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Steven L. Johnson wrote a new post on the site Discussion for Last Name Starting N-Z 9 years, 7 months ago
McKinsey & Company hosts an interesting interview with author and NYU professor Clay Shirky.
We’re in a world now where, unlike the old “you print the magazine in advance” model, demand creates supply. There’s not […]
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Steven L. Johnson wrote a new post on the site Discussion for Last Name Starting H-M 9 years, 7 months ago
McKinsey & Company hosts an interesting interview with author and NYU professor Clay Shirky.
We’re in a world now where, unlike the old “you print the magazine in advance” model, demand creates supply. There’s not […]
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That was an interesting interview. It covered a lot in the short period. I agree that abundance is more disruptive to society than scarcity. Companies are constantly searching for ways to create a niche market or provide a service in a way that differentiates them from the competition – ways to become “scarce” – because that’s where there is the most profitability. But, that profitability only exists until that niche or differentiation is eliminated by competition or when the service becomes commonplace. One interesting point that Mr. Shirky made in the interview was that in today’s world, new companies did not simply take profits from another company. But, rather, the old company’s profits tended to be eliminated or disappear. Because of “abundance” with an idea or a service, what was once profitable becomes the norm and people aren’t willing to pay for it any longer. Or, at least, they would prefer to spend more on the better mouse trap down the street. I think the music industry’s transition from the days of 8-tracks to examples of free music being offered in our Radiohead case is a great example of disruptive abundance. I have a few hundred CDs from the time that they were the best thing since sliced bread. But, since the Internet “touched” the music industry, I have barely touched my CDs other than moving them to my computer or Ipod to make them more accessible.
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RIch, I too barely touch or buy any CDs, books or magazines. They are all available online and much cheaper than the actual material. Also, having access to everything in digital format eliminates waste and reduces clutter on the shelves. You could argue that even though the internet has created an abundance of resources, more people have access to these resources and therefore increased profits. So, you can say it depends on the actual resource. Possibly, the abundance of “information” online is disruptive as no one will be “forced” to create a solution to a problem themselves.
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Ali, Sorry it took me so long to get back to your comment. Can’t argue with your point about profits because of access to resources. I guess Amazon might be a good example of that with significant book sales in a dying print industry? It’s amazing how the abundance of information you noted can be so good and so bad at the same time. I love the access to “everything” provided by online resources but how frustrating it is with respect to the news we watch. So much of what’s out there is not newsworthy because every little piece of information is accessible.
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That definitely was an interesting interview. I agree that some sort of abundance is more disruptive than scarcity. He goes on to say that when there is a scarcity, people create things to solve the issues, but when there is an abundance, people will just utilize whatever is out there. Scarcity always leads to innovation, whether disruptive or sustaining, a problem is solved. Take for example Facebook, there was no way to link everyone around the world on a common platform, and out of scarcity, a new website was launched. The internet does allow access to more materials than print, especially magazines, music and books. People have access to these resources on a daily basis and in most instances far cheaper than actual print or cds.
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This is a subject that is near and dear to me and is certainly a major discussion in medicine. I’d like to focus my discussion in the context of handheld ultrasound.
For decades, ultrasound equipment has been costly and bulky. Over the past decade, the machines that perform ultrasounds have increasingly become smaller and more compact. Recently, GE introduced a series of ultrasound probes that plug into the physicians iPhone and allow any doctor to perform an at bed ultrasound on the fly. These devices were initially expensive, but recently, the price has come and they are now less than 1k per probe. This is a disruptive new invention – since now physicians could all theoretically do bedside ultrasound and make a diagnosis.
Seeing the potential, Harvard performed a randomized trial comparing medical students to cardiologist. The gist was this – currently, medical students are trained to diagnose heart murmurs with the stethoscope. The yield on this is poor and very operator dependent. In the study, Harvard took a group of first year medical students, trained them how to diagnose heart murmurs on ultrasound and then gave them a group of unknown patients and asked them to make the diagnosis using only their handheld US probes – no stethoscope. Then, a group of cardiologists with over 20 years of clinical experience were given the same patients and asked the same question – but they could only use their stethoscopes.
To everyones surprise, the medical students diagnosed the problem correctly nearly 70% of the time, while the cardiologist were correct only about 50% of the time. The point being – training medical students in handheld ultrasound might be better for patients then focusing on using the stethoscope.
I’m still rather young (or like to think so, at 27), so I was somewhat surprised by the medical communities response. Physicians across the globe were up in arms – how could anyone even begin to consider the notion that the very symbol of our profession would be obsolete. Even more argued that using a stethoscope was part of the doctor patient relationship – it established a connection. Surely, they argued, hand held US would effect this relationship in a negative way.
In eerie way, this response is actually very reminiscient of the discussion doctors had over 200 years ago when the stethoscope was first invented. Prior to the stethoscope, physicians listened to heart sounds by placing their ear directly on the patient’s chest. When a pair of Italian physicians debuted their new medical device – a hollow tube with compressed air – which promised to increase physician abilities to diagnose heart murmurs, the medical community responded with rage. Physicians then argued that removing our ears directly from the patient would change the doctor-patient relationship (I’m not kidding – sound familiar?). Some how, the stethoscope became not just a commonly used tool, but the very symbol of our profession.
How does this all relate to the discussion at hand? Well, it points out that disruption is only powerful when abundant. We’ve been able to diagnose heart defects on ultrasound for decades, but until the innovation of cheap, affordable handheld and portably ultrasound devices, this innovation never had a chance to entirely disrupt the practice of medicine.
For a nice summary see the link: http://goo.gl/t4vx0X
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Nicholas – very interesting post and study. As I was reading along, I knew what the end result was going to be the students fairing better with the technology than the experts with a stethoscope. On a personal note, I have had a heart murmur since birth but its often difficult to detect with a stethoscope. When a new doctor is listening to my heart, I wait until after he is complete to ask him if he heard my murmur and most have a hard time picking it up but once I tell them I have one and they listen closer, they can pick it up. I am hopeful to see what results the probe would have on me. Thanks for sharing!
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Nicholas — that was a great post connecting disruption of abundance to current and past medial innovations. As a patient, I would hope that doctors use the tools best-able to diagnose a potential problem, especially if that tool is readily available, even if it meant removing a tool that is associated with the profession itself. I’d imagine similar “battles” existed as digital cameras became more readily available (and sometimes better) than traditional cameras — getting rid of the darkroom and chemical development was, for some people, getting rid of the essence of photography. When I worked in publishing, there was a constant battle going on regarding the editing process: should publishers be required to send paper proofs for editors to mark up by hand (the only option the days of internet, desktop publishing, and common-place programs like Word or Adobe Acrobat), or should they force editors to use electronic copies and mark edits directly in the file? I’ve worked in companies where a person refused to edit electronically because it wasn’t “pure” and they felt they couldn’t do as good a job editing on-screen. That person was eventually forced to move on because the benefits to the publisher of electronic editing (no shipping costs, faster delivery, real-time collaboration, no lost pages, no illegible scribbles, etc.) outweighed those of traditional editing (some people read better on paper than on screen, it’s “how it’s always been done,” etc.). These days I think most editing takes place electronically, but there was tons of push-back when it was first introduced. As Rich pointed out in his post, the interview brought up the idea that new companies don’t just take profits, but eliminate them completely. Similarly, I believe electronic editing eliminated job opportunities for those who only edit on paper, and if the electronic ultrasounds are widely adapted, those doctors who refuse to adapt will find themselves with less patients and be less employable.
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Nick, great response and interesting article. I don’t think this is a question of one-or-the-other, as the article title suggests, but rather newer technology complimenting the old. The stethoscope is relatively cheap and easy to use and still gives a large amount of valuable information. The stethoscope is also used to listen to the lungs, auscultate for bowel sounds, and so on. While in your example the cardiologists made the correct diagnosis with the stethoscope alone only 50% of the time, I imagine that using a combination of the two devices would push that number much higher. Suggesting that ultrasound will displace acoustic auscultation devices altogether is an extremist viewpoint. I would hope that the medical community would instead embrace the new US devices as another tool in their belt.
The stethoscope is important for another reason – it provides an “excuse” to establish physical contact with the patient. The importance of touch in establishing and maintaining the physician-patient relationship cannot be understated. Ultrasound devices similarly require physical contact to function and so would play the same role, albeit in another manner.
One quote that struck me as especially important given then current medical climate was the following:
Interestingly, if no abnormality was found on ultrasound examination, physicians were less likely to order additional tests than when no abnormality was found on physical examination, suggesting a greater confidence in making the diagnosis with the ultrasound device. Ordering fewer tests can potentially reduce the total cost of care.
Echocardiogram is routinely used in the diagnosis, management, and follow-up of patients with heart disease. When a physician notices a murmur, rub or gallop with his/her stethoscope, or if then patient is high risk, they will then be referred for a cardiac echo, an exercise stress test, or both. If the physician could instead perform something similar to an echo right at the bedside, this could drastically reduce the number of patients that are referred for further testing. This could also alter the cardiologists revenue stream however as the echo is a profitable test while a bedside US would be essentially free. -
Nicholas,
Great article. I love the innovation in the medical field especially with the use of common consumer products like an Iphone. I wonder if this study is going to change the way medical students are taught medicine and particular diagnosis of heart mumurs. While technology is great it works only when it works and I am strong believe we cannot lose the traditional methods of diagnosis. We as a society rely on technology for everything and yes its generally more accurate however if we have an over reliance on that its also not great. We do not want to produce a generation of cardiologist who cannot work without a ultrasound machine especially if they are practicing in remote conditions. Abundance could be more disruptive to society than scarcity as scarcity forces man kind to adapt and find new ways to solve problems.
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Abundance is more disruptive to society than scarcity in the way that Christensen defines it. We develop highly functional marketplaces to buy and trade scarce goods and services. Those marketplaces are supported by infrastructure and human capital. When a product becomes commoditized (i.e. becomes abundant), all of the investment in employees and processed becomes sunk costs. That’s why the Luddites protested the introduction of the power looms in the 17th Century and why many people fear globalization today. However, these abundant disruptions allow society to focus on areas of growth that are adding more value on the cutting edge of technology. It’s a double edged sword, because the big leaps in history are disruptive innovations, but often leads to skills mismatches, particularly for those whose industries are being disrupted.
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I also believe that abundance is more disruptive than scarcity. Interestingly, there has been some psychological research related to this as well. Barry Schwartz wrote a book called, The Paradox of Choice in which he argues that more options have created increased anxiety among shoppers. He discusses this within a framework of happinesss, and how happiness is derived from achieving certain goals. With the abundance of products and options available to us, it is simply too many choices to be made by a single person. And there is ample opportunity for second guessing decisions. We become fixated on making the right buy and tend to dwell on missed opportunities. All of these factor in to an inability to achieve our seemingly simple goal of purchasing item xx.
For more information, check out the following links:
http://en.wikipedia.org/wiki/The_Paradox_of_Choice
http://www.ted.com/talks/barry_schwartz_on_the_paradox_of_choice?language=en
I see this in my own life. For example, today I decided to apply a new seal coat to my driveway. I want to find “the best” company at “the best price.” This morning, I called my father for a recommendation because he had work done last year. I then posted a message to my neighborhood Facebook page for recommendations and also to see who else might be interested. I then texted a dozen friends for their recommendations. Sitting here at 5:35 p.m., I have a lot of choices, but I don’t feel any closer to achieving my goal. And worse, with all these choices I feel stress about choosing the right one. On top of it all, I’ve spent a full day thinking about this one decision. Multiply that by all the decisions I need to make in a day, and it’s exhausting. Abundance definitely is more disruptive to me, personally, and so I project that out to society as a whole as well.-
Chris,
I first heard about this concept of abundance of choice being counterproductive on a Ted Talks episode (not sure if it was Schwartz or someone else), and it was the first thing that came to mind when analyzing this reading question. I think abundance of choice brings more opportunity for the marketplace and helps people sift through those many choices, and actually opens the door for disruption. Companies can enter the marketplace to either bring new, better choices, or help consumers cut through the fog of choices via either a well positioned product, or direct advertising efforts. In industries with few choices and limited access to the market (think the airline industry, which is insanely difficult to break into as a startup), we really haven’t seen any big innovations or disruptions over the past thirty years or so. The tech industry, on the other hand, which offers many many choices to consumers and is easy to break into as a startup, is probably the industry where we’ve seen the most disruption over the past few years.
