How E-Business is making the Middle East more profitable

Alan Greenspan, Chairman of the Federal Reserve Board, USA, commented in a recent speech (The Bay Area Council Conference, San Franciso, California, January 11, 2002) on the difference in how companies are managing the current recession versus strategies and tactics in similar earlier periods of economic downturn. The conclusion was that this change in management is shortening the recovery rate of the overall economy to a notable degree. So what is the key difference?

'Thirty years ago, the timeliness of available information varied across companies and industries, often resulting in differences in the speed and magnitude of their responses to changing business conditions,' Greenspan comments. 'Our economic structure changed in the mid-1990s. The crucial agent of this remarkable change was the quantum leap in information availability.' He continues, 'Today, businesses have large quantities of data available virtually in real time. As a consequence, they address and resolve economic imbalances more rapidly than in the past.'

Indeed, the ability to extract information across all business operations to obtain an instant view of what's happening across an entire organisation, whether it be sales, leads, liquidity, staff or inventory levels, can give a CEO a distinct advantage in making critical on-the-spot decisions to contain and manage the worst of any economic downturn.

So how prepared is corporate Middle East? How many CEOs would acknowledge that they are as informed as Greenspan indicates? The non stop flow of foreign competitors, the increasing number of cross-country trqansactions, the need to tap into different labour markets, are all factors requiring faster and more accurate access to consistent information across the corporation.

Many large Middle Eastern corporations are still operating as a number of independent business units and country units, and therefore have difficulties in getting real time information at the executive level to take quick decisions.
Although it is encouraging to see the benefits of information management being reflected at the macro economic level, there are considerable productivity improvements yet to come. As hardware and communications become increasingly commoditised, the better use of software is starting to dramatically reduce costs and increase productivity. The acceleration of information technology as a facilitator and enabler will increase many times over as we enter the ultimate model of computing, where software is delivered as an online service.

A single version of the truth
One of the reasons that executives were so slow to respond in the past was that they simply did not have a clear view of what was happening within their company. Maybe a large amount of data was available, but it was fragmented around the organisation in many different places, different isolated systems and incompatible formats. Additionally, the data was inconsistent due to different definitions, cut-off dates and measurement criteria.

The solution? A single central database that gives everybody in the organisations access to the same data. Many organisations are now bringing together all their separate systems to achieve this singular view. For example, one UAE local government is consolidating different systems into one data center for a 'single version of the truth.'

A single source of data gives the organisation the ability to combine information across all business operations. Whereas managers used to receive a separate printed monthly report from each system, they can now obtain daily, or even hourly, electronic reports that give a single view of what matters, as it happens, across their entire organisation.

Chief executives can access a single dynamic report to monitor their critical success factors and key performance indicators, such as sales, leads, liquidity, staffing or inventory levels. These interactive reports allow the user, not just to monitor everything that is important to the company, but also to investigate variances and get immediate answers within a few mouse clicks.

The Internet
The Internet has forever transformed the way we transact business, and how we work with our communities of citizens, customers, partners, suppliers and employees. It is rapidly becoming the enabling infrastructure of modern business, and companies realise they must incorporate it into their existing sources of value creation to increase competitive advantage.
The use of common internet standards and technologies promote efficient and predictable communication, and dramatically lower the cost of managing information. It no longer takes years to implement new systems or upgrade and modernise existing ones. Many organisations are transforming their systems to embrace the internet in just a few weeks or months. Solutions do not need to be complex, but they must be part of a wider effort to enhance information sharing, streamline operations and modernize business practices.

Save, don't spend
E-business is about saving money, not spending it. Organisations maybe spending as much as 80% of their IT budgets on integrating their different systems. In contrast, e-business is about simplifying and centralising IT operations for more efficient business.

'Centralize Complexity, Distribute Informaion'
Having one single data centre running one complete and integrated set of business applications, which everyone can access through a browser, is a very simple model. It removes the previous complex collection of incompatible software packages, isolated pools of data, multiple data centres and ubiquitous departmental servers that result in uncontrollable computing costs.

Oracle Corporation has benefited from its own technology. 'Our management team has demonstrated that it is possible to use technology to preserve profitability during difficult and uncertain times,' wrote Larry Ellison, Oracle founder and CEO, in the company's September 2001 earnings report. 'In good times we used the E-Business Suite to increase our profits by a billion dollars. In tough times our applications have enabled us to protect those profits.'

Automated economies
Once an organisation has simplified its systems and fully integrated its data, it is in a good position to extend e-business outside its own boundaries to its customers, partners and suppliers in order to encompass its whole economy as an entire automated supply chain.

Many large organisations are setting up their own private electronic marketplace with their suppliers, whilst others are getting together with competitors to set up a similar joint arrangement. E-marketplaces are central hubs or exchanges that bring together buyers and sellers across the Internet and are already demonstrating success.

Buyers can choose to conduct a reverse auction over an exchange, with suppliers bidding the lowest price to supply them. For instance, Xerox has conducted many successful reverse auctions for direct materials, realising savings between 30 and 60 percent.

Successful collaborative computing depends on a single, integrated, internet-enabled software system that manages every aspect of the procurement process. The fewer disparate components that comprise such a system, the more quickly it will react and the better it will work.

