While the financial services and even the manufacturing industry have been quick to adopt new technology, the same cannot be said of the natural products industry in general. There appears to be a degree of diffidence to leverage the power of cutting-edge information technology (IT) for higher efficiency and growth.
Preparing an IT strategy and roadmap is the first step on the road to higher levels of efficiency, enhanced global competitiveness and higher profitability.
New technology platforms focusing on cloud and mobility, protection from cyber criminals, and deploying faster and more capable hardware and networks are critical to organization efficiency. An organization can substantially enhance customer acquisition and servicing capability by deploying data mining, analytics and machine learning solutions.
Pinpoint customer access is possible through GPS-enabled solutions. Social media platforms have made customer outreach across regions and continents possible. Transformative IT solutions and technologies have made it possible for companies to become more efficient, bring costs down, achieve nimbleness and bring higher shareholder return.
It is critical to develop a properly defined and comprehensive IT strategy road map. This will help a natural products organization induct technology at a controlled pace. Knee jerk or ad hoc induction adds to cost without commensurate benefits.
A strategy and roadmap definition involves undertaking a comprehensive analysis of the company and the industry.
IT Strategy Analysis Model
A strategy and road map preparation exercise can be broadly broken down into three steps:
1. Current state analysis
3. Strategy and road map recommendations
Current State Analysis
The current state and future need of the natural product organization business and technology should be examined to help define the IT strategy and road map. The organization’s business vision, strategy and plans need to be understood. Constraints, challenges and opportunities of a natural product industry segment should also be identified. This is often done through a series of focus group discussions.
The state of the network, operating environment, applications, technology and the interoperability among various pieces of technology in the company need to be studied, and the constraints need to be understood. It is best that at this stage, which is also called the requirement gathering stage, to review the IT adaptability of the workforce in the organization.
An assessment should be made on the ability of the workforce to adopt and re-skill post introduction and implementation of the proposed new technology architecture. Some organizations seek the help of the IT strategy team to make an assessment of expected workforce redundancies post new technology introduction.
This, if carried out simultaneously with the strategy and roadmap exercise, will help the company gain a 306-degree independent view of changes that will be required to be put in place during implementation. This will also help the company decide the pace of change acceptable. Factors that dictate the pace include, among other things, new technology introduction time, manpower management planning, re-skilling, process re-engineering and overall costs required for a holistic IT upgrade.
The IT strategy and road map recommendation is based on the organization’s vision, and long- and short-term objectives. Some companies just want a step up from current levels of efficiency to higher levels. Others may want to achieve a best-in-class status in the industry segment. Still, others may want to incorporate cutting-edge technologies and achieve transformational changes.
Depending on the organization’s objective, benchmarking need to be undertaken. Generally speaking, the bigger the technology leap, the more disruptive it is likely to be for the organization. The exercise will help the organization prepare for the disruption.
Recommendations and road map are based on the current state assessment and benchmarking. Here the consultants recommend from the technology standpoint, which pieces of software, hardware or network are to be either upgraded, re-engineered, retired, retained or developed.
IT Recommendation Model
IT recommendations should take into account interoperability with other pieces of legacy or new technology. Efficiency within the organization is influenced by the ability of pieces of software to leverage and analyze data from others.
Hardware and networks at a high level are best sized and estimated. This will assist in seamless integration of the proposed new IT ecosystem. A solution architect will help determine how technologies could be integrated in the organization with the least amount of redundancy and minimal disruption. The technical architecture recommendations also help factor concerns on cyber security, data protection and disaster preparedness.
Even the most technologically advanced organization needs people to operate it. A workforce capability assessment exercise to assess workforce retooling need is best done alongside IT strategy and roadmap definition. This will help the natural product company prepare human resource (HR) management plans that can be rolled together with new technology induction.
An IT strategy and roadmap consulting team should be composed of an IT strategy expert, solution architect, network and hardware specialist, security, HR and training specialist, and a business analyst.
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Paul is 45 years of age, lives in small town near San Jose, California state, USA. He works as a software programmer for a local mid-sized company, is respected for his skills and quality of code that he writes. One morning, he is called to the office of his boss. He is told that the global slowdown has hit the firm hard; the company needs to cut costs and has decided to offload code writing to an outsourcing firm in Bangalore, India. The world comes crashing down on Paul. He is without a job.
Sridhar studied in the local engineering college in Vizag a port town in the South of India. His parents had sold their only possession, a piece of agricultural land, to pay for his education. Sridhar finally got a job with an IT outsourcing firm in Bangalore. Sridhar first priority in life is to earn enough to repay his father’s debt and get his parents out of penury. A stint in the US is his dream. He is determined to compete, work hard, save a lot and finally own a house and lead a good life free from poverty and deprivation.
Paul and Sridhar may be fictional characters but their stories are true. These are getting repeated across continents in Asia, Europe and North America. Both are qualified engineers. One works for $90 per hour the other at $30. The job, they both do, is the same. One has just lost a job to Bangalore and the other has gained one. Both deserve a good life.
The IT outsourcing and job loss debate is not about technology but about profit, shareholder value and people. It is about trying to redress the trade balance between countries. It is about countries seeking to protect their citizens from pain.
India has 1.2 billion people, produces 600,000 IT graduates, 1 million graduate engineers and 16 million engineering diploma holders each year. IT outsourcing is the main export of India and helps to keep the trade deficit from going out of control. The IT outsourcing industry of India has an average age of thirty. The supply is continuous, although there is shortage of experienced resources. Average annual cost to company in India is only $6,500 as compared to $60,000 in the US.
Over time, the global IT industry has adopted the Indian Global network delivery model (GNDM). Herein companies have opened delivery centres called GDCs (Global Delivery Centres) across countries in different parts of the world. GDCs have been built across North America, Europe, Latin America, China, India, Australia and across the ASEAN region. This innovative model seeks to leverage advantages of each location.
At some places like India, China, Mexico, ASEAN region and Latin America cost is low and availability of manpower is comparatively good. GDCs help companies leverage local opportunities and expand their customer base. They also add to linguistic capabilities so critical while operating in non English speaking markets. In these low manpower cost countries size of GDCs are huge with a GDC manpower strength reaching up to 5,000 people.
In an expensive location like North America and Europe, manpower deployed is relatively small and is rarely over 500 people. Hereto, all efforts are made to induct cheaper qualified resources from India. Work visas like H1B and L category for the US become critical to maintain profitability of these companies. This staffing mode is common to both Indian, North American and European companies. Under pressure from local governments, companies have started hiring local manpower. They will continue to do so till such time, this does not significantly erode their profits.
Research, innovation, new product development companies have also moved in a big way to countries like India. New product development work is now being conducted at offsite RDCs (Research Development Centres).
The recent effort to increase cost of applying for a visa, forcing outsourcing companies seeking to induct cheaper resources into the USA by insisting on their paying prevailing market rates to their employees deployed in the US will inevitably result in drying up of inward traffic to the US. Technology resources are a fungible commodity. It will move where it gives the best Return of Investment.
Companies, globally in different times innovate and adapt to new challenges. Protectionism is not new to the world. The GNDC could play an important part in this counterstrategy. Free trade agreements, regional free trade agreements between North America and Latin American countries will come in play. Instead of Indian manpower, the onsite deployment will happen from Latin America. Paul will not get his job back soon. His job will be replaced by a Mexican Paul instead of an Indian Sridhar.
Technology will also be deployed to counter this challenge. Cloud based solutions, may not require onsite deployment of human resources in numbers. Most of the work can happen offshore. Government efforts in protectionism will lead to disruption but will this lead to increased jobs in the US and elsewhere? The jury is still out on this one.