The Hindu Business Line : How IT is redefining productivity

Given that businesses will disaggregate and face atomisation challenges, the next horizon for productivity will be based on collaboration across partner and customer organisations, within functions, between functional business units and across partner and customer organisations.

The Net, a proven catalyst for saving time and money.

Businesses that fold Web 2.0 collaborative and universal-communications models, such as social networking, into their processes could see a return to 3 to 5 per cent annual improvement in worker productivity, noted John Chambers, President and CEO, Cisco, at a recent conference.

His observation applies to the future of the global economy, which is directly tied to productivity. Improving efficiency, reducing costs and creating new revenue sources are, and will continue to remain, key drivers of business growth worldwide.

The Internet has emerged as a proven catalyst for saving time and money and for creating new revenue-generating services. In a ‘net impact study’ designed by top economists at the University of California, Berkeley and the Brookings Institution, US companies indicated that almost half of their expected productivity increases would come through Internet business solutions. In European countries, that number was close to one-third. And over 50 per cent of businesses in the Canadian study indicated they are already using Internet business solutions to gain productivity and revenue increases.

It is Internet-enabled, costs-based productivity that has powered India’s competitive advantage in IT and propelled the economy onto a fast growth track. However, as globalisation continues to accelerate, costs-based productivity will matter less as a source of differentiation.

An Economist Intelligence Unit (EIU) survey of business executives across the globe predicts that over the next 15 years, the value of price competitiveness to customers will decline relative to other factors such as personalisation of products and quality of customer service. Price and quality will continue to be important, but the real value in the years to come will be in a company’s ability to customise its products and provide customers with a high quality of service.

Atomisation

Another global trend that is expected to have a profound impact on business productivity is atomisation. Atomisation is the idea that increasing competitive pressures will result in processes, firms, customers and supply chains fragmenting. As a consequence, more businesses will expand overseas, work will continue to flow to where it is best done and information will increasingly be digitised.

Collaborative problem solving is expected to increase in volume inside and outside the organisation, as customers and suppliers become more involved in product development, as cross-functional and cross-border teams work together more frequently and as partnerships with other organisations proliferate.

Even in this changing scenario, increasing productivity and reducing transaction costs will continue to be a major objective of IT investments. But businesses are beginning to focus on the fact that productivity is not just about reducing costs. And reducing costs doesn’t always equal increased sales.

Now that technology has enabled the automation of manufacturing processes, business transactions and other tasks, a new definition of productivity is emerging based on adding value to the exchange of information.

Given the fact that businesses will disaggregate and face atomisation challenges, the next horizon for productivity will be based on collaboration across partner and customer organisations, within functions, between functional business units and across partner and customer organisations.

Businesses will increase productivity by focusing on the interactions between colleagues, partners and customers.

Productive interactions will help improve profitability and customer satisfaction and create new opportunities for corporate growth and success.

Businesses that can innovate to make their complex, higher-value, collaboration-led activities deliver what their customers care about most will probably gain significant, enduring and not easily duplicated advantages in distinctiveness, quality and cost. Thus, the hunt for competitive advantage will increasingly focus on three areas: improving the productivity and performance of knowledge workers; delivering unique value through specialised or niche products and services; and maintaining more intimate relationships with customers and suppliers.

Technology and organisational strategies will be inextricably conjoined in this new world of interactions-based productivity. Technology investments will increasingly be aimed at making it possible to boost the quality, speed and scalability of the decisions employees in complex jobs make.

Technology tools that help employees to identify key trends, such as the buying behaviour of a customer segment, quickly and accurately will be deployed extensively.

In line with this thinking, the focus of IT investment will shift towards knowledge management, customer service, operations efficiency, business development and marketing and sales.

The broad trends notwithstanding, differences between industries and market segments will continue to influence IT investment choices. Manufacturers are far likelier than service industries to look to increased automation of processes as a route to higher productivity.

Low costs will continue to be critical for companies operating in discount segments. And some industries, such as banking and finance, are already more sophisticated in their relationship management than others.

Pervasive connectivity

In the emerging collaborative global economy, connectivity will be key. As many as 14 billion devices will be connected to the Internet by 2010, fuelled by more and more computing tasks now being handled online, from phone calls to personalised searches to downloading entertainment.

The IT investments of businesses will be geared toward improving collaboration among knowledge workers. Broadband connectivity, collaborative applications, multi-location videoconferencing and IP (Internet Protocol) telephony are some technology tools that businesses will leverage to reduce operational costs, provide more flexible application deployments to the desktop, boost personal and workgroup productivity and provide exceptional customer care to their customers.

The future is about “pervasive connectivity”. It is about connecting people to devices and places in real time to eliminate productivity “dead-zones”. And the IP network is the platform over which “pervasive connectivity” will be delivered.

As the new phase of collaboration-centric development unfolds, the ubiquity and scalability of IP is being combined with new levels of intelligence and capability to create the right network to serve as the basis for real-time interactions.

And the applications of the future are increasingly empowered by this network platform.

The key is to shift away from using the network as a pipeline for moving data and, instead, to use the network as a platform for integrating business strategies, processes and goals.

Essentially, it is a shift from transactions to interactions like negotiating a sales deal (human-to-human), responding to alerts on a dashboard or control panel (machine-to-human) or a package in a warehouse being scanned by an RFID reader (machine-to-machine.)

In fact, the increasing importance of collaboration and the emergence of the network as a platform is changing the entire value chain of IT and placing the network squarely at the centre of innovation.

(The writer is Vice President-Business Development, Advanced Technologies, Cisco, India and SAARC.)