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I agree with the notion that abundance is more disruptive than scarcity. The reason, similar to that stated, is that scarcity is manageable. When something is limited, there are fewer players out there, lower production quantities (in manufacturing or publishing), and fewer consumers who are able to purchase a presumably more expensive or hard to come by item. With abundance, prices drop and consumption increases. Items that were produced in low quantities and sold in specialty shops are now available online or on the shelf at Walmart, Home Depot, Costco, etc., and produced in quantities of hundreds of thousands or millions. All of the sudden, there is job creation in manufacturing, logistics, sales, and other capacities that were previously managed by a few but must now be coordinated amongst many, in some cases on a global scale. The internet being able to share different artistic media such as songs and books does not have the same effect to production, but does create large-scale distribution and the ability of anyone to have access to any item. While a scarcity model may disrupt society in a limited way, in line with its own limited availability, an abundant model will affect society on a larger scale.
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I do agree that abundance is more disruptive to society than scarcity. As Mr. Shirkey points out, when something becomes scarce society is willing to pay a premium for that object or resource. Contrarily, if there is an abundance of something it becomes obsolete. I can’t help but to think about the parallels between Google and encyclopedias and libraries. Before the Internet, people relied on encyclopedias and going to the library to get information about various topics. Not to say that information was scarce, but it was scarcer than it is today. There was a necessity to either have updated books in your house, or travel to the local library to obtain the most recent information. This changed with the introduction of the Internet and Google. Now people can access information about countless topics from their home computers or mobile devices. When was the last time you read an encyclopedia or visited a library? The Internet and Google have provided an abundance of available information, which has caused previous methods of disseminating information to become obsolete.
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Chase — I was also thinking about the connection between this reading question and Google/encyclopedias. I remember my parents had a complete set of The Book of Knowledge encyclopedia when my brother and I were kids. If we had questions, we had to look it up. Now if I sit around with friends at a bar discussing random facts and if someone doesn’t have the answer or doesn’t believe the answer someone else provides, we all pull out our smartphones to Google it. The need for printed encyclopedias disappeared because not only are they out of date as soon as they’re printed, but why pay for something when it’s available for free online? Regarding your question about a library — I do use our local library to check out “for fun” books (well, I used to before I started this OMBA program), but I haven’t gone to a physical library to do research in many years — that access is also available online.
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Hey Rachel,
My parents also had a large set of encyclopedias, and actually still do although now they’re more of a bookcase filler than anything else. Me and my friends do the same thing whenever a dispute arises and I’m sure many others do as well. It is truly amazing the amount of information we have at our fingertips. You make a great point about the information on Google being free, I hadn’t thought about that aspect of it. I had focused my thinking on the fact that using Google was so much more convenient than going to the library or reading an encyclopedia that it made those prior forms of distributing information obsolete. From a different perspective, you did have to pay for the information found in encyclopedias, and as you stated, why pay for something if it’s offered for free. Thanks for the insight.
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Chase,
Great example with the encyclopedias. I remember too well using Encyclopedia Encarta in the late 90’s and every year they had to release a new version with more information or like you said, go to the library to get newer information. The information was “scarce” compared to modern web browsing and that’s why it died out. Believe it or not, Encarta actually didn’t die out completely until early 2009 but it backs up your point that abundant information like we see today is much more “disruptive” to society then scarce information like old school encyclopedias. You hear all the time the phrase “Google it” but you never hear “encyclopedia it” because that means of technology was much less disruptive to society. As far as when was the last time I visited a library, I would have to say it’s been at least three years because everything is available online now. Great post.
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Wow. I didn’t realize that Encarta lasted that long. I vaguely remember loading an “Encyclopedia Encarta” CD on my computer either my freshman or sophomore year college, but it was mostly for fun rather than for real research. Even back then I was using online libraries instead of going to one in person — they usually weren’t open at the times I was doing research.
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Like everyone else I think that abundance is more disruptive than scarcity. Abundance is more disruptive because it changes everything about the old process, or as Shirky put it, “it rips the guts of the scaricity model.” The perfect example of this is the music industry. Once music became abundant everything was disrupted and record companies who were successful throughout history using the scarcity model were left hanging on to their old methods. As a result, they didn’t realize that once something becomes abundant everything changes. Instead they still tried to keep their old model of scarcity through litigation, essentially fighting abundance which was a fight that could not be won. While abundance is disruptive, I don’t think that it is disruptive in a negative way. I think that for those who acknowledge and embrace it, abundance can create new and better opportunities. The problem as Shirky points out is trying to combine the two, Shirky says “It’s easy to say “preserve the best of the old and combine it with the best of the new,” but in revolution, the best of the new is incompatible with the best of the old. It’s about doing things a whole new way.” This couldn’t be more evident than with itunes, or online streaming services demonstrating the new way to the record companies.
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I’m going to take the other side of the argument and say I disagree with the statement that abundance is more disruptive to society [as a whole] than scarcity. It’s true for developed nations, like the US, but I’m thinking of third world countries – the bottom of the pyramid. In our class with MB Sarkar we learned of companies who are developing products to meet the needs of these individuals; basic needs like clean water, or better healthcare. The scarcity of these things has led to the development of some seriously ingenious products, whose use has spread back to the developed world (known as reverse innovation). The portable EKG machine was developed for use in India, because patients couldn’t travel to the machine, but it is now used in hospitals and ambulances across the US. I’m curious if the portable ultrasound from Nicholas’ post had the same beginnings. Disrupting our consumption of “things” is well and good, but it’s more interesting to learn about what is being done to disrupt the lives (for the better) of those who couldn’t care less about eBooks or Twitter. That disruption is based in scarcity and that is what will change our society for the better.
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I believe that abundance is more disruptive to society than scarcity. When something is scarce, there is a uniqueness associated to it and usually there is also a price premium for it but when it is no longer unique, it usually becomes an abundant commodity and as noted “rips the guts out” of it. Of course there are exceptions but the examples of the music, book, and movie world were all very recent and all due to the internet. I wonder what students 20 years from now will be using as examples. I wonder what the next major disruptive idea will come along next and what companies will prosper or peril because of it.
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I agree that abundance is more disruptive than scarcity, and I think Shirky hits the nail on the head when he say’s “Once something becomes so cheap that it’s not worth metering anymore, that’s when real social change happens.” Abundance of supply drives down price, which then opens the market to additional players, which brings disruption. I think the internet is one embodiment of abundance, because it dramatically increased our access to information and products, and drove down costs in many industries. This “abundance” gave birth to low-cost and accessible technology which then paved the way for entry into the market from disruptive innovators who otherwise would never have had market access. For example, if access to the internet and technology were severely limited, Zuckerberg never would have invented Facebook – which has proven to be highly disruptive in the digital marketing world. Similarly, Amazon never would have found success, and they have been highly disruptive in the retail and consumer products industries. Ultimately, abundance increases access, which paves the way for disruption.
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Andrew, totally agree. Computing and communications technologies have dramatically and progressively improved to enable the practicality of a services-based model. In addition, the ubiquity of broadband and wireless networking has changed the nature of how people interact, and they’re increasingly drawn toward the simplicity of services and service-enabled software that works and make everyday life easier. Apple is one example – the shift in abundance created an opening for Apple to target internet connectivity as part of their core offering.
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Is abundance more disruptive to society than scarcity? No, not in every area. But in areas such as, the recording industry, newspapers, software, game developers, etc.; we have seen the internet being used as an efficient distribution system (as in the Radiohead case). And this is the point I think Clay Shirky is making. In some areas, the Internet has provided an opportunity or abundance if you will and this will foster even more disruptions.
This new model has the potential to fundamentally impact how we behave and think and how developers build, deliver, and monetize innovations. No one yet knows the ‘limits’ of software/technology and some markets will embrace this model more than others. But, isn’t that the idea behind this OMBA program? Abundance has disrupted education, giving way to online learning. Now when we think of education-What do the classrooms look like? What are the class sizes? What are the hours? Think about it…we all went back to Grad school without really going anywhere! -
What do you think? Is abundance more disruptive to society than scarcity?
I think that abundance is more disruptive to society than scarcity for many reasons. First, when you have scarcity you have very few people an operations involved in a product which by default creates little disruption in the market and society but as soon at that product becomes abundant it requires a much larger operation with many more people to get that product to market. In addition, that product is now so abundant companies might then try to replicate it for a cheaper alternative which disrupts the market more. A perfect example of this is store brand vs name brand products. Look at CVS, they sell drugs like pain killers and allergy medicine but CVS also has their own branded version of those products. This can create an even larger disruption to society because people have too many options and they then don’t know what to buy. Over-saturation of the market in this regard can create a disruption. When there is scarcity, society then bands together to create a solution to the presented issue but when there is an excess abundance innovation is struck down because everyone is satisfied with what they have. An analogy to this could be the movie Interstellar which I just recently watched. The premise is (without giving any spoilers) is that humanity over utilized the resources of our planet and we must find an alternative to keep surviving. The issue what the same there as in the article, humans were satisfied with the abundance of resources they had at one point so they invested very little in the future. But only when scarcity of resources presented itself did humanity need to come together to find an innovative alternative to ensure a viable future.
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I really wanted to go the opposite way of everyone here just for the sake of having an argument, but I can’t. Abundance is truly more disruptive to society than scarcity. To go even further I will say abundance creates waste, diluted products, and laziness.
Does it happen all the time? No. But I genuinely believe it occurs more often than not.
Look at it from a perspective related to food. If crops in a certain part of America drop we begin to value them more and find a way to make the most we can out of whatever the crop is. We could even relate this idea to water. When there are droughts we begin to value water more and find ways to use it for what is needed instead of what we want, and we eliminate the wastefulness.
Even look at something as successful as the NFL. Yes, I’ve now gone from crops to football in a technology class, but my point is that NFL owners wanted more money so they expanded, and they keep looking to expand. The league is everywhere, but what happens to the product they produce? It is diluted. You have below average players competing because now instead of trying to fill 24 open positions at quarterback you need to find 32. Those extra eight create a sub par on field product that fans watch every week. Why they watch is a different topic though.
And when I think about what abundance has done to society as a whole, it has made us lazy. Think about when something is in abundance and when something is scare, like a job for example. If a certain job is scare you better believe you are going to work your tail off to get it, but if there are a bunch of jobs and it’s easy to get you will likely encounter individuals who just coast through and do the minimum.
I know the ideas I presented aren’t related to technology, but I wanted to go a little outside of the box and think of how this idea is far reaching in society.-
Hi Will,
I like your alternative thinking here. In a strange way it seems when something becomes scarce, caused by society perceived abundance, innovation is created so scarcity can be disruptive. Looking at water and especially the announcement this week California reservoirs may be out of water in a year – will cause scientists to go beyond conservation for solutions. I saw on the news that a Boston man was shipping snow to southern and west-coast customers and the newscaster said, “they should pack up all this snow and send it to California” – hey, why not?? This seems far-fetched but you never know. Scientists and Californians are now forced to think of creative solutions to their water shortage born out of scarcity. In “abundance versus scarcity disruption”, scarcity has the potential to bring responsive action just as much as abundance does.
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I don’t know that abundance is more disruptive than scarcity to society per se but certainly that notion has some merit when it comes to information specifically as well as some forms of art. We are now entering a world where information is essentially crowd-sourced. We can learn almost everything we need to know from Twitter, Facebook, Wikipedia and Google News.
Despite the ease of information dissemination however, most of us still rely on the large networks and our televisions and radios to stay current. If we want to know what’s happening in Zimbabwe or Egypt, we still watch the nightly news for some reporter who actually goes to visit the region. Some day perhaps we will get the current story simply by following the Twitter feed of an English-speaking local, but that day isn’t here, yet. -
Abundance of any service or product can definitely disrupt industries more than scarcity would. As we progress as a society we go through a cyclical phase of scarcity and abundance. We experienced it with cell phones, computers and printers. The more access people have to a particular technology the cheaper it becomes thus creating a disruption. The best example of this is 3d printing. Currently 3D printing has been used to make prototypes and have only really been available to those with the money to purchase the printer and its materials. As more people gained access to the technology there became a wider range of uses for these printers and created the potential to disrupt certain industries when it becomes widely available.
