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For over a decade, Europe has complained that they lag the United States in all things technology-related -- curiously, it is always considered two years behind. It has never caught up for a number of reasons: The inflexibility of the labor market; the paucity of venture capital finance; the lack of robust telecom competition; et cetera. But these are all superficial causes. The root is ideological: a form of industrial policy that is so deeply-ingrained in European culture that it is hardly recognized anymore. Every country made it a priority to protect their national champions -- Germany's Siemens, Italy's Olivetti, France's Bull, and the list goes on. To let a firm fail was to give away the future, or so it was felt. American-style capitalism was scorned.
The good news is that this approach is clearly changing. German politicians may still call foreign hedge funds"locus," and Frenchmen may get ruffled over rumors that Pepsi might buy Danone -- but beyond the political bluster, there is a steady consensus in Europe that it needs to reform and compete. The "No" votes against the European Constitution, in this light, might be optimistically seen as ushering in a period of much-needed domestic reform before the European project moves ahead. In fact, Europe is well-placed, considering that due to the Internet, geography matters less. For instance, a company like Dell doesn't make computers; it doesn't deliver them; it doesn't even process the credit cards charges -- it simply accepts the orders and ensures the rest happens. Had Europe caught a glimmer of this -- the change in IT to commodity hardware; importance of process innovation -- before Michael Dell did, it would not have supported home-grown PC makers but encouraged entrepreneurs with new business models. There is no reason why the next Dell can't come from the Old World.
However, if the story is a happy one, it is also a challenging one.
Happy, in that tech markets are shifting and the primacy of place is
over. New rivals can crop up anywhere. The problem, however, is that
they do. Just as Europe is preparing itself to compete with America,
the West itself is about to be challenged from the two emerging
technology superpowers, India and China. Both today compete at the
low-end portion of the IT industry -- but they won't forever. Like
Japanese firms three decades ago, companies such as China's Huawei and
India's Infosys and Wipro are vying to springboard into the higher-end
aspects of the IT business, replete with their own intellectual
property. Are European business leaders prepared?
I will be posting commentary about some of the interesting discussions, debates and conclusions at the European IT Forum on IDC's new blog, IDC eXchange. Please follow the commentary there, and I look forward to your reactions and comments. |
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By Frank Gens, Senior Vice President, Research, IDC September 12, 2005
In Paris, one of the things we'll be talking about is the impact of IT's supposed commoditization on the future of the IT industry and IT in the enterprise. How’s this for an interesting perspective… When I spoke at IDC’s CIO Conference in Milan last May, one of the other speakers was Nicholas (IT Doesn’t Matter) Carr, who presented his controversial vision of the impact of IT commoditization. Later that morning, Renzo Passera, the CIO of Italcementi, the $6B+ international cement manufacturer offered the following reaction to Mr. Carr’s presentation (I’m paraphrasing): Since my company makes cement, believe me: I know what a commodity is. One of my frustrations as a CIO is that IT - particularly software - has such inconsistent quality. So many bugs, patches, poor documentation, on and on. One of the hallmarks of a real commodity is that you always know exactly what you’re getting - specs are well-defined, and delivery to spec is the rule or you’re out of business. IT has a long way to go before it is even worthy of being labelled a commodity. OK, we can all agree that software is more complicated than concrete. But I’d say Renzo is more on the mark than not. We have a long way to go before software is a true commodity in the best sense. An interesting question I look forward to discussing with delegates and our invited speakers is: will two important megatrends - open source development models and composite applications - help or hurt our ability to get there?
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SAP’s Brosset on Customer Strategies and the Future of Enterprise Software (audio) By Frank Gens, Senior Vice President, Research, IDC August 8 , 2005 When I think of IT’s growing role in enabling business process innovation, I think most about the paradox of enterprise application software. Software from SAP, Oracle, Siebel, and others have helped customers automate and streamline business processes. But the inflexibility and high costs of these packages have also held back customers from innovating beyond the initial implementation. As discussed in a recent IDC Executive Insights, the key software industry players are radically changing their offerings to break this paradox – with a dynamic, services-oriented architecture that supports rapid innovation. At the European IT Forum, Pascal Brosset – SAP’s SVP of Market Strategy – will share his and SAP’s take on the critically-important transformation of enterprise applications. I spoke with him from his office in Paris this week, and asked him how the transformation is going so far: which customers and industries are starting to shift to the new application architecture, how they’re overcoming the challenge of “selling” it internally, and how leaders like SAP, Oracle, IBM, Microsoft, Siebel and others need to cooperate to ensure compatibility in this emerging dynamic application environment. Here is the audio from our 10 minute conversation. |
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In spite of mounting pressure from globalization , Manufacturing still directly accounts for one in five jobs, and about one in every five Euros of GDP, in Western Europe. Add in manufacturing-related service jobs (and GDP), and the importance of Manufacturing to the future of Western Europe’s economic growth and vitality is enormous. Bob Parker, VP of Research at Manufacturing Insights, will be presenting at the European IT Forum on Energy and Manufacturing Trends: The Era of Value Realization. I recently met with Bob to talk about IT’s increasingly critical role in his manufacturing clients’ strategy and operations. Our conversation touched on: the top three business priorities driving manufacturers’ IT investments, the technology infrastructure gap that still exists in Europe’s midmarket and upper-midmarket manufacturers, and the emergence of Dynamic IT in manufacturing. Here is the brief (8 minute) audio. Quote of note: “We’re almost seeing Manufacturing move toward the Financial Services model, where technology isn’t about score-keeping; it’s about how the whole business operates.”
