Enterprise Software in China

WSJ reports that SAP and Oracle are taking big steps to sell to the mid-sized enterprises in China, “moving into direct competition with local developers that offer business software at lower prices.”

The two giant companies have modified their complex suites of business applications to make them less expensive and easier to implement in the Chinese market. To save costs, both are signing up distributors to sell the products rather than relying on their own sales forces.

Their actions come as two of China’s largest software companies, Kingdee International Software Group and UFSoft Co., have started to sell more-sophisticated enterprise-management programs, moving up from their base in accounting products.

But the moves also reflect the fact that China’s demand for basic business software is larger than for broader, multifunction suites. Chinese businesses purchased $142 million of accounting software last year, compared with $85.5 million of more complex, enterprise-wide products, according to International Data Corp., a market-research firm.

“Brand recognition, price and delivery capability will combine to determine whether their execution will be good enough to compete with the local vendors,” said Louisa Liu, a software-market analyst in Shanghai for Gartner Inc., a market research and consulting firm.

SAP is starting its software at prices under USD 10,000. I think India is already beginning to see these price reductions also – only that the local companies aren’t as well established as their counterparts in China.

Taking on Pepsi and Coke

It is not often that the small guys win. So, it was interesting to read this story in The Wall Street Journal about how Peru’s Kola Real is taking up on the big guys in Latin America:

Kola Real is emerging as an unlikely threat to both Coca-Cola Co. and PepsiCo Inc. in a region where the two soft-drink giants enjoy some of their fattest global profit margins. By cutting out frills and skimping in areas such as advertising, Kola Real, officially called Industrias Ananos, offers ultra-low prices that appeal to the region’s poor majority. As a result, the company has captured almost one-fifth of the Peruvian market and has made inroads into Ecuador and Venezuela.

Now Kola Real (pronounced RAY-AL) is shaking things up in Mexico. Mexico is a crown jewel in Coke’s international operations and the world’s second-biggest soft-drink market after the U.S., with annual sales of roughly $15 billion. In less than two years, the Mexican version of Kola Real, called “Big Cola,” has captured roughly 4% of the market. Coke and Pepsi have cut prices in response, denting their profits. At the Sam’s Club warehouse store in Mexico City’s upscale Polanco neighborhood, Big Cola is the fifth-best-selling product, narrowly trailing Coke.

Kola Real has put a new twist on globalization. As trade barriers have dropped in much of the developing world, foreign-owned behemoths such as Wal-Mart Stores Inc. have squeezed local incumbents unaccustomed to competition and raised local people’s price sensitivity. The Ananos family has turned the tables on two U.S. giants by undercutting their prices and adapting their aggressive marketing tactics to local conditions.

Kola Real’s strategy is simple: offer big sizes at low prices. In a Carrefour supermarket in Mexico City, a large display of Big Cola beckons shoppers with a price of about 75 cents for a 2.6-liter bottle. Nearby, bottles of Coke go for about $1.30 for a slightly smaller 2.5-liter bottle. On a recent day, housewife Lourdes Avila put four of the Big Cola bottles in her cart and said: “For that price, I’ll try it.”

To keep prices low, the Ananos family runs a lean operation. While Coke and Pepsi bottlers spend nearly 20% of their revenue on beverage concentrate from Atlanta-based Coke and PepsiCo, Purchase, N.Y., the Ananoses make their own. Instead of maintaining a fleet of trucks as most Coke and Pepsi bottlers do, Kola Real hires third parties for deliveries — even individuals with dented pick-up trucks. The company also does little advertising beyond an occasional radio spot, relying on word-of-mouth from penny-pinching housewives.

Some lessons for Linux companies in their battle against Microsoft, perhaps…?

The Next Hurdle for Indian IT

The McKinsey Quarterly has an interview with Narayana Murthy of Infosys. Some excerpts:

Its not easy for the multinationals to create a workforce equal to ours in a country like India. The multinationals have to compete here for the talent and then train the people. There are many processes that have to be built up over a period of time to do that effectively. And of course, just having talented employees trained to deliver services is not enough. We have developed tools, methodologies, processes, and the management expertise for providing services to clients across geographic distances. We develop software in a geographically distributed way, in collaboration with customers. Our approach takes advantage of the 24-hour workday. Its not just a question of renting a building and hiring a few people and then saying to customers, “The shop is open.” So for now, our primary competitors will continue to be India-based companies, such as Tata Consultancy Services and Wipro.

