ConVoyage_Jan11

8/7/2019 ConVoyage_Jan11

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CONVOYAGE January 11

c o n s u l t i n g c l u b @ j b i m s . e d u Page 1

JAMNALAL BAJAJ

Institute of Management Studies

ConVoyageIssue January 2011


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CONTENTS:AN ARTICLE: POWER OF THE CLOUDIN THE WORLD OF BUSINESS.........3CONSULTANT TALKS...................................................................................7

PUTTING STRATEGIES TO THE TEST: MCKINSEY GLOBAL SURVEY RESULTS........7HOW THE GROWTH OF EMERGING MARKETS WILL STRAIN GLOBAL FINANCE.......9INCREASED LABOUR MOBILITY TO MEET DEMANDS FOR ECONOMIC GROWTH...12

CROSS WORD..............................................................................................14CONSULTING FUN.......................................................................................15


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An Article: Power of the Cloud in the world of

Business

By

Vineet Inamdar1st Year MMS, JBIMS

Think about the way you do business.

You might have the best technology

available, talented resources and might be

highly successful. But are you doing

enough? Are you doing it the right way?

When you need to start a business, you

need to have so many resources in your

hand: Business applications like SAP or

other ERP software, servers and technical

people to run, monitor and debug these

applications, power costs, operational and

set up costs which can be enormous.

Plus there are always problems with

version upgrades, or technology becoming

outdated, or technical issues which

needlessly frustrate you. Welcome to the

world of cloud computing. Cloud

Computing is a concept where the entire

applications runs from a virtual cloud (In

this case the internet). By this, data,

applications and computing power are all

lodged at a remote location from the user.

So how does the User leverage this to his

advantage? Well, he simply logs in by

providing a user name and a password,

and only pays for those applicationswhich he wants.

It is similar to a building where every

office in a building uses the same

infrastructure and basic facilities available

but still has the capability to customize its

own office space.

Cloud computing is a mere extension of

Software as a Service (SaaS). It can also be

called as a Utility computing similar to

utility services like Electricity and Water

where you pay only for what you use.

To be in business, you need technology

and to make the best use of the resources

available with you, you have to leverage

your IT costs where Cloud Computing

helps you out.

What does it have in store for the various

firms across the globe??


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Traditionally bigger firms have deep

pockets to buy the latest technology and

use the traditional client server

architecture. But for start-up, small andmedium enterprise firms, the only way to

survive and make progress is by

embracing cheap but effective technology.

How does cloud computing work?

Cloud computing is Internet based system

development in which large scalablecomputing resources are provided as a

service over the Internet to users. The

concept of cloud computing incorporates

web infrastructure, software as a service

(SaaS), Web 2.0 and other emerging

technologies. It works on the concept of

multi tenancy where in a single software

runs on a server, but the same is used by

multiple clients (called tenants in this

case).

The advantages of Cloud Computing is

that it gives the organization a very rapid

start up, since no time is wasted forresource allocation or for set up, scalable

since the number of users can grow but

everyone shares only one single instance

of the software, reduction in capital

expenditure and operating costs.

What would decide whether you should

move your application(s) over the cloud

or not??

It depends on how fair is your usage of

the data and the application. If the

application has a fairly consistent loadthroughout the day, it then makes no

sense to move it to the cloud. But in cases

of applications with high variations in the

traffic, it is better to move the application

since it will have better utilization. Also,

you pay the same amount of money when

you move to the cloud and in fact enjoy

the advantage of a higher processing

power in the form of several shared

multiple servers working on your

application.

A classic example in this case is of Pixar

Animation Studios, which runs

its computer-animation rendering process

on Windows Azure (A cloud computing

or cloud services operating system for the

development service hosting and service

management environment) because every

frame of their movies takes eight hours to

render today on a single processor, which


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means it would take them about 272 years

to render an entire movie.

With Azure, they can get the job done as

fast as they need. The result is huge spikesin Pixars usage of Azure as they render

on-demand.

Some industry examples where companies

have actually cut down on their IT costs

drastically and become more optimally

competitive:

KPIT Cummins:

Headquartered in Pune, India, KPIT

Cummins is an emerging leader in

providing consulting, solutions and

services in the fields of finance, accounts

and manufacturing.