Food – 3D printers now have the capability to print unique objects out of food which include, sugar, cheese, sauce, etc.
Military – There are a ton of custom 3D designs for many guns that can be printed using a 3D printer. This can create a disruption in the military industry because one can quickly print a replacement part needed for a gun or build the gun entirely from scratch.
Toys – Toys will become 10 times cheaper to make with a 3D printer. Consumers will have the ability to create, download or modified toy models.
Check out this article and interesting video of the Top 10 amazing people have made with 3D printers:
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Celia — I was just thinking about 3D printing this morning, so I’m glad you posted about it. Although 3D printers are still costly, there is a lot of crowd-sourcing going on to help develop and improve what can be printed from them, especially in regard to prosthetics. This article from the NYTimes talks about how much easier and how much cheaper it is to create 3D-printed prosthetic hands compared to traditional prosthetics, and they’re great for kids who can outgrow them quickly. I agree with you — as the technology spreads and becomes more abundant, it’s going to disrupt multiple industries.
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In my opinion abundance could be more disruptive to society because majority, if not all of the population has dealt with scarcity. Looking around you notice many things that are abundant today in comparison to how scarce it used to be; this poses a huge challenge. Abundance is not bad, because it presents the opportunity for something larger, but it becomes challenging when you cannot let go of the old ways. I found an interesting article that illustrates how brands built in the age of scarcity could pose a significant risk.
http://www.pakman.com/2015/02/06/brian-williams-and-abundance-vs-scarcity-in-media/
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I think that, from a certain perspective, the scarcity model necessarily encourages the kind of thinking and behaviors that contain and safeguard knowledge, and which rely on identifying and strengthening various levels of “us and them” type of distinctions between individuals, groups, and organizations. On the other hand, the abundance model seems to engender precisely the opposite kinds of thoughts and behaviors, encouraging the open sharing of knowledge, and the emphasis on “we” rather than the organizationally defined ingroup/outgroup distinctions commonly associated with the traditional ways of doing business. From this perspective, I think that the abundance model definitely can be more disruptive to society, as it encourages the kinds of intellectual and social exchanges that are the crucible for new ideas, practices, and discoveries. While there are many examples of the “lone genius” who comes up with something amazing, I think that it is far more often, when we “get together” and introduce all of the differences that make us who we are, that we generate the most exciting – and most genuinely disruptive – new advances.
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Steven L. Johnson wrote a new post on the site Information Technology Management 9 years, 7 months ago
Here are the group break-out questions for tonight’s class meeting.
Break-out #1
Deliverable: Answer these questions
What kinds of applications do you think the cloud is most helpful for?
What kinds of […] -
Steven L. Johnson wrote a new post on the site Information Technology Management 9 years, 7 months ago
With the exception of the Learn IT #2, all assignments due through today have been graded. Please see the Blackboard Gradebook for:
Week 1 Online Participation
Week 1 Class Team Work
Learn IT #1 (Hour of […] -
Steven L. Johnson commented on the post, Progress Report for Week Ending, September 29, on the site 9 years, 7 months ago
You are very welcome!
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Steven L. Johnson wrote a new post on the site Discussion for Last Name Starting N-Z 9 years, 7 months ago
What was the role of IT in the globalization of Wyeth? More broadly, would you say that IT-enabled globalization is simply another version of the centralization/decentralization decision that any company makes […]
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IT was seen an an enabler for Wyeth to achieve globalization, and it was not a simple case of centralizing a previously decentralized firm. Some of the operations such as global product sourcing would benefit from centralization to a particular plant in a certain country, for instance. But there were differences between this and a case of simple centralization of previously decentralized operations within a single state, for instance. Regulatory approval processes for drugs varied considerably from country to country, and marketing materials had to be changed to match the local regulations. Furthermore, each country had different traditions, structures, and needs for marketing and sales distribution according to the article. Also, the sheer distance of traveling country to country did make it a challenge for Garcia and his team to get buy-in from his business units around the world. Wyeth simply was not built for this, particularly at the senior leadership level where it was needed, and as one employee stated, “We need global people, and not just a global organization.”
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Saqib, I agree with your assessment that Wyeth was not built to get buy-in from the business units around the world. All these business units had autonomy for many years and it is understandable they would not buy into the new strategy without resistance. Without the strongand centralized senior leadership you mentioned, I can see why there were so many obstacles and compromises to the original globalization initiative. Do you think IT would have faced as much resistance if senior leadership had been more prevalent at the road shows and in the change communcations?
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Good question. I would have to say the answer is yes, Duke.
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Based on the reading, I think IT had a central role in the globalization of Wyeth. Up until the 1990s, Wyeth operated as independent groups in many different countries with very little information shared among the companies. This resulted in inconsistencies and inefficiencies across the organization. In order to become a global corporation, Wyeth management determined that it would need to gain the tools necessary to manage a global firm – it did this through implementing an IT strategy. The IT strategy involved creating regional support centers (RSCs) and building centers of excellence around them. Steering committees were also used to implement the processes and to gain buy in at the local levels. I think that IT-enabled globalization can be a version of the centralization decision that any company makes when it has multiple divisions. It is very important for a company to know what is going on at its divisions around the world, particularly for a pharmaceutical company. Often times, the same drug ingredients are made at the same site and then exported to approved-selling locations. By being able to track what is sold in each location and where certain divisions need help or have excess, the global organization can run much more efficiently and become more profitable.
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The role of IT was to develop structure in a decentralized company. They lacked consistency in reporting and compiled very little data from all of their different businesses in order to run a “global” organization. The article addresses one of the fundamental challenges that Wyeth had in formulating this strategy. Wyeth was a holding company that would acquire companies and ensure their profitability, and if they were not profitable they would dump them. While they were acquiring companies, they were not instituting a centralized strategy from a corporate office, and therefore the companies continued to operate independently, as long as they hit their numbers. The IT integration allowed all businesses to “talk to” one another and allowed Wyeth to streamline processes for consistency throughout the world. I believe that IT definitely enabled the globalization of the company, and that Wyeth was able to gain additional information to make business decisions and streamline processes based of the IT integration and standardization.
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Stephen, IT was an important component of the globalization process for Wyeth allowing the company to improve cross communication among all divisions and coordinate specific functions such as manufacturing and sales. IT was the basic tool in the process. What really contributed to globalization was the philosophy of arbitraging certain roles to various regions that were more efficient in getting things accomplished. IT allowed information to flow seamlessly throughout the company to coordinate relationships between divisions and to allow certain locations to excel at some things and consolidate resources while others specialized in other functions. Without IT as a partner globalization would have been much more complicated and less efficient
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I kind of disagree Stephen about the decentralized company. While I do understand your argument, I feel that all the data and structures have to go through a single point person/location. The overall strategy was determined by a central point, and how the regional locations did with the strategy was up to them as long as they followed the overall structure. Some leeway was given to regional locations which is how they got the Europeans on board(with the consolidation of the AS400 computers).
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The implementation of the IT infrastructure assisted in the globalization, and it would not have been possible without it. I still think that prior to their decision to roll out the IT initiative, they were a very decentralized company. This is why they needed to adjust their strategy in certain parts of the world to a more “regionalization” strategy in order to gain buy in on the IT implementation.
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A truly global company – one that has processes, operations, and organization standardized across regions and borders – is able to achieve significant efficiencies and cost savings that cannot be obtained by companies that operate in pieces. Within Wyeth IT became the engine that drove the company through its transformation from a loose association of related companies to well-designed global pharmaceutical company. IT-enabled globalization within Wyeth touched every aspect of the company – people, processes, and systems. Creating standards will enhance operations, improve knowledge sharing, and allow for personnel to move in and out of positions within different regions. Removal of old systems and processes, consolidation of applications and data centers, optimization of support staff and management will allow Wyeth to be positioned for significant growth in the future – whether organically or through acquisition.
In some companies, centralization and decentralization decisions are often made based on sales and operations – and IT is brought along as an afterthought. With Wyeth, Fadem’s vision was for IT to drive the globalization conversation – bringing along sales and R&D in the process, enabling them to be better, which would overall help the company transform.
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I liked the way the case put it, that IT was an enabler for Wyeth’s globalization efforts. Facilitator might be an even better word. The process of instituting the global IT plan really helped to reshape the various autonomous units into a business organized around central processes and operations. Because so many of the business units had been operating essentially on their own up until that point, IT began to tie them to the other units and Wyeth’s overall goals. As they became tied to these other units and the company as a whole, they were directed into changing the way they would think about their business. It wasn’t just their own individual unit anymore, it was the Wyeth company. I think this really facilitated the necessary culture shift to enact the global integration.
I don’t think you can really centralize multiple divisions without IT support and framework. It is the common thread that knits the units together. Without information sharing, a company will be fractured into its divisions and will have to adapt to each one’s processes to make sense of everything all the time. Like Wyeth originally, there’s no real way to track your company other than looking at each division’s bottom line from quarter to quarter or year to year. So IT is really essential to standardizing things and allowing companies to be successful.-
Sam, I agree that IT was what helped tie together the various units that had been thinking and operating too much as individual entities and not as much part of a single company. IT greatly facilitated the ability of these units to be linked together and to think and act in conformity Wyeth’s goals. While it might not have been impossible to implement a single corporate culture in these units without the benefit of IT, the process was greatly accelerated and made easier by IT’s involvement.
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IT played a leading role in the globalization of Wyeth and I believe that IT-enabled globalization is separate from the decisions on whether to centralize or decentralize functions.
I have worked in global organizations that have a combination of centralized and decentralized functions. For example, many years ago I worked for the large international conglomerate Siemens and we centralized Shared Services functions but allowed the individual business units to retain local control of core business functions. Financial systems were centralized out of our Munich headquarters but customized for the needs of each individual country and business. As a result savings from economies of scale were recognized without impacting how the businesses operate in a decentralized manner.Although IT led the globalization of Wyeth, I do not agree with how it was done. I believe Wyeth senior executives should have set the overall global strategy from which IT, HR, Marketing, Finance and other support functions would then determine the best way to achieve aligned with the overall global strategic priorities. Instead, IT was forced to forge their own path forward without an executive mandate, coordination across businesses and support units or funding! In fact, the case stated they were put in a position to “impose globalization on an ill-prepared audience”. Also, as soon as I read they were trying to make a business case on “investment avoidance” I knew it was going nowhere and wasn’t surprised when they had to change course. My experience is that investment or cost avoidance is rarely realizable and shouldn’t be the foundation for funding projects.
I interpret this as a case on how to make a globalization effort difficult.
It’s amazing that IT was able to achieve as much as they did from a globalization perspective with the lack of overall strategic vision and alignment of resources from the senior executives of the company.-
Paul, I appreciate your post and insight from your experience. I also agree that this globalization effort was poorly understood and directed from the top down. I especially liked Fadem’s remark on page 11. He says, “There is a gap between people understanding the concept intellectually and getting it in their gut.” In the quote he is talking about the affiliates, but it also applies very much to the upper management. They understood intellectually what they wanted to accomplish, but when it came time for the rubber to hit the road, they had no concept of how to make it happen. To paraphrase Fadem, the upper management distributed announcements, met people, went into presentations and got nodding heads, so they thought they were done when it was really only the first step.
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Great insight Luke – I think you nailed it in that they thought they were done but in reality had only just begun.
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IT was seen as a true enabler towards achieving globalization at Wyeth. As a holding company with diversified businesses, Wyeth did not have the culture nor the systems/processes in place to handle the growth of a global organization. Local firms bought local products and there was no system in place to handle global supply chain, there was disparity in the operations from region to region.
They had a culture where managerial knowledge was not flowing from corporation to its affiliates, vice versa, there was very little control or interaction among managers of different business units and across nations. The prevailing local thinking and lack of integration was causing several operational challenges for managing inventories globally. R&D was the only unit that was global in outlook and operations.
To roll out any internally developed products on a global level was a huge challenge to Wyeth; hence IT was a true enabler to provide an integrated, cost effective and timely solution to this. It was generally seen by the management as a service operation but it took significant role in globalization of the company.
Wyeth was not set out to centralize its systems to begin with due to the underlying business model of a pharmaceutical company. Due to the regulatory differences among countries, it was better and easier for them to buy, manufacture, test and sell locally.There were significant challenges in their business processes and information processing as part of their globalization efforts. To achieve globalization by simply centralizing its systems or processes was not ideal. But for a global launch of a product, it was very essential to have a shared elements and uniformity and could be done by reusing centralized materials resulting in time and cost savings.