Infosys was the first company to articulate the concept of a global delivery model. In this model, we partition a large-scale software-development project into two categories of tasks. The first includes those that must be done close to the customer. The second consists of tasks that can be done remotely in talent-rich, scalable, process-driven, technology-enabled development centers located in cost-competitive countries like India…The first category of activitiesthe ones that must be done close to the customerinvolves defining the project with the client and helping the client to install and use the software once it is developed. These activities include business consulting, IT consulting, defining requirements, installing the software, training the customer to use it, and rapid-reaction maintenance services. The second category of activitiesthe ones done in our development centers in Indiaconsists of technology tasks done most cost-effectively in remote locations. They include detailed function-design tasks, detailed technical design, database design, programming, testing, creating documentation, and long-term maintenance services.

Our biggest challenge is to become proactive problem definers rather than be reactive problem solvers. Right now, we solve problems our customers define. We need to be able to go to customers and say, “These are the problems we believe you will face, and here are some solutions.” Our focus is on providing solutions leveraging IT. We need to help shape the design of the technology solutions and then implement those solutions. This is the biggest challenge we facetheres no doubt about that.

The second challenge is to become more and more and more multicultural. Employees of 38 nationalities work for Infosys. We have efforts under way to integrate people across various cultures. For instance, on large deals we make sure that people from different parts of the world contribute, on a collaborative basis, to prepare a proposal, to defend the proposal, and to execute the proposal.

the third challenge is to continue to retain the soul of a small organization in the body of a large organization. We now have more than 19,000 employees worldwide. It will be tricky to balance the tension between scaling the organization as quickly as we have been doing against the need to maintain disciplined processes as well as an integrated multicultural organization.

MIT’s iCampus

News.com writes about the creative use of web services to improve quality of student life:

A Web service can help you catch a bus. Or test an electronic circuit from a dorm room. Or even take English writing tests in a new way.

These creative uses of Web servicesa method for connecting software systems over the Internetat the Massachusetts Institute of Technology stand in stark contrast to the more mundane, workaday uses of Web services at corporations. But these applications suggest that Web services may be an important link in realizing the vision of broad access to information originally promised by the Web browser.

iCampus is a 5-year, USD 25 million project funded by Microsoft. A related story in NYTimes looks at the Libraries Access to Music Project, to provide music from some 3,500 CD’s through a novel source: the university’s cable television network.

This kind of collabarive effort to test out new technologies is something which Indian IT companies and educational institutions should definitely look at.

Contextual Collaboration

Robin Good writes about “the future of real-time conferencing”:

When I talk about contextual collaboration I intend to describe the concept of online collaboration in which real-time features are a built-in components of a standard application and where no one has to leave his production tool in order to share, send or collaborate with others at-a-distance.

Some of the typical components of Contextual Collaboration are:

a) Presence awareness – this is normally confused with instant messaging. Presence awareness is indeed a specific functionality of typical instant messaging clients allowing and making possible the actual instant messaging functionality. The ability to “see” and be able to reach out to direct contacts, friends and team-mates is in my opinion at the very core of online collaboration.

b) Conversation – this is the ability to talk, exchange and discuss as smoothly and transparently as possible. VoIP is the preferred route. Text chat can be an alternative. Asynchronous discussion threads a further road nearby.

c) Object sharing – to collaborate we need to be able to share and exchange document, tools, information. The ability to share any of these with ease and immediacy is of essence to the task of effectively replicating our long-formed expectations for working together.

d) Shared workspaces – we don’t collaborate suspended in the air. Like in physical space we normally need a bare minimum of a facility to carry out our work. A minimum of a desk, a set of archival drawers, writing and editing tools and whatever we feel needed for the type of collaboration at hand. A collaborative space is the necessary environment to carry out work with the needed basic support facilities.

Indeed, as only few real-time collaboration companies seem to have understood so far, instant messaging may be the very best pivot point around which to build effective collaboration and meeting opportunities.

