have Had Supply Chain Disruptions.
Has your company been rocked lately by a supply chain disruption? It may not help much, but you can seek some solace in knowing you're not alone. According to a study conducted by Accenture, 73 percent of supply chain executives at U.S. companies with more than $1bn in sales suffered at least one disruption within the past five years. The disruptions most frequently mentioned include problems associated with supply chain partners, raw materials and natural disasters.
Source: Industry Week, http://industryweek.com/

Future of the Airfreight Market in the UK Is Not Terribly Rosy
Is there any future for the United Kingdom air export market? It has long been one of the world's liveliest cargo markets, but the way many of the country's air cargo managers talk these days, one might wonder. Industry executives in the U.K. are more comfortable talking about industrial decline, plunging yields and cut-throat competition than identifying opportunities for growth.
"It is hard to get excited about an air freight market like the U.K.," says Dan Parker, head of commercial for Virgin Atlantic Airways, which gets 37 percent of its revenue from the home market.
"We do rather talk ourselves into doom and gloom," says Alastair Cairns, U.K. air freight development manager for Kuehne + Nagel.
In fact, the official figures support the general view that the United Kingdom isn't a place to generate much optimism. Figures from the Cargo Network Service CASS settlement system show a 5.8 percent rise in U.K. export revenue for the first five months of 2005, but this followed something of a decline in 2005, itself a hangover from a relatively strong 2004.
Source: Air Cargo World, http://www.aircargoworld.com/

MIT Study: Sarbanes Brings Significant Financial Benefits to Businesses
Despite current calls in Congress to ease the impact of the Sarbanes-Oxley Act, an MIT Sloan School of Management professor and coauthors find that the Act's reporting and disclosure standards have brought significant financial benefits for businesses, including smaller firms that some have been seeking to exempt from the law.
Far from just adding to corporate costs, says MIT Sloan Assistant Professor Ryan LaFond, "our findings tell a very different but consistent story about Sarbanes-Oxley. Firms with strong internal controls already in place and firms that remediate prior control weaknesses are rewarded with a significantly lower cost of capital," which falls by as much as 150 basis points for firms that can demonstrate such compliance.
Source: BPM Today, http://www.bpm-today.com/

Are Enterprise Applications Dead or is the IT Change That's Coming Less Drastic?
IT execs say most business functions can benefit from automation, but data integration problems must first be solved. That means stepping toward service-oriented architecture and Web services—and away from suites like CRM and ERP. Business processes have plenty of room for improvement: IT executives say IT and finance, the most computerized of business functions, can be far more automated than they are now. And IT's potential for improving customer service is massive. But data integration is thwarting IT's ability to improve productivity, reduce costs and increase revenues. So, companies are not just adopting new technologies like SOA and Web services—they're beginning to move away from 1990's-era enterprise applications. We are on the verge of a sea change in application integration.
Source: CIO Insight, http://www.cioinsight.com/

PWC: Most Execs Say IT Spending Has Positive Effect, But They Aren't Getting the Right ROI
In its latest management barometer survey, PricewaterhouseCoopers reports that more than three of four senior executives say their company's technology spending has had a positive business impact in recent years. Good news, right? Well, it turns out, there may be room for improvement.
For the survey, PWC interviewed 107 CFOs and managing directors in the second quarter of 2006. Some key results:
• Some 76 percent of senior executives say their company's technology spending has had a positive business impact over the past three years on revenue enhancement, cost reduction, and improved customer satisfaction.
• A majority of senior executives (53 percent) rate the performance of their technology function as "excellent" (8 percent) or "very good" (45 percent) at implementing major new systems projects—that is, achieving promised benefits with few budget or schedule overruns.
• But only 36 percent say they are very confident that their business is achieving an optimum return on its technology spending. The rest are only somewhat confident (46 percent) or not very confident (18 percent). Source: Internet Week, http://internetweek.cmp.com/

China, the No. 4 Economy, Could Be No. 3 By End of the Decade
The mainland Chinese economy has basically doubled in size to around $2.2tr (as of the end of 2005) thanks to a remarkable five-year investment boom since joining the World Trade Organization back in 2001. Last year, it overtook Britain as the fourth-biggest economy behind the U.S., Japan, and Germany.
By the end of the decade, if China can manage 8.5 percent annual growth rates, its economy could hit $3.2tr or so, advance to No. 3, and close in on Japan. Some see China overtaking the U.S. economy in nominal GDP by mid-century.
Source: Business Week, http://businessweek.com/