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IT helped globalized Wyeth by allowing a central source of information. The dramatic increase the IT department employed from 22 people in 1997 to 1800 by 2004 shows the massive undertaking the company took. They created a centralized corporate data center which included a majority of their data and created regional data centers in various locations across the world to help with technical and client support. The regional data centers would also consolidate the AS400 computers. By creating this centralized IT with regional data structures, Wyeth is centralizing the decisions of the company. They have a single location as headquarters for IT that make decisions which then branches to its regional support centers. By centralizing the data, they make it easier to measure data and metrics. With the older system, each affiliate had its own measurements and data and normalizing the data proved to be challenging. Once all the data was normalized, accurate data could used to help forecast the future needs. The centralization system that Wyeth created is similar to the structure of the government of the U.S. We have the federal government and the state governments. The Federal government is the corporate data center, while the local states are the regional data structures and the local municipalities could be thought of as either smaller departments or affiliates.
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IT served as a catalyst (precipitated globalization) for transitioning to a global company more than an enabler. IT was seen as a primary target to overcome the company’s challenge of organizing their operations in order to take advantage of the reorganizations and divestures (pg, 5). Efforts to actually initiate Wyeth’s goals around IT required major change management regarding structure, key stakeholders, buy-in, budget reallocation ,and more. Without this buy-in the transition likely would have failed. To say IT enabled globalization implies that IT made it happen alone. While IT certainly provides the means to globalize supply chains, marketing efforts, communications…etc., they’re were a multitude of initiatives required to make the transition successful.
I do not think it’s a simple centralize/decentralize decision primarily due to the complex, and integrated, nature I described above. Wyeth’s efforts around globalizing the company through IT included significant organizational, structural, and cultural change. This decision was far more complex deciding to hire independent designers, outsourcing a call center, or even using Salesforce for CRM.
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IT globalized Wyeth by centralizing the data and implementing one clear system of data management (SAP ERP). Prior to the IT changes, multiple countries operated within multiple systems with little interest in sharing data. The IT changes forced the company to operate as a whole. I cannot think of anything other than IT that would promote such a change in the processes and operating culture of a company. While the implementation period took longer than expected, the end result was a data warehouse and clear consistent processes. IT-enabled globalization is fundamentally different that centralizing a process. IT influences most aspects of work within a company, so an IT-enabled globalization is a major project that leaves a lasting change on the company.
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Hi Kristin,
I agree with you that IT was the only part of the business that was positioned to organize data management that helped link various parts of the business together in an effort to create globalization. The process took longer than expected because of various reason such as dealing with time needed to educate and allow buy-in by the key employees to minimal IT infrastructure and regulation differences in different countries. But at the end they created a clear process that can be followed to attain their goals.
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IT was an enabler in the globalization of Wyeth. It was not the driving force behind it, but rather the means to accomplish it. It provided a metaphorical language through which all the different affiliates could communicate, collaborate, and coordinate. Without proper communication, problems go unsolved, solutions go unnoticed, and potential windfalls go unclaimed. For this reason, some level of IT globalization is necessary whether a company takes on a centralized, or decentralized business model. It may be in a given company’s best interest to take on a decentralized business model, but globalization of IT will still pay dividends. The simple availability of company-wide data for analysis is very important for the well being of any company. Likewise, the processes and operations that can by streamlined by global IT can lend some degree of scale, even while still maintaining decentralized, quasi-independent divisions. In the case of Wyeth, even if they were not trying to centralize the business, the ERP push to implement a company wide SAP system and the data warehouse would have still been beneficial, both to the c-suite and to the individual affiliates. It is therefore my opinion that globalization of a company’s IT capabilities on some level is important, independent of an overall centralization/decentralization strategy.
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The role of IT at Wyeth is to provide the infrastructure necessary to conduct globalized business activities. IT enables timely communication, provides for consolidated databases and the capability to integrate multinational processes. Globalization is fundamentally different than just decentralizing a company into multiple divisions. Globalization differs in that operations in separate countries are directly related to each other and function as one large system. The sites are not segregated based on business activity or country, but rather should be operated as one comprehensive entity. Decentralization would be consistent with having sites that are more reflective of individualized operating units that happen to be in different locations.
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As Wyeth was working on their goal of achieving globalization, IT was identified as the key that would enable the organization to achieve its goals. Although top management did not have a clear picture of the true potential of IT they all understood the need to revamp the system. The role of IT included transforming some of the business systems and practices through centralization. This would allow the organization and its top management team to be positioned to get timely, accurate information and also improve the interaction among managers of different business units across multiple counties. The process implemented by IT was more complex than just a centralization/decentralization decision that any company makes because not all aspects of the organization’s business could be centralized, but Wyeth still needed to have coordinated information flow from one department or country to another to accomplish their globalization goal.
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Hi Christine,
I definitely agree that the process was more complex than just a centralized/decentralized decision. In most organizations it is a joint effort to change the company to become more global. Unfortunately due to rules and regulations, and for that matter some resistance specifically in Europe, the company will never be able to operate completely centralized. Without the efforts from IT in identifying the deficiencies within the organization from how they handle their financials, to the lack of IT knowledge not being shared in Latin America, and to the overall lack of integration with the management of global inventories, I don’t believe Wyeth would have been able to compete with other big named pharmaceuticals today had they not made the changes. I think Fadem did a great job of making the whole process transparent to the organization which created a lot more buy-in from resistant managers.
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IT enabled globalization at Wyeth was not simply another version of the centralization/decentralization that any company makes when it has multiple divisions. The history and structure of Wyeth, and of a pharmaceutical company which has a presence in over 140 countries, made this a more unique and complex and fundamentally different undertaking.
Wyeth was very much a conglomeration of individual companies which were acquired by Wyeth and their management teams were largely left in place to continue operations. At one point Wyeth consisted of as many as one hundred companies. To continue to compete in the global marketplace, Wyeth needed to globalize internally. Also, as a pharmaceutical company, there is inherent in that business a multitude of individual laws and regulations, languages, traditions, and cultural differences that affect the company in each different country or region. The issues facing any pharmaceutical company were compounded in Wyeth’s case due to the history of many acquisitions and intact management teams of the acquired companies having been left in place. The benefits to be gained by globalization may have been similar in many respects to what “any company” stands to gain by centralizing aspects of its management and information, but the implementation of that culture was more difficult and unique in this circumstance. IT’s undertaking and accomplishment in Wyeth’s case was to build the structure to centralize an unwieldy collection of independent groups into a global organization and to have everyone eventually buy in. -
Without IT, Wyeth would not have had the opportunity to globalize their operations. As mentioned in the article, Wyeth was a holding company with a number of diversified businesses, who did not have the culture or the business processes of a global organization. Each of the countries were “ok” with operating independently. Top management saw IT as a service operation and not as an enabler of change. With little funding and lack of some management support, it was an uphill battle for IT at Wyeth to transition them from working as solo units to a global organization.
In Wyeth’s case the company was very inconsistent in their operations. While there were some rules and regulations in each country with how data was reported and how their business could operate, there was an opportunity for them to become more unified, global. Generally a decision is made and IT is brought in to implement change. This is something I see with my company. Currently we have several entities under one roof who operate on different accounting systems and report our financials in different ways. When our new President started, he immediately criticized the process, met with each entity accounting director, hired a new VP to develop a universal chart of accounts, and lastly requested IT upgrade our systems to reflect the change initiatives. Wyeth is fundamentally different. IT for them was the beginning of the process of change. They hired Bruce Fadem who assumed the CIO role in 1997. He immediately got to work who bringing the company together to brainstorm ways the company could become more global. Starting with the workshop for the senior supply chain managers to help change the mindset of the firm, to the hiring of the consulting firm to help establish a global IT strategy, to forming relationships in each country through regional support centers (RSC). It was IT who sought the funding necessary and developed the relationships to help Wyeth operate as a global organization.
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Steven L. Johnson wrote a new post on the site Discussion for Last Name Starting H-M 9 years, 7 months ago
What was the role of IT in the globalization of Wyeth? More broadly, would you say that IT-enabled globalization is simply another version of the centralization/decentralization decision that any company makes […]
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Wyeth used the IT division as a catalyst to change from a multinational company to a truly global one.They were seen as the enabler to Globalization. I would say that while there are parallels from this example of centralizing IT and other centralization/decentralization decisions, at its root it is different because of the fact that IT is seen as an enabler to bring about Globalization of a company. IT brings abilities to the table that other departments cannot inherently bring. For example, Computer Systems and Software are essentially the same across the World. You don’t need one type of software here and another there. No matter what country, IT can provide support that is universal in scope across all departments. 0s and 1s don’t need a translation. Also, the need for IT is seen across the board. It is an essential ingredient of a high-powered company. Without it, competitive advantage is missing. Because of this, they are able to extend there reach across all aspects of the company, no matter where they may be in the World.
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Brandon,
I went back and forth with this question and your post and honestly tried to play devil’s advocate, but I’m aligned with your thinking that IT brings abilities to the table that other departments can not. What got me thinking though is if there could be a way to build some of the principles of IT into other departments. Within IT you pointed out that support is universal in scope and that you can’t translate 0s and 1s. So why not try to do that in Marketing, Accounting, Research and Development or some other department? Is it even possible to do something like that across the board or do you need to build up small wins within different departments, establish trust that a centralized approach will be successful and then implement a broader centralization plan?
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Information technology is a common medium through which a multinational company can become global because its systems of communication, product sales tracking, and personnel listings (to name just a few items) may be used to catalog all company activity in one location for reference by an individual anywhere in the company’s network. Like other multinational companies, Wyeth used IT integration as a method of centralizing its functions to improve inventory management and consistency in accounting practices among its different divisions. Like many companies embarking on IT integration, Wyeth also had its IT services managed on a very local basis with substantial variability between regions which could be optimized through integration and “globalization.” However, as a pharmaceutical manufacturer, Wyeth faced particular challenges which made their integration of IT fundamentally different, primarily due to the significant variations in regulations between countries. These differences meant that drugs had different names, different indications, different marketing strategies, and different pathways to approval in each country. Although this was an obstacle to Wyeth’s globalization strategy, they successfully used their IT systems to coordinate global product development and launches by developing a new “global business model” and a “global data warehouse” which included a cross-referencing file for products and services in different locations, as well as an enhanced ability to manage the supply chain on a global scale.
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Alan, great summary. Just wanted to stress that Wyeth established IT shared services to better manage IT service delivery. As both you and Chase mentioned, technology is an important tool in achieving greater efficiency and productivity. By doing so they have gained efficiency and realized tremendous cost savings. However, in order for a company to achieve success, Wyeth showed that the appropriate processes and the right organizational support model must be in place if the technology is to truly enable high performance. In other words, in successful implementations the focus must be on business integration and not just systems integration.
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Information technology played a significant role in the globalization of Wyeth. For instance, IT made the creation of the global warehouse possible. This warehouse allowed information to be shared between affiliates around the world, providing them with valuable information regarding what was being manufactured and when it would arrive. In addition, the creation of the global IT architecture helped drive the shift to conformity throughout the organization. The implementation of the RSC initiative is evidence of this point. IT also helped the globalization of Wyeth by providing consistent levels of service across all regions. As stated in the case, smaller countries often did not have the resources to deploy expensive applications, but IT globalization allowed these countries to get the services and resources they needed to acquire such applications. Thus allowing the level of service to be uniform throughout the world. Furthermore, the benefits of investing in IT proved to be two-fold. Not only did it assist Wyeth’s in becoming a global organization but it also provided cost savings throughout. Although the initial plan for saving through investment avoidance was not realized, cost savings was achieved through consolidation.
