As 2008 winds down, many people are attempting to predict what will happen in 2009. One common element is that the year will be difficult from an economical perspective. Whether the crisis will last 6, 9 or 12 months is open for debate, but there is a crisis and it will hit hard. Let me in turn share with you my views from a business and technology perspective.
Let's first start with five business related predictions:
- 1. As business slows down, cost cutting will continue to be at the top of CEO's agendas. This will result in less travel, little celebration and the cutting of all non essential costs. Unfortunately a number of companies will have lay-offs to trim their workforce to the available business, but that will be the last resort as many companies believe the crisis to be deep but short, and do not want to remove essential capabilities
- 2. The business world will be divided in two. On the one side, cash rich companies that will take advantage of the crisis to acquire additional assets cheaply, and on the other, cash poor companies that are the prime targets for these acquisitions. So, we should see a number of acquisitions taking place over the next couple months, making the cash rich companies stronger. Cash poor companies without a strong value proposition are the ones that will suffer most during the crisis as they do not interest anybody.
- 3. Variability is still very much in the system. The fluctuation of the US$/Euro value, to take an example, is there to stay. The oil price will also move up quickly once the economy recovers. So, companies will be forced to include this variability in their medium to long term plans. This will need to an increased understanding of the sensitivity of companies to external factors.
- 4. Outsourcing is there to stay. However, outsourcing will no longer automatically mean China. Near-sourcing will increasingly take a more prominent role while companies search for new logistics routes, in particular between Asia and Europe. Selected jobs may be coming back, but they will not create a substantial amount of work as the labor cost differential is still too high. Through spreading out manufacturing facilities, companies will however have to deal with more complex supply chains
- 5. Social and environmental focus is there to stay. As companies figure out how this can help them reduce costs and mitigate risks, the focus will increase drastically. Some companies will try to get away with buying carbon credits, but most will look at how they can decrease the environmental impact of their operations, while working with suppliers to improve working conditions in low cost countries.
How will technology help address the above:
- 1. To improve their operations, reduce costs and mitigate risks, companies will require more information on what happens within their own operations and throughout their supply chain. To achieve this, increased visibility and business intelligence is required. This will result in the launching of enterprise data warehouse, business intelligence and supply chain visibility projects despite the reduction of IT budgets. Company dashboards will become common in boardrooms.
- 2. As business travel reduces, companies will have to increase their level of remote collaboration. Collaboration tools, going from instant messaging to telepresence will become more common around enterprises. Companies should increasingly look at Web 2.0 tools for inspiration on how to work remotely together. Telepresence tools managed on integrated networks (such as HP's HALO room), will allow companies to work collaboratively with their suppliers and customers, maintaining a close working relationship at a lower cost. Integrated web based environments such as Windows Live can serve as a collaboration backbone if Microsoft can demonstrate an appropriate level of security is in place for cross enterprise collaboration.
- 3. As ERP systems become mature and only provide a snapshot view of the company, the integration of those with business intelligence and a variety of planning, simulation and analysis tools will have to be achieved to provide companies the information they require. Master Data Management will have to be put in place to ensure consistency of the information across the company and its eco-system.
- 4. With a number of safety threats behind us, the need for improved product track & trace is becoming increasingly apparent. Technologies such as RFID and smart labeling have achieved a maturity level that makes them prime candidates to become the basic tools for such traceability. Information backbones will be developed to collect the data and provide companies with information quickly and efficiently, resulting in fewer, faster and smaller recalls in the future.
- 5. New, hyped technologies will continue to appear. Cloud Computing will continue being at the center of many conversations, although it only covers e-mail and a small number of collaboration applications at this moment in time. But in the mean time leading companies are implementing Service Oriented Architecture (SOA) environments to increase their responsiveness and agility. In doing so, they are preparing themselves to be able to take advantage of cloud based services the day those become available
Predicting the future is always difficult. So, this is my trial and I hope you enjoyed it. On a very different note, may I wish you all the best for 2009, both on a professional and private basis. It has been a pleasure for me to contribute to this blog and hope to continue doing this in 2009.