To handle issues like the increasing cost

of hardware, software licenses, power

usage and consumption, the company

migrated to a virtual environment and

optimized the server space utilization.

By reducing the number of servers from

120 to 20, and increasing the server

utilization, the company managed to get

newer applications deployed and

provision servers from several months to a

few hours.

Coca Cola Enterprises:

Coca-Cola Enterprises is the worlds

largest marketer, producer and distributor

of Coca-Cola products. In order to grow

against heavy competition and a complexenvironment, there was a need to

effectively communicate with its

employees, particularly with its sales

employees to deliver information to them

in real time. In order to fill up this

messaging need and maintain contact

with the employees, they migrated to

Microsoft online services where the

software and data were hosted online with

real time support. Traditional way of

communication was via email to which

sales employees had limited access. But

now, it was possible for them to

communicate with the company since

there was ample support for the software

through multiple devices like mobile

phones and computers.

Negatives on Cloud Computing:

While the entire concept of cloud

computing has gathered steam in the past

few months, there have been increasing

criticisms on cloud computing.

Larry Ellision, CEO and co-founder of

Oracle while quoting some companies

which boasted of providing ERP systems

on the cloud, said it was unclear on whatcould be hosted from the server. He said


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that the entire issue of cloud which is a

new name for coined for the hosting from

the internet or over the network is in fact

over blown and has always existed in thepast. Software as a Service has co- existed

with traditional software vendors for

several years.

Also, the biggest disadvantage is that of

data security. It would not be possible for

an organization to deploy its highly

sensitive data over a remote server which

houses data and provides services to

different users.

It is true today that all organizations

providing cloud computing services have

to comply with several security standards

but instances of data breach are not

uncommon.

Another disadvantage is that they would

provide you the same set of service to

everyone who uses it. So even though you

could customize it, the logic still remains

the same: Same set of services to offer

from a host of services from which youneed to select which service you require.

Also, cloud computing might be

successful for small and medium

enterprises. But for traditional large scale

organizations, it is always economical tohave your own server (private cloud) and

host applications rather than migrating

your application to some third party

vendor.

Whether cloud computing showers itself

upon the world or not, only time will tell

since there are too many constraints,

primarily of security to be handled.

But it is definitely a new concept in the

use of IT which gives a method to

companies to be more cost effective in

terms of the technology usage.

References:

www.microsoft.com


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CONSULTANT TALKS

Putting strategies to the test: McKinsey Global Survey results

Creating a winning strategy is a struggle for most companies; some seem content

just to play along. They may not be asking themselves the right questions.

Competitive advantage is the essential

ingredient of any strategy. Yet for many

companies, advantage is an elusive goal.

The results of a recent McKinsey surveysuggest one reason: just 53 percent of

executives characterize their companies

strategies as emphasizing the creation of

relative advantage over competitors; the

rest say their strategies are better

described as matching industry best

practices and delivering operational

imperativesin other words, just playing

along.

In this survey, executives around the

world answered a series of questions that

allowed us to test how fully their

companies business unit strategies pass

ten tests that we believe, based on years of

work with clients and academic research,

make for a good strategy. The first

whether the strategy will beat the market

by creating competitive advantageis

comprehensive. The remaining nine tests

disaggregate the picture of a market-

beating strategy, assessing how the

strategy positions the company in the

market, what level of insight the strategy

rests on, and what the implementationplan involves. Nearly two-thirds of

respondents indicate that their companies

pass three or fewer of the ten tests,

meaning that our description of the test

closely describes a particular element of

their strategies. And only 2 percent of

respondents say their companies pass nine

or all ten tests.

While its certainly possible for a strategy

to succeed at a company that fails all or

even most of the tests, the results

underscore that companies can do much

more to pressure-test their strategies. The

results also suggest some ways that

companies can prioritize improvements in

their approach to strategy based on the

tests respondents say contribute most to

financial performance and are most

frequently used in their sectors.


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While its certainly possible for a strategy

to succeed at a company that fails all or

even most of the tests, the results

underscore that companies can do much

more to pressure-test their strategies. The

results also suggest some ways that

companies can prioritize improvements in

their approach to strategy based on the

tests respondents say contribute most to

financial performance and are most

frequently used in their sectors.