IT Systems Obstacles Are Largely Driving Customer Interest in Service-Oriented Architecture
Integration issues (25 percent), pace of change (24 percent), and cost of change (21 percent) are the IT barriers that organizations face when trying to meet customer and competitive demands. In a nutshell, this is the root cause behind the overwhelming market buzz around service-oriented architecture. SOA is an architectural approach to building and maintaining systems designed to make change much easier by breaking systems up into more manageable (and reusable) services. With SOA, you can make changes to a service or a number of services while minimizing the impact to applications that use the service. More importantly, SOA is about connecting those services in new and distinct ways, orchestrating improved and more flexible business processes from existing assets.
Source: AMR Research, http://amrresearch.com/

India Inc. Runs Low on Highly Skilled, English-Speaking Engineers
As its technology companies soar to the outsourcing skies, India is bumping up against an improbable challenge. In a country once regarded as a bottomless well of low-cost, ready-to-work, English-speaking engineers, a shortage now looms.
India still produces plenty of engineers, nearly 400,000 a year at last count. But their competence has become the issue. A study commissioned by the National Association of Software and Service Companies, or Nasscom, found only one in four engineering graduates to be employable. For the rest, it said, either their technical skills are deficient, their English-language abilities are below par or they have not been taught how to work in a team or deliver a basic oral presentation.
Source: CRM Daily, http://www.crm-daily.com/

Checklist of Five Risks to Avoid if Your Global Sourcing Project Is to Succeed
There are five key sources for global supply based risk you must be aware of to ensure that your overseas sourcing initiative is successful.
• Delivery of supplies from offshore companies means longer lead times. Should a supplier literally miss the boat, it can bring production to a screeching halt. Distance, time, tighter margins—these are the supplier monitoring challenges companies face today.
• Quality control for each country is different, if there is control at all. The U.S. has strict laws about product integrity, but global standards are very inconsistent.
• Financial data on global suppliers can be inaccurate or unavailable. Truly understanding the financial viability, business practices, management changes, etc. of overseas vendors is challenging.
• Cultural differences are prevalent when doing business overseas. In some countries it's common to close shop for days or even weeks around major holidays, which can delay the delivery of critical supplies.
• Laws and regulations overseas differ significantly from those in the U.S. While sweat shop wages are legal in some foreign countries, it's illegal for U.S.-based companies to buy from those sources.
Source: Line 56, http://www.line56.com/

'Forward-Thinking' Companies to Increase Use of Mobile Devices by Workforces in Field
As mobile devices grow more powerful, functional, affordable and ubiquitous, there is little question that they will soon be standard issue at most forward-thinking companies with mobile workforces. Multiple surveys have found that IT executives rank enterprise mobility among their top initiatives for the next few years. These executives understand the potential of enterprise mobility to improve employee productivity, customer service, operational efficiency and revenue generation. They are aware that these are all good and necessary things for their organizations.
Source: Mobile Enterprise, http://www.mobileenterprisemag.com/

Lenovo Chairman Says Learn from Mistakes with Weekly Review of All Decisions
Past decisions can serve as a natural curriculum for avoiding future mistakes. Take the case of Liu Chuanzhi, for example. He was working at the Chinese Academy of Sciences in 1984 when his country commenced its momentous liberalization. Inspired, Liu formed what would become Legend Group, eventually morphing into China's largest PC producer. In 2005, rechristened Lenovo, the company acquired IBM's personal computer line, making it the No. 3 global PC producer. At the end of every week, Liu and his top aides reviewed major decisions of the past five days. Many errors were committed, he told me, but the weekly debriefing helped "to ensure that we don't make [the same] mistakes in the future."
Source: Optimize, http://optimizemag.com/

Super-Big Outsourcing Deals on Decline, But Number of Small IT Outsourcing Deals Rises
IDC researchers have found a reduction in the number of both mega outsourcing deals and deals ranging from $500m to less than $1bn total contract value, or TCV. However, the number of deals with less than $250m TCV saw a dramatic increase from eight in 2004 to 23 in 2005.
Interestingly, the study found that while the number and value of business outsourcing deals declined in 2005, the value and number of IT outsourcing deals increased.
Source: CRM Buyer, http://crmbuyer.com/

Oh, Yes, You Do Care What E-Discovery Means
E-discovery refers to finding and producing documents stored in electronic form in response to litigation or regulatory requirements. Civil litigants, regulators and criminal prosecutors now commonly ask for copies of selected e-mail communications or make broad requests for all electronic records. That trend will only intensify after Dec. 1, when changes set to take effect in the Federal Rules of Civil Procedure make e-discovery a standard part of federal proceedings.
Responding can be a burden, particularly if corporate archives are poorly organized and difficult to search. Costs include the information systems expense of locating backup tapes, restoring data and extracting relevant information, as well as fees paid to lawyers for reading through thousands of pages of poorly sorted and categorized documents.
Source: Baseline, http://www.baselinemag.com/

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