IT enabled globalization is fundamentally different than the traditional centralization/decentralization decision faced by multidivisional companies. A company cannot just centralize processes and procedures and pass it off as globalization due to the differences of local culture and regulatory bodies. What works in one region may not be acceptable in another. However, with globalization differences present in a region can be communicated to other regions and adjustments for that region can be implemented when necessary. -
In any organization, achieving high performance starts with determining business needs and its current processes, identifying the appropriate operating model, and then using technology as an enabler. In the late 90’s, Wyeth underwent a major transformation of its infrastructure and corporate culture. The company was able to change its business operation into a global firm by using its systems. This was made possible by enabling the integration of activities across the company’s business units (BUs). This practice was in contrast to what was done earlier. As a holding company with various businesses, Wyeth’s IT department simply went along with the technology demands of individual BUs. However, when the decision was made to use IT as an enabler the company was forced to look at governmental compliance, strategic alignment, financial cost-benefit analysis, and adherence to overall business-systems strategy (example- implementation of a global data warehouse).
IT-enabled globalization is not another version of the centralization/decentralization decision. While both strategies attempts to organize processes in a way which facilitates information sharing throughout the organization and promote efficiency. Using IT as an enabler is more of a shared services model under which the various business and geographic division share IT applications, infrastructure and costs. However when using a centralized/decentralized model, there is no need to standardize or have a shared service function in IT.
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In an increasingly competitive market, Wyeth became a globalized pharmaceutical company with centralized information that shaped new efficiency. Because Wyeth business practices did not consist of continuity throughout their companies, management decided that they needed to become a global corporation that had those set standards. Management understood that Information technology was the key for future growth. Wyeth had to be free of all the non-health care divisions that they owned and redefine themselves as a pharmaceutical company. IT-enabled globalization helped Wyeth standardized their business processes, measured their success and proved business value. IT-enabled globalization is different because it transitions from a company’s previous low priority support functions to a comprehensive strategy with IT as the focus. IT enabled globalization helps a company improve its core business functions to efficiently deliver valued products and services on a global scale.
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Information technology was the driving factor in Wyeth’s globalization. If the company could properly manage its information across all affiliates, it would present cost savings and provide more efficient ways to track and manage production across the organization. In the example from the Data Warehousing discussion, the coordination of IT could provide a “global glass pipeline” –where affiliates would be able to see what is being manufactured and when it will arrive.”
With respect to IT enabled globalization, it seems to me that it is a more significant endeavor than is the decision to centralize/decentralize a company with multiple divisions. Both situations require a buy in from all parts of the organization but with IT enabled globalization, the process seems to me to be “all encompassing” and working with the ultimate goal of having the organization work as one combined global unit. As we saw in the Wyeth case, the global warehouse was not only an initiative that made sense because it cleaned up the company data. It was recognized by all areas of the firm that the initiative added value to the company as a whole.
While many companies need to make the decision to centralize/decentralize operations, these efforts seem to be driven primarily by cost savings and removal of redundancies. As we saw with Wyeth’s IT initiatives, centralizing efforts were part of the process as there became an organized corporate IT department and global warehousing system. However, the centralization efforts were not the end of the process as they were part of the larger goal of transforming Wyeth into a global pharmaceutical company.-
Hi, Rich: I think you make a solid point about IT globalization being a more significant endeavor that the decision to centralize/decentralize. In an ever-increasingly connected market, IT systems have greater influence on business productivity and efficiency. The IT function now permeates all parts of an organization. Centralizing or decentralizing comes down to decision-making and reporting structures. Building out an IT structure includes that plus more. It includes building up new capabilities among personnel, investing heavily in infrastructure and computing needs, migrating and coordinating data, changing business planning and processes, and obtaining vast managerial approval (and second guessing) across the enterprise. The Wyeth case shows it can be a daunting, yet ultimately successful, task.
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The role of IT in the globalization of Wyeth was to be the primary driver of the change. While senior management recognized the challenges in getting the data they needed to make effective decisions, IT was the primary driver in getting all of the different stakeholders on board with the plan and then following through. In fact, IT made some questionable project management decisions in building the infrastructure by piggybacking things they on which they wanted to work onto existing projects at the country level. The case presents those choices as positive decisions, but I’d actually argue if those were the means of getting to globalization, the IT department did a poor job of selling management on the costs and benefits. That said, ultimately, IT did a decent, but not perfect, job of managing the change from a multi-national to global structure.
I think it is another example of the centralization/decentralization decision any company has to make, though perhaps one with more downstream consequences than most. When Wyeth was in M&A mode, it made sense to keep a decentralized structure, so long as the subsidiaries were profitable. As Wyeth grew and saw opportunities to increase profits through economies of scale, it made sense to pursue a centralized strategy. When choosing such a strategy, one of the first goals is to ensure you have the infrastructure in place to allow information to flow between subsidiaries, which of course means IT needs to get involved. But the IT strategy itself folds within the larger corporate strategy of centralization vs. decentralization.-
Adam,
You make a good point about IT piggybacking on other projects. I agree that the need to do this showcases IT’s failure to adequately present the
benefits of globalization and gain the needed support. If the organization is implementing a global initiative, it should be at the forefront of
organizational activities, not an afterthought tacked on to other projects. With that said, if the IT department did present the facts and others
within the organization did not see the long term benefits regardless of the information presented to them, then I commend IT for doing what was
needed to get the initiative off the ground. After all, as time passed more and more people within the company got on board with the globalization initiative. -
Adam, in addition to your point, I also noticed that at the outset of the IT innovation initiative, not all managers bought in to the benefits of the project. However, I think this dynamic is often out of the hands of IT professionals, as many managers, (especially back in the 90’s), have not seen first hand the benefits of using IT to either expand or globalize the firm. To me there was no way around this dilemma of trying to sell the project to management, and I think ultimately the IT department was able to prove that the methods were effective.
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Adam I agree with you 100%. IT was a transformation vehicle acting as a change agent to drive the business to operate differently and like you pointed out build a data driven business model versus making decisions on your gut. Like you have indicated a decentralized model is great when subsidaries are profitable however when your trying to maximize the revenue you want to get the economies of scale by building shared services. This model does not apply to just IT but all backoffice services like finance, HR, procurement, legal, facilities etc where companies build centers of excellence to get maximum operating efficiencies of these functions especially when they are shared by multiple divisions. Its not just about costs like you point out its about offering better service to your customers in most case.
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Wyeth’s new global strategy requires unifying IT across all divisions. Formalizing systems, prioritizing approaches, having a reporting line through international client support, enables governance of IT and establishes effective internal communication. In order to go global, focusing on IT is the best start to the change initiative. Facilitation in continuity of business practices starts with the ERP system and the Global Data Warehouse. Getting employees acclimated with the new systems sets acceptance of leadership having a new direct role in operations. This makes Wyeth’s corporate office not seem abstract with divisions relinquishing some of their local procedures over time.
Centralized governance makes Wyeth an integrated global pharmaceutical company. Centralizing IT implements the global strategy and when successful lets the company move forward in centralizing other departments like HR and marketing. The decision to go global necessitates centralization so it is not fundamentally different – they are one in the same. For I cannot see how one can occur without the other.
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I believe IT enabled the globalization of Wyeth, and ultimately united the company as a global brand through the streamlining of data and ERP systems, which had a culture shifting effect on the firm. Prior to the launch of IT reforms, the company was fractured and decentralized without a singular corporate culture, without strong communication between managers and corporate leaders. By instituting a corporate IT department with local IT managers, the company established a unified system for data distribution which in my opinion had a unifying effect on the entire company.
I think using IT to drive globalization is fundamentally different than other centralization/decentralization decisions. IT can unify various factions of a company under a single umbrella of ERP and communications systems in ways that other centralization techniques cannot. For example, prior to the implementation of IT, Wyeth was a decentralized and fractured organization – they were unable to truly morph into a global brand until the IT innovation project was launched. IT has enabled brand globalization in ways that were previously unavailable; even something as simple as everyone in the firm using the same enterprise system and global email system has a unifying effect on the organization, which I believe affects the entire culture of the firm.
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While IT was a major factor in the change to become a global company, there were many other factors in play going on at the same time also becoming a catalyst to change. For instance the company made a conscious decision to focus on healthcare and divest non-healthcare divisions. They also began to follow a more centralized model for other functions besides IT such as marketing and operations. When I think about the importance of IT in the globalization of Wyeth or any company it’s more about breaking down the barriers and building a single view of the organization and changing the culture so they feel as if they are united and doing things in a similar fashion or method. It’s much more than moving to a centralized vs decentralized model, it’s about bringing consistency in how and why work is done. Much more important than the system was the globalization of processes and this is where most of the concern was for the organization. Individually organizations felt they had much more to lose as opposed to gain with the movement to globalization. IT was certainly an enabler of the globalization, but was simply 1 piece of a major puzzle.
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Wyeth’s systems and processes were scattered throughout its plants. It was a decentralized system that lacked the ability to communicate with the entire organization. The management at Wyeth understood that IT can help link its systems and create a centralized “business” that is globally focused, not just on a local level. Wyeth understood that IT will enable the business to grow and create a system that allows the free flow of information from all operations and can help them streamline projects quicker and efficiently. Integrating IT throughout the company helped management as well as the employees realize that things can get done much quicker. After all, Wyeth is a international company and without integrating IT, Wyeth could not centralize its processes and grow. I would say IT definitely enabled globalization regardless of its centralized/decentralized actions. IT enabled the management staff to realized the companies shortcomings and enact measures to create and reorganize its processes.
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IT’s role in the globalization is a transformation engine which highlighted some of the challenges Wyeth faced as it looked to expand its business globally. The case study makes a great argument for showing how IT addressed many of the shortcomings, duplications of effort and overall waste of resources that Wyeth had to contend with with each Market having its own IT staff and functions. IT at Wyeth was a transformation vehicle which helped Wyeth reduce costs and build shared services for corporate functions like Finance, Manufacturing, Procurement etc to help propel the expansion of Wyeth by letting the company focus on its growth and not the challenges of running backoffice business functions. The transformation of IT at Wyeth was not about centralizing IT, it was about unifying the model to deliver consistient set of IT services to the businesses so the business could focus on driving revenue, R&D of new drugs, manufacturing etc. For a company to operate on a global scale core business services need to be defined and managed centrally to avoid every new market/country from having the issue of figuring out the same problem other markets have already figured out. How do you stop from re-inventing the wheel every time, you offer it as a shared service which not only reduces costs but it also provides a higher level of quality. If one makes the arguement that what happened at Wyeth was a pure power grab by Central IT i would argue Central IT took on more problems than they expected and took on more work to make Wyeth operate more smoothly. The typical centralized vs decentralized paradigm does not play into this arguement from my perspective
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What was the role of IT in the globalization of Wyeth? More broadly, would you say that IT-enabled globalization is simply another version of the centralization/decentralization decision that any company makes when it has multiple divisions, or is it fundamentally different? Explain.
The role of IT in the globalization of Wyeth was the driver for change across the entire company. By updating and refining the ERP and data systems, IT allowed communication to flow more freely through the organization. I would even argue that they needed this change at the time it happened because of the restricting laws regarding pharmaceuticals and the tightening regulatory differences among the countries they were operating in. I would say that information technology was the largest contributing factor in allowing Wyeth’s globalization. By creating this organization wide information technology process it allowed Wyeth to reduce redundancies in the processes while also saving money. Take for example their old process which allowed monthly closing of book accounts 5-8 full business days. This was a large waste in time and wage pay because they needed to pay their accountants almost a week per month to just focus on closing accounts which could be streamlined with a proper IT infrastructure. Clearly there was a need here for improved IT. I would say that IT-enabled globalization is more than just another version of the centralization/decentralization decision that a company makes when it has multiple divisions. This is because IT helps an organization improve and streamline its systems and processes to make it a companywide change where centralization/decentralization focuses less on the overall organizational change and more on streamlining certain functions or departments. Like with Wyeth, the role of IT created change and value for the company as a whole and not just on individual departments or processes. -
One theme of this article is how IT is an enabler for globalization and related services. However IT-enabled globalization is similar to the centralization/decentralization decision in some respects and different in others. One reference that highlights this distinction is the discussion concerning which processes were to be changed. The executive commented: “Does the process for travel and reimbursement have to be the same? No. But the guy in Taiwan and how he reports his inventory position to the sourcing plant in Ireland needs to be identical to the way the guy in Columbia does.” Hence any process that involves interactivity between plants and locations needs to be standardized via IT-related services, whereas the day-to-day activities of each individual facility can continue to be managed in an ad hoc manner. When discussing the global distribution of a pharmaceutical for instance, the production scheduling, distribution requirements, and sales recording processes should all be standardized as this enables economies of scale and increases efficiency. If a manufacturing plant were located in each country these could be managed in a decentralized manner. However the goal is to aggregate production as much as possible for scale economy reasons and manage delivery in as close to a just-in-time model as is permissible. Thus, an enterprise resource planning (ERP) solution is essentially different than a centralization/decentralization decision, especially when the production and distribution of equivalent products are involved. If the products in each were region were different then the answer would change.