How Startups Evolve

NYTimes writes about Silicon Valley companies have “renewed” themselves as the It environment has changed around them. The article describes the experiences of four companies: Tellme, InterTrust, VMware and Scalix. “Companies across Silicon Valley tell similar stories. The marketing plan, business model and sometimes the company itself die, but good technology tends to live on. Think of it as the business-and-technology equivalent of the ‘selfish gene,’ a term coined by the evolutionary biologist Richard Dawkins, who argues that the gene rather than the larger organism is the fundamental unit of survival.”

Social Networking Software

VentureBlog writes about “software that lets you connect to people and opportunities via your network of friends, colleagues, business relationships, etc.”, and briefly discusses Friendster (online dating), LinkedIn (professional networking), Tribe.Net (classifieds).

The opportunity: “The area I am most interested in is applying social networking software to enterprises. I like it for two reasons. First, there are a bunch of important enterprise applications that can be vastly improved with social networking software. Examples are sales force automation, customer relationship management, and human resources software. There are probably a bunch more. That sounds like a good market to me. And the second reason is that i think a tightly controlled social network may have more utility to its users. You can apply privacy, trust, rules, and controls on an enterprise network that you can’t apply to a public network. And that means that the participants in the network will be willing to share more of their knowledge and relationships without worrying about what bad stuff could happen. I think that leads to more utility and more usage.” Two companies in this space: Spoke Software and Visible Path.

Always On had an article by Paul Reddy of Spoke Software recently, who wrote about how it is building its software:

Software should provide compelling value to the user. If you enable users to do their jobs better, value will flow to the enterprise.

Software should generate value quickly. Sales people, in particular, have short attention spans. Amaze them in ten minutes, and theyll come back.

Dont ask the user to create more data. Ask the system to discover information for the user.

Give people control and choice. Privacy, in the end, is about control.

Make the user your friend. Use the Web to expose users to your products and help them bring it in under the radar, instead of by decree.

TECH TALK: SMEs and Technology: Information Management Architecture (Part 2)

The Personal Knowledge Manager (PKM) is a sort of Memex, a memory extension, as envisioned by Vannevar Bush. This tool helps users to build and manage their personal knowledge base. It is an individuals views of the world, formed by the users associations. The basic goal of the PKM is to retain and return stored information. At its simplest, it is a directory-cum-outliner, constructed using the OPML (Outline Processor Markup Language), which can allow for transclusion (in-place viewing) of similar, other Memex constructs.

The Group Knowledge Manager (GKM) captures and amplifies knowledge across teams. It is a collaboration platform. The GKM belongs to a category of software that is growing in importance of late social software. The goal of social software is help groups work better. Every organization small or big has many groups some are formally set up (for example, marketing, engineering) while others can be informal (for example, organised by communities of practice). The objective of the GKM is to help these groups store and manage information that is of relevance for all of them. The only tool available today is email, and that does not work effectively across groups. Weblogs and Wikis can serve as the foundation for creating GKMs.

The Digital Dashboard provides an integrated view of all the information that a user would like to see on s single screen. Think of the Dashboard as having three areas a scratchpad writing area for making quite notes, a events viewer which shows a filtered view from all the event streams that the user has subscribed to, and a links area, which has shortcuts to various applications and recently used documents. In addition, there is a search box, with three options to search the users own information space on the server, search the users writings on various blogs (public, group and private) and search Google.

The Microcontent Client provides real-time event updates to the user. This client will typically be part of a users smartphone. It will connect to the users IMAP mailboxes that which gets the email, and the other created by the Info Aggregator. Taken together, they provide the user with the complete view of the personal, enterprise and external worlds. In addition, the microcontent client should also have the ability to accept content (text or multimedia) which can be posted on to a blog specified by the user. The new generation of cellphones already have cameras in-built. With better keyboards, they will become full-fledged two-way mobile multimedia centres.

Thus, these set of seven applications make up the information refinery. It will be possible to manage any kind of information text, image, audio or video through this pipeline. This is the platform that the small- and medium-sized enterprises (SMEs) need to manage the information that they come across and create. In the past, these systems have been expensive or hard to put together. Now, the components and standards for putting these systems in place already exist. This is the foundation of the Active (Publish-Subscribe) Web.

Tomorrow: Business Applications Architecture

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