Taking the tests to the bottom line

Whether executives say their companies

pass a given test is likely, of course, to be

partly related to whether they think it

matters. And indeed, there is a rough

correlation between passing a test and

executives saying a test is instrumental to

financial performance. For example, when

asked which three tests have the most

positive effect on financial performance,

more executives select flexibility to make

choices in the future than any other test.

And as Exhibit 2 shows, this is the test the

most companies pass. Conversely, novel

insight is the test rated least important to

financial performance and passed least

frequently.

When executives assess the tests impact

on financial performance, some

interesting differences arise among

industry sectors (Exhibit 4). Executives in

the energy industry, for example, are

likelier than all others to say a focus on

trends has a good effect on their financial

performance, with 46 percent saying so.

Executives in the health care and high-

tech sectors, meanwhile, stress the

importance of management having a

strong belief in the strategys underlying

assumptions; nearly half of them cite that

test.


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How the growth of emerging markets will strain global finance

Surging demand for capital, led by developing economies, could put upward pressure

on interest rates and crowd out some investment.

Short-term doldrums aside, the worlds

corporations would seem to be in a strong

position to grow as the global economy

recovers. They enjoy healthy cash

balances, with $3.8 trillion in cash

holdings at the end of 2009, and they

have access to cheap capital, with real

long-term interest rates languishing near

1.5 percent. Indeed, as developing

economies continue to pick up the pace of

urbanization, the prognosis for companies

that can tap into that growth over the nextdecade looks promising.

Yet all those new roads, ports, water and

power systems, and other kinds of public

infrastructureand the many companies

building new plants and buying

machinerymay put unexpected strains

on the global financial system. The

McKinsey Global Institutes (MGI) recent

analysis finds that by 2030, the worlds

supply of capitalthat is, its willingness

to savewill fall short of its demand for

capital, or the desired level of investment

needed to finance all those projects.

Indeed, household saving rates have

generally declined in mature economies

for nearly three decades, and an aging

population seems unlikely to reverse that

trend. Chinas efforts to rebalance its

economy toward increased consumption

will reduce global saving as well.

The gap between the worlds supply of,

and demand for, capital to invest could

put upward pressure on real interest rates,

crowd out some investment, and

potentially act as a drag on growth.

Moreover, as patterns of global saving and

investment shift, capital flows between

countries will likely change course,

requiring new channels of financial

intermediation and policy intervention.

These findings have important

implications for business executives,

investors, government policy makers, and

financial institutions alike.


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Surging demand for capital

Several economic periods in history have

required massive investment in physical

assets such as infrastructure, factories, and

housing. These eras include the industrial

revolution and the postWorld War II

reconstruction of Europe and Japan. We

are now at the beginning of another

investment boom, this time fueled by

rapid growth in emerging markets.

Across Africa, Asia, and Latin America,

the demand for new homes, transport

systems, water systems, factories, offices,

hospitals, schools, and shopping centres

has already caused investment to jump.

The global investment rate increased from

a recent low of 20.8 percent of GDP in

2002 to 23.7 percent in 2008 but then

dipped again during the global recession

of 2009. The increase from 2002 through

2008 resulted primarily from the very

high investment rates in China and India

but reflected higher rates in other

emerging markets as well. Considering the

very low levels of physical-capital stock

these economies have accumulated, our

analysis suggests that high investment

rates could continue for decades.


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In several scenarios of economic growth, we

project that global investment demand

could exceed 25 percent of GDP by 2030.

To support growth in line with theforecasters consensus, global investment

will amount to $24 trillion in 2030,

compared with about $11 trillion in 2008.

When we examine alternative growth

scenarios, we find that investment will still

increase from current levels, though less so

in the event of slower global GDP growth.

The mix of global investment will shift as

emerging-market economies grow. When

mature economies invest, they are largely

upgrading their capital stock: factories

replace old machinery with more efficient

equipment, and people make home

improvements. But the coming investment

boom will involve relatively more

investment in infrastructure and residential

real estate. Consider the fact that emerging

economies already invest in infrastructure at

a rate more than two times higher than that

of mature economies (5.7 percent of GDP

versus 2.8 percent, respectively, in 2008).

The gap exists in all categories of

infrastructure but is particularly large in

transportation (for instance, roads, airports,

and railways), followed by power and water

systems. We project global investment

demand of about $4 trillion in

infrastructure and $5 trillion in residential

real estate in 2030, if the global economy

grows in line with the consensus offorecasters.