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Steven L. Johnson wrote a new post on the site Discussion for Last Name Starting A-G 9 years, 7 months ago
What was the role of IT in the globalization of Wyeth? More broadly, would you say that IT-enabled globalization is simply another version of the centralization/decentralization decision that any company makes […]
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I do not believe the Wyeth case is on about whether IT enables globalization. Wyeth is already a global company. The company recognizes a lacked of control between affiliates, differences in performance and compensation methods, and little interaction among managers of different business units and across countries. These problems, and more like them, allow variations that result in global inventory management challenges. Recognizing the problems affirms the company is already global. I think the question is whether IT enables a valued solution of integration of global information. In this case, in order to support the solution, which is a centralized system, IT creates regional support teams. The teams support both the transition and any ongoing needs, which there will be many. The IT support teams exist to support the central system as it functions to gather information but I do not see the case being about centralizing/decentralizing decisions. I just see it as a project to get all the affiliates on a common information platform so better informed decisions can made at any level.
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I can see your point Steve but I do see some fundamental differences in the way IT is being leveraged moving forward than it was in the past. IT appeared to be used more to support business requirements and stakeholder requests in the past. Moving forward, IT has become a big driver towards pushing the new global initiatives. IT are being used in a more strategic fashion as they are standardizing cross-organizational applications, integrating systems, and handling a lot of the designing and managing of the project. I think IT has become much more valuable to Wyeth thanks to the new initiatives.
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I am more in Eric’s camp than I am in yours. What I see as IT’s role in globalization is that it provides the competitive edge companies need to survive today to be global. As Eric has indicated, IT enables Wyeth to strategize in a way they couldn’t if IT couldn’t be leveraged. I agree with Eric that it is a driver.
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Wyeth launched an IT-enabled globalization strategy in an effort to create an integrated pharmaceutical company. This required a major shift in control where IT transitioned from a low priority support function to the key enabler in overseeing Wyeth’s globalization effort. Centralization of the processes and IT infrastructure would not achieve globalization. In order for pharmaceutical company to successfully become global, Wyeth needed a comprehensive strategy with IT at the core.
Over time, Wyeth’s leadership recognized the potential of IT as a crucial facilitator for its globalization strategy and properly empowered them to provide the essential platform for global business operations. While there were IT budget constraints, the firm committed to correcting issues with its existing system as well as enhancing the overall IT function. By cleverly including globalization costs in projects funded by the business units, IT was able to accomplish its initiatives. IT was able to develop “…formal systems processes such as application development, maintenance as well as IT governance mechanisms, business to IT valuation strategies and prioritization approaches.” (Page 6) Additionally, processes were standardized to facilitate interrelation, connectivity, and information sharing among the business units. These enhancements to Wyeth’s resources and processes would help to fulfill the needs of the globally integrated firm.
Wyeth’s centralized globalization strategy allowed the company to streamline and enhance its business functions to effectively deliver value-added products and services on a global scale. Information technology was a vital catalyst that transformed Wyeth into a global corporation and made the firm a leader and model for formal processes including request, deliverables and change management. -
What was the role of IT in the globalization of Wyeth? More broadly, would you say that IT-enabled globalization is simply another version of the centralization/decentralization decision that any company makes when it has multiple divisions, or is it fundamentally different? Explain.
Wyeth was already a global organization in the sense that it was a holding company for divisions and businesses around the world. Their process for globalization started with streamlining of their businesses and divestment of those that were not core to the health care industry. IT became a flagship for the centralization of a particular aspect of their organization that was already operated on a local level by all of these separate organizations. IT is not necessarily the only process through which centralization of global companies can occur, but in the case of Wyeth, it facilitated a process that helped with cost savings more broadly. It may even be a stretch to say that the implementation of the new IT system described in the case was part of a true globalization process, but rather just a globalization of the one aspect of the larger corporate system. In this sense, IT-enabled globalization is fundamentally different than a true globalization process which would be like taking a globally franchised business and converting ownership and oversight to one central management office, effectively streamlining all of corporate leadership.
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HI David,
I like that you pointed out that this process really only globalized their IT system. It did seem like Wyeth didn’t address the corporate cultural challenges that each affiliate had. It was clear from the article that they did not have a central culture and just globalizing the IT systems couldn’t solve that issue. I would be interested to know how the company is “globalizing” now.-
Hi Amanda and David,
I agree that Wyeth had a corporate culture challenge to tackle, and I know that IT can’t solve that, but I think where this case left off, going forward with an integrated IT system Wyeth would have a better chance to succeed at a cultural transformation. As I stated in my response to Steve, it is hard for me to imagine a company being successful on the global stage without a corporate strategy that is scaffolded by IT.
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David: excellent points. I also believe that IT helped containing sky rocking liability typical of globalization of pharmaceutical industry.
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As mentioned in the very last sentence of the reading, in the case of Wyeth especially, “IT in many ways became the business lingua franca of globalization.” This point stood out particularly when they mentioned the difficulty in tasks such as making sure the spelling for a particular drug is the same in all data entered in different countries. Ultimately, IT was the vehicle that facilitated the transition, the common language that unified the globalization goals of the company. It is true that IT is not something a globalization structure is usually build on. In other words, there are far more broad goals that drive a company toward globalization strategy. In the case of Whyeth, the company saw more opportunity in drug development and globalization allowed them to consolidate and dedicate more resources to R&D. Moreover, one could argue that in today’s business structure, it is hard to survive at all without globalization. At the same time, these goals could not be implemented without a strong IT presence and, in fact, necessitated it. Therefore, I think “IT-enabled” is a good description of the process where IT facilitates and becomes the tool with which globalization for a company takes place, because there is an inherent implication that IT serves the broader goals of the company, whatever they may be.
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Mariya, very good points. Indeed, globalization could save resources to strength R&D, as we always thought globalization meant more money invested for a bigger operation. I completely agree with you that IT have become more involved in the operation of the business, not even in global companies, it is no longer a service or support department.
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I truly believe that information technology has opened to the door for many companies, to include Wyeth, to become the leaders in their business lines. Although Wyeth was already a global company, IT globalization enabled it to become a more efficient, thorough company. It allowed the company to reach more manufacturers and local businesses throughout the word. I believe that the IT globalization allowed Wyeth to become a more decentralized entity while maintaining its various branches, plans, manufactures, and business under the same system and same umbrella. The multiple divisions of the company can now work as they deem efficient and productive while following the basic strategy of the parent company, Wyeth. This independence fosters growth; therefore, strengthening the core values, and bottom-line, at Wyeth and across all affiliates.
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Interesting post, Mori.
The matter regarding decentralization/centralization topic seems quite ambiguous for I have read many comments clinging to either side. From your post, you deem the development as a decentralization move. I partly agree with you. However, I really think the whole process comprises a mixture of both attributes, or better still, is “fundamentally different.”
Wyeth was already a decentralized company that operated based on practices suiting predominantly individual affiliates. Organization-wide cohesion was very minimal. On the other hand, IT-enabled globalization created a centralized medium of operations that aligned the corresponding units with the global organization vision. -
Well said Mori; a classmate mentioned that IT didn’t enable globalization as Wyeth was already a global company. I agree with that statement but believe that a well structured and managed technology strategy absolutely plays an important role in the overall effectiveness of a corporation. Conversely, a very poorly managed information technology strategy can lead to failure. There is an example (to remain nameless) of a company that attempted to implement an ERP system and the failure was so intense that they could not report financial results or even pay their payable. This company is no longer in existence and the failed ERP implementation was one of the reasons for their demise. This is a very extreme case but I don’t think you can underestimate the favorable impact of a well-managed information technology group.
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While, initially, top management saw information technology (IT) as a mere service operation and a support apparatus for the individual decentralized units of Wyeth, the company’s executives thought changes in their IT systems could merge its business units into one cohesive enterprise. These executives believed IT could; first unite geographically separated managers and businesses through direct communication channels with shared programming and data warehousing, second centralize their research and development undertakings, and finally unify inventory tracking, control and logistics. Additional benefits of linking Wyeth’s world-wide operations with highly sophisticated and coordinated information technology include IT support savings, IT centralization, hardware and software savings and increased speed of upgrades.
I, personally, believe IT-enabled globalization can be the most significant and contributory decision to a company’s centralization effort. Modern technology has changed modern business in a way such that businesses must stay current or risk losing competitive advantages. Diversified and decentralized organizations can benefit greatly by uniting supportive departments, like information technology. The IT structure has the power of bolstering other centralization campaigns. Via this integrated IT groundwork, companies can unite and share other processes (following Wyeth’s example) like accounting, world-wide salesforce tracking, inventory management and research and development. I do not consider IT globalization just another centralization task for unifying business units of multinational companies, rather I believe it is the paramount pioneer to the mission.
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Jordan,
Great post. I think you raise a number of great points. IT is definitely a key strategic driver in today’s business environment. To achieve globalization, you have to unite all of the company’s distinct business units through the use of common information in a shared infrastructure. For Wyeth, I believe that IT centralization was unquestionably essential for logistics and inventory management and the result should be a huge boost to their operations. The rapid pace at which the world now operates – a result of the digitization of the planet over the past three decades – makes it almost absolutely necessary to have systems that provide accurate numbers in real-time or very near real-time. For a company the size of Wyeth, it was critical to centralize their IT functions and create normalized data that could be interpreted across all regions. I agree that IT is not simply a small piece of a larger puzzle. It can enable companies to transition from a hub and spoke model to a star model organizational structure where all departments are intertwined, share processes, rely on the same information, and achieve a common goal. Thanks again for your thoughts.
Bill
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It is true that Wyeth was a global company at the time when it became evident a major reorganization of IT was needed. However, it was a global company pre-internet and a much diversified one whose operation was spanning from the food industry to agriculture, pharmaceutical, and discovery. By divesting all the non-healthcare division Wyeth, implicitly changed its position statement because the company was now narrowing its focus on one segment: healthcare and discovery. In addition to that Wyeth was going global in an era where business was run differently from the late ‘20s when it was first incorporated. IT in the ‘90s was no longer a commodity, it was a necessity that enabled the globalization of the corporation. The data on the resources invested in IT going from 22 to 1800 professionals, and the budget going from 3 to 500 million are impressive and are reflective of the importance and pivotal role addressed by IT in the globalization process. One item that was not discussed in the paper, that I have knowledge of is the liability Wyeth faced in the process of going global. All the facts described in our reading concerning the different regulation in the different countries and the drugs’ label led to a number of lawsuits that were progressively taken under control by the system reorganization implemented by IT.
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Cataldo,
I find your comment about IT no longer being a commodity, but rather a necessity, very relevant. It is hard for people in my generation to remember what life (let alone business) was like before the Internet and heavy focus on IT. So, it’s easy to forget that at one point IT was a commodity. Also, it seems that life has evolved to require IT to a point where it is no longer possible to be on an even playing field without it. I remember hearing that NATO and other humanitarian organizations were considering making internet a basic human need, meaning that access is basically a necessity for existing in the modern world, like electricity and indoor plumbing. I would certainly agree about that (maybe it wouldn’t be first on my list), but I was wondering if you think it is THAT crucial.
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Mariya,
Thank you for your comments. I was not aware of NATO’s position on internet, and I was pleasantly surprised to find it out. I believe that the contemporary world is dependent from internet. I remember the world without cell phones and internet, and sometime I miss it. However, I do not see our society functioning effectively without IT. It is a fact that humans can easily adapt to new unfriendly environment but, I personally like the current scenario better!-
Cataldo,
I meant UN, instead of NATO, in case you wanted to look up information about it. Sorry!
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no worries, thank you!
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The IT department for Wyeth brought all of the local IT efforts together under one umbrella. IT-enabled globalization in this case in my opinion is another version of centralization / control that a company with multiple divisions does. Although they are trying to get everyone on the same platform and need to understand the needs and laws of local offices, the reason they are doing this is to get more understanding of their business. They are trying to cut costs by implementing similar systems which would then allow for less staff and also allow them to forecast better. Wyeth is a global company, and although IT is implementing systems that allows their main office to see the trends of different offices, it is essentially centralizing the information so that management has access so they can make better business decisions.