As we look forward to the IT Forum, yesterday the market offered another reminder of the challenging issues around IT, innovation and growth in Europe. IBM announced its second quarter earnings, rebounding from a negative first quarter surprise with a 6% year/year increase in sales (excluding the PC business), and an 11% year/year increase in earnings per share. But, as was the case in Q1, slow growth in Western Europe – particularly in Germany, France and Italy - continued as a major concern in 2Q. IBM CFO Mark Loughridge noted that while 2Q sales performance in Western Europe overall improved 4% year over year, in Germany, France and Italy sales actually declined versus 2Q04. Here’s the audio of Loughridge’s comments about Western Europe. [For IDC clients, here is a recent IDC document on IBM’s restructuring efforts in Europe (subscription required).] 25/07/2005 20.01 Author: Tony Picardi 27/07/2005 15.44 Author: Frank Gens
The comment from M. Jansen about the importance of looking beyond just the technologies – at how IT organizations can structure themselves and operate more dynamically – prompted me to visit with Dr. Peter Weill of MIT’s Sloan School Center for Information Systems Research (CISR). Peter will be presenting at the European IT Forum about CISR’s latest research into “IT Governance and Business Agility”. In his office in Cambridge, Peter gave me a preview of his research findings – touching on the four ingredients for agile/dynamic IT organizations, the role of outsourcing in the journey toward a dynamic IT environment, the importance of modular architectures (such as SOA), and diagnosing the skills gaps on both the IT and business sides of the enterprise.
IDC’s European IT Forum is opening in less than 90 days, and we’re excited to launch this weblog as a place to get our collective discussion going – to “prime the pump” – long before we convene in Paris. The conference agenda defines a broad and challenging scope of discussion: “How can business people, IT people - and the vendors who support them - make real, sustainable breakthroughs in using IT that directly, and positively, impact business performance?”. This is certainly not a new discussion. Indeed, it has been THE issue for CIOs for decades. But in 2005 there is some “new news”, in two areas, that offers great promise for being able to provide real answers to the important question above. First, business people in leading companies (and, increasingly, beyond) are becoming extremely engaged in this discussion. Last Autumn, IDC surveyed European line of business (LOB) executives regarding whether they think IT matters to their business success, asking, "How much of a factor is IT operations performance in the success of your business?" Forty-six percent of the executives said that IT is "critically mportant," meaning that their business cannot actually operate without IT systems up and running.
Strategic Value of IT to European Businesses
At the same time, we’re in the midst of an innovation explosion in new technologies, standards, tools and management best practices that better link IT strategy and execution with business strategy and operations. (IDC calls this shift to business-connected IT “dynamic IT”.) At the European IT Forum, we’ll probe industry leaders for their experiences in the latest governance practices for aligning business and IT leaders’ agendas and operations. We’ll also ask leading users and vendors alike for their experiences with, and outlook on, the new generation of technology solutions that support IT and usiness alignment, including: service-oriented architecture (SOA), web services standards, composite applications, federated data/information, virtualized and grid-enabled infrastructure, and new development, pricing and delivery models for IT. So here is where you come in, and our weblog starts to become a true discussion: Our speakers and panelists will be participating in this blog, so let’s help them understand what we want to hear at the Forum. Let us know: Which of these developing areas (governance, technologies, business innovation with IT, others…) concerns you most? What do you want to hear at the event – and leading up to the event, in this blog - about each of these at the Forum? We’ll post comments, and recruit the Forum presenters to get into the conversation with us over the next three months. All of which will make the event itself a richer learning experience. [NOTE: access to some of the links above require registration on idc.com. Don’t worry: registration takes two minutes, it’s free and IDC adheres to a strict privacy policy.] 07/07/2005 22.07 Author: C. Jansen, Netherlands 07/07/2005 22.09 Author: Anonymous Comment: Business people need to get more educated on IT - they profess to have greater interest, but then don't show up to joint business/IT planning meetings, at least in our company.
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Follow This Link to On-Site Commentary from the European IT Forum