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Increased Labour Mobility to Meet Demands for Economic Growth

Industries and countries worldwide will require major increases of highly educatedpeople in their workforces to sustain economic growth

Demand will be biggest for highly

educated professionals, technicians, and

managers. Professionals will be in

particularly high demand in the trade,

transportation, and communications

industries in developing nations.

In the next two decades, demand for

professionals in manufacturing will peak

at more than 10 percent in developing

countries, exceeding 4 percent across all

countries sampled. (Labor-demand

growth rates are compounded annually.)

Health care research and development

alone will generate enormous demand for

skilled labor worldwide.

Employees without critical knowledge

and technical skills will be left behind.

If left unaddressed, talent scarcity will

become a threat to sustained growth,

particularly in knowledge-based

economies. Human capital has replaced

financial capital as the engine of economic

prosperity, said Hans-Paul Brkner,BCGs president and chief executive

officer.

The roots of the global talent risk include

the widely uneven quality of educational

systems, erratic employability of the

workers in the Southern Hemisphere, and

demographic changes in the Northern

Hemisphere, where retirement of the baby

boomers will result in an unprecedented

talent deficit.

In Canada, Germany, the United

Kingdom, and the United States, expected

immigration and birth rates will not offset

the workforce losses caused by aging

populations. Today, foreign-born workers

with university degrees or equivalent

qualifications make up just 2 percent of

the European labor market, compared

with 4.5 percent in the United States and

nearly 10 percent in Canada. Improved


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education and training must go hand in hand with increased labor migration.

The global problem is no longer a mere

talent mismatch. The scale of the predicted

talent gap requires concerted action, starting

withand going well beyondremoving

barriers to the mobility of talent, said Piers

A. Cumberlege, senior director, head of

partnership, World Economic Forum.

The report proposes seven core responses to

global talent risk:

Introduce strategic workforce planning

to address imbalances between labor supply

and demand.

Ease migration to attract the right talent

globally.

Foster brain circulation to mitigate

brain drain.

Increase employability by advancing

technological literacy and cross-cultural

learning skills.

Develop a talent trellis by focusing on

horizontal and vertical career and education

paths.

Encourage temporary and virtual

mobility to access required skills easily.

Extend the pool by tapping women, older

professionals, the disadvantaged, and

immigrants.

Members of the Global Agenda Council on

Skills and Talent Mobility, as well as more

than 100 high-level experts and

practitioners, contributed to the

recommendations in the report and to the

talent mobility dialogue hosted by the

World Economic Forum online and at

meetings in Brussels, Doha, Davos-Klosters,

Dubai, Montreal, New Delhi, and New York

in 2009 and 2010.

The World Economic Forum Annual

Meeting 2011 in Davos-Klosters will seek to

catalyze a pragmatic, result-driven action

focused on effective sharing of good

practices.


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CROSS WORD

Business and Finance

Across Down

1. rate and efficiency of work4. ask the bank to advance money

6. money paid for a loan10. wealth of person or business12. promise to repair or replace13. amalgamation of two companies14. legal agreement16. total sales of a company17. share of profits paid to shareholders

2. proof of payment3. put money into a company or business

5. money paid to owner of copyright orpatent7. part of the capital of a company8. where shares are bought and sold9. money lent11. amount of money spent14. neither cheque nor credit card15. money returned

(Note: Solve the crossword and mail the solution to [email protected]. Names of the early

three winners will be published in the next month edition of ConVoyage)


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CONSULTING FUN


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The Consulting Club-Enhancing Quality

Contact us- [email protected]

Senior Members-Dr. Rahul Salvi Prasad GholveCell- +919819292862 Cell- +919769220527Email id - [email protected] Email id - [email protected]

Saurabh Sonparote Ekinath Khedekar

Cell- +919819539767 Cell- +919821708412Email [email protected] Email id - [email protected]

Junior Members-Mayank Goel Parinita JatkarCell - +919920018159 Cell - +919867798948Email id - [email protected] Email id - [email protected]

Pramod Kanojia Kush TandonCell - +919867393620 Cell - +919987442845Email id - [email protected] Email id [email protected]

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