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I do not think Wyeth is a global company initially. It is a multination company with very loose association among affiliates. It is their IT department playing pivotal role in their globalization transition. IT are generally seen as a service operation, it is very difficult for employees and management team to accept the idea of change IT as a support service to bearing management role and are willing to share their resources and move forward to make those changes. I think the best part that Wyeth have made is their gradual transition from multiple affiliation to centralize their IT department. To ensure IT personal to understand the business side, Wyeth have created relationship manager and changes in reporting lines. To further validate and improve the process, an application/system support center is established. I do think any company who is willing to globalize its business operation should be simply borrow or copy the model from Wyeth. IT-enabled globalization is not just centralization or decentralization. Every business has its own unique features and a complete customer base and operating opportunities. To successfully transit to a global business, the management team should know their own business model, their global markets and their own IT department well, well plan and get all employee buy in. Of course, IT department is still a key in the transition, which could expedite the transition, oversee all aspects of the business including inventory, manufacture, sales and markets, and all information relevant to the process of the business. On top of it, IT could provide instant information to management team, carry quality control monitoring and deliver all instant information to every aspects of the business, and etc.
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IT’s role was that it became the common language spoken by all Wyeth affiliates who over the years had become embedded in their own locales and were dependent on their own operating procedures. The role of IT was that of a competitive strategy. IT and the Internet have broken down communication barriers between cultures around the world just as it broke down barriers to allow Wyeth’s shift from a multinational corporation to a global corporation. Rather than globalization meaning something different for each affiliate, IT created a common platform from all to launch from. I would say that IT-globalization is simply another version of the centralization/decentralization decision because as seen in this case study IT enabled Wyeth’s globalization by bringing all of the local IT efforts together that had been fragmented and individually linked to their locale. It wasn’t a quick process for a company with multiple independent and mature divisions throughout the globe. Multiple divisions with no real organizational culture up to this point. There was still a need for decentralization efforts in order to engage with the local populace, but Wyeth’s challenge was in working backwards to create centralized business processes from a “hands-off” management culture in order to become a true global corporation. IT went from being a barrier to an enabler of new global initiatives.
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Hi Clint,
I liked how in your post you mentioned that the IT department was a competitive strategy, I do think that is an important concept for all companies. IT should be viewed as more than just a support department but rather a department that will assist with their future success and should always be aligned with the company strategy. Also your last line was on point when you mentioned that IT is now an enabler rather than a barrier for global initiatives. I did have a hard time though trying to figure out if IT-enabled globalization was just another phrase for centralization as I felt it was (as you did) and I am not sure how it would be fundamentally different.-
Hi Clint and Kristen,
I understand your perspectives, but when I think of a truly global firm, I can’t imagine that to function as such, it could be accomplished without IT. I don’t think Porter’s global ideal where company’s link supply chains from some countries, manufacturing in others, service and support in yet others could be accomplished with a thoughtfully designed and implemented IT strategy. I think we are all agreeing that it is a competitive strategy. But I think being global is different than being decentralized. Being global links everything together, and as the article mentions offers the opportunity to achieve the communication, collaboration and operational efficiency that is referred to as enterprise fluency. I think that is very different than centralization/decentralization.-
Good posts everyone. I tend to agree with Diane here, in the sense that globalization requires more than just centralization or decentralization, which is often rigid and an either/or. IT enabled globalization appears to be a more hybrid approach, where IT takes the lead on change management and process improvement even more so than on technology advances. The outcome is a hybrid approach where some items become standardized globally, while some retain regional control. This would also appear to be less philosophical in nature and more solution based. Just a thought. Also like Diane’s comment on enterprise fluency…make a lot of sense.
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Mike, Good points. I like the use of the word hybrid to describe IT enabled globalization. But I don’t think centralization/decentralization has to be rigid and either/or if it is implemented in a “tell them what to do not how to do it” management style. I still think their IT strategy allows them to have centralized control (standardized globally) while allowing for decentralized execution (retain regional control). Unless I am interpreting it wrong, I thought this hybrid approach of think globally, act locally, have an organizational culture but allow for local flair was in line with achieving communication, collaboration and operational efficiency. My experience with centralization vs decentralization is not a rigid either/or concept, but more of a hybrid approach.
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Kristen and Diane,
Thanks for your comments. They way I relate to the centralized/decentralized decision is from a military perspective. To me, Wyeth had been operating as a multinational corporation with no centralized control. All operations were decentralized on the local level. Their IT strategy made them a global corporation by giving them centralized control but kept their decentralized execution in tact. As in the military the higher headquarters has control and is giving orders to their subordinate units, but the actually execution of those orders is decentralized and the decisions made by the boots on the ground. The boots on the ground in this case would be the local affiliates. This is why I don’t think they are fundamentally different. Think globally and act locally is centralized control with decentralized execution. Thanks again for the discussion and look forward to hearing your thoughts on this additional post.
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IT was once something that was just built and utilized based on each country’s individual needs so IT was something that was not really centralized as a company. By making it a priority and bringing together each of the business units and countries together, really would enable Wyeth to be more effect and efficient in their processes. And the company not really developing their IT systems much sooner really caused the company to miss out.
I think it’s really necessary to have a centralized IT in many cases. I think it really reduces a lot of redundancies and costs a lot more to build and maintain. It’s really difficult for an industry like this, I would think, where there are many different laws and regulations with respect to financial management as well as the product itself.
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Wyeth felt that IT would organize its operations and give them the tools they need to manage a global firm. IT would give locations access to information from other locations. The understanding was that if you are going to have a global company, you must have standard processes to facilitate interactivity amount the units. IT would provide standardization between business units.
I feel that IT-enabled globalization is a tool to help a company become more standardized. I don’t think it is the same as centralization/decentralization. I believe it is a tool a company can use to become either centralized or decentralized. It is a way for divisions to be in contact with other divisions and share information. It can also allow divisions to operate independently but under the same umbrella as the other divisions in a company. IT-enabled globalization gives a company the tools to make the decision to become centralized or decentralized.
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The role of IT in the globalization of Wyeth: It created homogenous applications linking the different business units across 50 countries together. “Globalization is a process of interaction and integration among people, companies, and governments of different nations, a process aided by information technology.” – SUNY Global Workforce Project. Applying this definition to the topic, we would find that though Wyeth was already an international organization, it wasn’t necessarily global because certain keywords, integration and interchange, were missing. There was neither or real-time exchange of valuable information and ideas among the affiliates. I would say that IT-enabled globalization in this sense is a centralization process because it linked improved business processes, made them coherent to all participating affiliates and also established some sense of global organization culture that did not previously exist.
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The role of IT in the globalization of Wyeth: It created a homogenous system that linked multiple business units across 50 countries together. According to SUNY Global Workforce Project, “Globalization is a process of interaction and integration among people, companies, and governments of different nations, a process aided by information technology.” Applying this definition to the topic, we would find that though Wyeth was already an international organization, it wasn’t necessarily global because certain keywords, integration and interchange, were missing. There was no effective exchange of information and valuable ideas among the affiliates. Business transactions could not be executed in real-time due to an absence of integrated business applications.
I would say that IT-enabled globalization in this sense is a centralization process in an organization that was already notably decentralized. The new integrated system was implemented with a strong focus on a uniform standard that aligns the numerous business units with the company’s global strategy. It improved business processes, made them coherent to all participating affiliates and also established some sense of global organization culture that did not previously exist.
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At Wyeth, IT’s role is to ‘enable’ globalization by facilitating the transfer of knowledge and sharing of best practices across the company’s global locations.. What’s the point of being a global company with a diverse product line,, if you are isolated and cannot leverage learnings from other business units/SKUs. Ultimately, the case reinforces the need for a “standardized and global friendly process” that can be leveraged to glean valuable insight from the company’s data. Otherwise, you just have a ‘garbage in/garbage out’ inventory tracking and pricing system, counterproductive to the inherent benefits of being a ‘global’ company.
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Corey,
Nice points. The business units were truly ridiculously isolated. It’s hard to imagine thousands of SKUs operation without a centralized system. Although the company had branches all over the world, it wasn’t functionally global. Integration and real-time exchange of information are two attributes of globalization and Wyeth obviously lacked these two. Information Technology should be a part and parcel of every business plan right from the onset, and no expansion strategy should be devised or finalized without proper IT consultation.
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It would seem that the IT organization at Wyeth was in constant development and evolution. The case indicated that in the last 90s, ” IT was seen as a low priority support operation. Information technology was fragmented and closely linked to individual country needs.” This was certainly not aligned with the globalization strategy also underway within the firm. There were numerous challenges associated with fixing the limited role of IT, which had to do with firm culture, local regulatory requirements, and limited inter connectivity between IT solutions globally. This created a disjointed arrangement, with insufficient global reporting functionality and a lack of scalability across borders. With the realization that IT had to become an enabler to globalization, the strategy was outlined in the consulting report from 1998. By creating a global IT group, realigning reporting structures, establishing the IM role, attempting to standardize parts of JDE and by implementing global reporting and data warehousing; Wyeth was moving toward strategic IT. The implementation of the program would prove more challenging than expected however. Fedem remarked in the case, ” There is a gap between people understanding the concept intellectually and getting it in their gut. In their day to day lives, when they have to make a decision, they don‘t know how to apply the concept and they go back to what they have learned over the years.” This also speaks to local cultural issues and the inherent challenges with rolling out a global strategy, against the headwinds of engrained local behaviors. The role of IT was requiring more and more change management and process execution, which was beyond just implementing new technologies. IT was being now taking a strategic lead on determining which solutions would be global and standardized and which would be better left to regional control. This fundamentally changed the role of IT at Wyeth over the time of the case.
Additionally, IT-enabled globalization is fundamentally different than centralization and decentralization generally. Whereas centralization or decentralization is a guiding strategy, which is often fairly rigid in its role out, IT-enabled globalization takes a much more holistic and flexible approach. As demonstrated in the case, Wyeth didn’t simply move all IT operations to one place and define one set of solutions for all localities. The process was much more complex and involved numerous iterations in striking a balance between standardization and local and/or regional solutions.
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I agree with the other comments here that IT played a central role in globalization efforts at Wyeth. I don’t think it’s about centralization/decentralization, though this of course is a question to be wrestled with during any globalization effort. Rather, as Mariya indicated above (and as the article concludes) IT was the ‘lingua franca of globalization,’ the means by which globalization efforts were enabled. Globalization is in many ways about knowing what it is done in other parts of the organization and streamlining those processes where possible, and adapting them to local climates where needed – this is really striking an appropriate balance between centralization and decentralization. IT enabled Wyeth to share data through streamlined processes so that Wyeth USA would know what was happening in all other areas of Wyeth’s global enterprise.
However, as noted here, globalization presented cultural challenges and human resource challenges (such as downsizing some departments to create regional centers) that IT would not be able to solve. With different regulatory structures in each different country, a pharmaceutical company serves as a great example of how globalization is much more than just coordinating to have all data on the same IT platform. Therefore IT is “necessary but not sufficient” to a globalization effort. Its importance cannot be downplayed, and I’m not surprised that IT led many of the processes, but the CIO cannot succeed in globalizing a company without a strong corporate vision and direction from the CEO and buy-in from numerous other stakeholders, including shareholders willing to see the company transform and take risks such as divesting from non-pharmaceuticals to focus on and coordinate its global health care business.
Simply put, without a coordinated IT effort, globalization would not have occurred at Wyeth. The role of IT was central to the globalization plan, but relied also on many other players to get Wyeth to where it stands today.-
Great post Dan. I agree that IT was one of the thing that was common across divisions of Wyeth that helped drive the globalization efforts. However, as you indicated, the success of IT globalization would not occur without a clear strategy adopted by leaders and CEO. The CIO in may ways is executioner of the globalization plan; the actual driver, per se, would be the leadership of CEO and corporate vision. With my experience with the adoption of a global process certainly suggests the global leadership support needs to be employed for execution of IT globalization. A CEO of the company has directed the CQO to employ a global system (as i mentioned in my post below) while ensuring its able to cater to unique regional requirements. However apart just from the guidance, I also believe the globalization efforts need such support from CEO to ensure the members are able to perform throughout project. I have been part of numerous requirement building activities which all have had direct involvement of executive leadership to ensure they provide appropriate short and long term vision to ensure the strategy is well heard by all the employees.