Software outsourcing
In the early 20th century, the electricity grid became the underlying enabling backbone of the industrial economy. Today, the Internet, with over half a billion users worldwide, is becoming the enabling infrastructure of the information economy.

And just as electricity - and water and gas - have become utilities that can be consumed at the flick of a switch or the turn of a tap, so the Internet is starting to allow computing to become a utility. This 'utility' model allows users to have their software professionally managed - either at their own offices, the IT vendors premises, or at a third party's premises - and to connect to their data over the Internet through a browser.

Around the world, both private companies and public bodies are opting to pay a predictable monthly subscription per user for software managed by third parties in their remote data centre.
IDC, an independent analyst company, carried out a survey of 50 companies using this model. On average, they generated a 5-year ROI of 404% with an average payback of 1.33 years. The sources of benefits were technology (30%), business process enhancement (36%) and business productivity enhancement (34%).

'Quantitative and measurable benefits provide tangible proof of success,' said the report. 'However, customers frequently cite valuable qualitative benefits as important factors in the implementation's success, such as peace of mind, an ability to focus on their core business and a better working environment. Equipped with both quantitative and qualitative benefits, decision-makers can be better assured of sound business judgments.'

Oracle is already successfully delivering this service to 30,000 customers around the world. Companies can be initially reticent to outsource their data, but once the natural human resistance to change is overcome, software outsourcing will become the new paradigm of business computing. The traditional in-house IT department will shrink considerably, as organisations access their IT systems via the Internet.

Mobile Solutions
The Internet is also no longer just 'fixed,' i.e., connecting desktop computers and those in data centres. 'Mobile internet' is extending the reach of information, allowing managers to access it wherever they are whenever they need it.
Wireless access to existing e-business applications and e-marketplaces will increase productivity, timeliness and efficiency even more. Mobile executives are already using notebook and handheld computers to dial in to their internal back-office systems from hotel rooms and through their mobile telephones.

New 2.5 generation systems are starting to be used in many parts of the world that provide users with a faster 'always-on' connection to their network. They are charged on the basis of the amount of data transferred.

The increasing use of data is resulting in whole new range of mobile devices are becoming available. Executives are abandoning bulky notebook computers for 'smartphones' and PDA that give access to corporate data and email much more quickly and conveniently. They can carry them with them always, including evenings and weekends, to respond immediately to unexpected situations.

PDAs can access corporate data in informal situations with customers, such as in a restaurant, when a notebook computer would be impractical. One investment bank is even giving customers a PDA to access its internal banking systems, to execute transactions more conveniently than with its competitors.

Mobile-enabling applications can dramatically increase ROI and improve the effectiveness of business processes, particularly when used by the mobile field force. When they read domestic meters at the customer site, field employees at utility companies are now using mobile devices connected to the Internet to deliver complete billing information to head office. Police authorities in Italy and the Netherlands are using handheld devices to access updated information at the central office while out on patrol.

Modern parking solutions now enable drivers to pay their parking fees by mobile telephones, so they no longer have to search for coins or change notes. Customs officers in the field can have protected mobile access to databases containing information like shipping documentation and police records. It makes search and administration functions much easier and faster and streamlines the customs clearance process.

Because of speed and convenience, wireless use is on the rise worldwide. In the next few years, executives will expect their information to follow them wherever they go. As the younger generation grows up, they will not understand why people had to work at a desk or why their telephones were tied to the wall!

Security
Research by InformationWeek concluded that the cost of security-related downtime to businesses in the past 12 months was $1.39 trillion worldwide. Unprecedented cooperation is needed among government, businesses and citizens to protect a nation's critical infrastructure against cyber attack by deploying enhanced internet security measures. These must protect the communications infrastructure, commerce, government, utilities and other essential services.

The more complicated an organisation's computing infrastructure, the more likely it will contain vulnerabilities for hackers to find and exploit. E-business simplifies the software and makes it easier to work with specialist security protection software. This is already in widespread use by government agencies that deal with highly classified information.

Correctly designed, such procedures will minimise risk and secure the confidentiality and integrity of the organisation's information. It will not just protect it from cyber attack, but from system failure and human error, while minimizing the management cost of the entire infrastructure.

e-Government
Governments are also embracing the internet to provide services to business (G2B), citizens (G2C), and government-to-employee (G2E).

The drivers for eGovernment are to save cost through more efficient processes and more integrated government agencies, as well as to improve service through a higher degree of self service for citizens and businesses by taking advantage of internet and other electronic channels.

However, providing a seamless online service to citizens and business requires integration between the front and the back office functions within each department. It also requires integration across boundaries of agencies and departments.

Are you prepared?
The open connected community of the Internet is bringing together organisations and their suppliers, partners and customers; governments and their citizens; and consumers throughout the world. Forward-looking companies and public bodies are harnessing its power to build a secure, globally integrated economy, reduce complexity and promote international trade. This is bringing automated processes, business transparency, centralised operations and a single instance of software.

Ultimately, Alan Greenspan acknowledges that, with technology as a provider of critical information, recessions will never be the same. 'Contractions initially may be steeper but, because imbalances are more readily contained, cyclical episodes overall should be less severe than would be the case otherwise'.
Oracle is the world's largest enterprise software company. For more information about Oracle visit our website at http://www.oracle.com/me