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Dan, I really like your comment about finding a balance between “centralization” and “decentralization”. IT is the vehicle that delivered the flow of information, but as you mentioned there are many other challenges that IT cannot solve. However, I have found that keep IT in the loop with many business decisions from the start allows them to see the “larger picture”. The Texas Rangers have a committee called “Analytics Intel” and they meet on a monthly basis. This committee has a member from each department (IT, Marketing, Ticketing, Maintenance, etc.) and they come together to discuss various projects and see how they can support each other while meeting the common goal of the organization. After reading this case (and your comment) that is exactly what happened hear with Wyeth. By centralizing IT in his strategy they were constantly in the loop on all business fronts to make sure that systems were connected and giving the proper results to each stakeholder.
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What was the role of IT in the globalization of Wyeth? More broadly, would you say that IT-enabled globalization is simply another version of the centralization/decentralization decision that any company makes when it has multiple divisions, or is it fundamentally different? Explain.
Per the definition established by Michael Porter, Wyeth was a multinational company undergoing a transformation toward a global company thought the globalization of its IT systems. Wyeth was streamlining its IT services and platform to build a global system for its group of companies. The globalization was in many ways centralizing the company’s growing IT requirements. In the transforming era with increasing dependence on the IT systems, the centralization would enable Wyeth gain competitive edge over its competitors. Instead of scattering the decision making for utilization of right technology, the global infrastructure enables Wyeth to ensure the performance across all divisions is optimal with robust systems that encompasses learning from all small divisions. J&J has undertaken a new project in past five years to develop a global post-market vigilance system for entire family of the company. This, similar to Wyeth, movement has resulted from various issues developed within individual systems under each sectors. The global system enables the company to centralize the management of the application under a skillful workforce, while ensuring its meeting needs for each of the company. As described in the case, the global systems development initiative comes with many challenges from management and funding of resources to governing requirements. However, the overall vision of the integration into one single system is to ensure the organization is operating as one instead of devising a solution that are applied only at a sector or company level.
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Wyeth’s IT globalization strategy was the initial step in creating an integrated pharmaceutical company. The IT department became the “universal language” that unified the goals of the company. In order for this to work IT could no longer be on the sidelines as a “support function” but had to be at the forefront – there need to be a major shift in control. Wyeth knew that in order to be successful globally communication on all fronts had to be fluid, flexible, and transparent – meaning IT needed to be at the core of his strategy.
In many cases, IT is the backbone and has a tendency of being “reactive” instead of “proactive”. However, with this approach, all business units are connected from the beginning allowing objectives to align (with little barriers). Wyeth’s centralized strategy resulted in the company streamlining their business processes and delivering added value to its products. -
Wyeth was already classified as a global company. Early on during Wyeth’s inception in the 90’s, they were tapping into global markets within a few functional areas, for example R&D. As they started realizing that IT could make their operation more efficient and by streamlining resources, this will centralize IT systems of multiple divisions, tasks, and functions. In addition, the plans to incorporate ERP Parallel, an SAP system that would definitely centralize key financial reporting within global markets. Global Data Warehouse was also a project that would assist with centralizing information via an automatic data transfer. Wyeth is definitely a company that has advanced its IT systems, behaviors, and practices to focus on centralizing more of its resources.
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Steven L. Johnson wrote a new post on the site Discussion for Last Name Starting N-Z 9 years, 7 months ago
Two major components of Wyeth’s global IT strategy were its ERP system and its “Global Data Warehouse.” In what ways do you think that the global nature of these initiatives influenced their design, development, […]
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This was one of the more interesting parts of the article. Wyeth implemented an ERP with a long range goal of basing this on SAP, but realized that it needed to create a data warehouse to pull in transactional data from all the legacy systems around the world. Because this was a large global project, they knew that they would not be able to simply implement an SAP solution simultaneously at all their units. And although the global data warehouse was a great idea, it would encounter difficulties such as having to normalize data due to different drug spellings and different packaging used for a single drug in different countries. Furthermore, implementation on a global scale was challenging because local units were busy with their usual operations, and were not prepared or interested to spend time normalizing data for the warehouse. I think the challenges that Wyeth faced are a good lesson even for domestic businesses that are trying to invest in their IT by data warehousing from multiple disparate sources.
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The SAP ERP system and Global Data Warehouse were designed with the intention of sending the transactional data generated by the SAP ERP system to the data warehouse. Wyeth’s business leaders could then leverage the global data warehouse to solve many of the information and decision making challenges presented to them. However, the development and implementation timelines of both major components were not aligned. As part of the globalization project, the creation of the global data warehouse was seen as a short- to medium-term goal so it was put in place first. Meanwhile, the implementation of global SAP ERP transaction processing system was a long term goal. Legacy system feeds had to be created to move non-SAP data into the global data warehouse which resulted in a lot of extra work that would not carry over when the global ERP system was finally implemented. Interestingly, the marketing unit understood the value of the data warehouse which allowed them to view global pricing and track pricing deals worldwide so it ended up funding a major portion of the project.
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Duke, The development of an informational storage house via Wyeth’s Global Data Warehouse was the beginning of a globalization effort that hit its bumps early on in the process. It was clear that the marketing teams understood the value early on in their efforts to bridge the companies pricing opportunities worldwide. Other divisions were worried about their relevance and viability which is understandable as the company’s units were more or less independent up to this point. Such growing pains are necessary in any company beginning along the path of globalization. The CEO and board needs to develop the appropriate messaging and then garners trust in their employees before a company can go from a multinational firm to a truly global operation
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Alex, thanks for the feedback. You hit on two key things that I saw as a theme throughout the case. The first issue of trust or in Wyeth’s case mistrust between the business units and IT was evident. In addition, I also do not get of sense of trust between the many different businesses as they have always been left to do as they wanted before as long as they made money. Wyeth’s culture lends to a very close to the vest attitude from the different business units. There had to be a major change effort to change this type of thinking within the culture first before addressing the Globalization initiative. In addition, the mandate for Globalization came from the top and IT was seen as the enabler for this strategy. However, this leads the second issue you also raised in terms of communication. A lack of communication from the senior management to get behind the IT globalization initiative was also evident. I could not understand why it the most senior member of the road shows was just the head of IT and not more senior level leaders. As you noted, the message being sent was not clearly being backed by the top level leadership so why would their be universal buy-in from all the business units.
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Duke, I think a scenario that epitomizes what you summarized above is that in some scenarios they decided to call it “regionalization” rather than “globalization” in order to gain additional buy in from the international businesses. I think this is similar to last weeks article as there needs to be a consistent message from the corporate office on the importance of execution of global strategies and how they will impact the businesses locally. The fact that they were such a decentralized organization made it very difficult for “big brother” to come in and implement its strategies on a company that had previously been running independently, and most likely meeting its profitability expectations.
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Steve, I absolutely agree that the change management message needs to come from he corporate office. In Wyeth’s case, I think they were too ambitious in putting forth two major changes with one globalization strategy. IT globalization should be secondary to a bigger corporate effort to change the company’s culture away from having autonomous entities focusing on their own needs to one that focuses more on the whole.
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I saw this a bit differently than you, Duke. If the IT globalization was the enabler of the overall globalization effort, I don’t think it needed to be secondary, but rather directly tied to the culture change. It provided the venue for the messaging regarding the new global view and the resulting process changes. They were initiating these changes as a direct result of the new global culture and wouldn’t have been able to send that message without tying it to the IT projects. Otherwise, they’d just be telling the various business units to “be global” without really giving them a way to do it. With the IT centralization, they provide the early stages of globalization by tying everyone together and that then gets them to think of themselves as part of a larger whole, bringing about the culture change.
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Sam, the main reason I think IT globalization needs to be secondary is because IT has always been seen as an operational and supporting unit instead of a strategic partner to the business units. I am not sure that putting a global view on top of IT will change this perception of IT in the business units. Secondly, the current corporate culture of autonomy between the different units is the biggest threat to a new global culture so more attention and focus should be spent changing this mentality first. If the business units start to think globally, IT can then truly be the enabler of globalization through standards, tools, software, and processes. I do understand and appreciate your position. Thank you for presenting your view.
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Sorry, Duke – for some reason there’s no Reply button for your comment below, so I’ll just do it here.
I certainly won’t argue with the way things were before the globalization effort. Where I do disagree with you, however, is that I believe the IT projects are indeed the mechanism to spur the culture and mentality change you and I agree is necessary. Getting back to the original question, I think that they were designed with this goal in mind. Bringing together all of the data from the different business units and standardizing processes and information actually forces the different units to start thinking outside of themselves and towards the company as a whole. Wyeth is changing everything with the stated goal of creating a global effort. The IT projects are the physical embodiment of this change and the various business units are forced into the new systems. If using a globally standardized system that uses globally normalized data doesn’t start changing the mentality of the previously fractured company, I don’t know what will. Therefore, the IT program was specifically designed to unify the units and put the new globalization front and center. It enables the new system.
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Global IT for multinational companies is a lot like network connectivity for the rest of us. It’s hard to believe that we used to do things another way. With that said, these types of changes are hard and globalization strategies are not meant to be executed from paper manifestos, instead projects are needed to help reorient a company’s staff to think globally. For Wyeth, the SAP and the Global Data Warehouse initiatives were very well timed because they provided opportunities to move from strategy to action. Global SAP rollouts are typically slow and require a lot of interaction with regional IT staff. They also rollout progressively which allows people to come along as the initiative advances.
A Global Data Warehouse is also a great asset for gaining insights based on data across the company. In many ways pulling data together is easy, making sense of it is the hard part. The normalization effort was cumbersome, but that is to be expected. Once normalization rules are defined, it opens up a standard way to report across the regions. This type of standardization is necessary for global IT and I’m certain that the Global Data Warehouse provided a good opportunity to develop the standards. -
After successfully divesting the non-pharmaceutical businesses, Wyeth’s goal was to organize its operations so that it could start taking advantage of all the divestures and reorganizations and become a true globally integrated organization. The focus was on global business systems. So their IT plan was to transform business process by changing the underlying systems and practices. Implementation of ERP transaction processing system based on SAP was a long ranging plan for IT globalization strategy, but having a globalized data warehouse was both a short and medium term plan. Global data warehouse would rely on the transactional data generated by SAP, legacy system feeds were created to move non SAP data into the warehouse. The global warehouse was seen as a key underlying resource to address the long standing management reporting problems. The global warehouse projects were a tool to solve many of the information and decision making challenges at Wyeth. The supply chain portion was the most compelling reason for the development of data warehouse as it would provide information on purchasing, support forecasting, inventory, pricing , resale, true cost of products etc
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ERP and Global Data Warehouse had to deal with many different issues which required specific solutions. For instance when dealing with Rx in the global data warehouse they need a large “X-Ref” (cross reference file). The X-Ref allowed them to correlate product and supplies that have different number coding schemes in different locations and systems. A major hurtle was dealing with local regulatory bodies that lead to each of the 50 affiliate countries having 3,500 to 5,000 different SKU’s. Acquiring this information was difficult and required assistance from many departments including marketing. Once implemented the Global Data Warehouse would rely on transactional data generated by ERP SAP. SAP started in Ireland and eventually led to the expansion into Europe. It would gather all accounts receivable, accounts payable, and finished goods inventory. These programs had to deal with many different issues due to their dealings in many different regulatory bodies. Because of this they developed solutions that would affect heir build.
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Globalization of IT for an international company is very involved and requires the full buy in from upper management for a successful and timely implementation. Wyeth’s goal of implementing the SAP ERP transaction processing was key to providing the company with centralized information from which to work from going forward. Development and design of the system was influenced by the timing and workload of the the essential pieces of the project. The data warehouse had to be created and then old data needed to be transferred to the new SAP ERP system to then be stored in the warehouse. This was a large undertaking that produced a tremendous amount of temporary set up work. In the end the projects success came down to planning and adequate funding. Because the company was globalizing IT they also globalized the IT expense. That was a smart move. It showed the support of management and made IT a key component in the company.
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Wyeth understood that although globally there were looking for standardized applications and to integrate systems they could not fully implement this. The example given was that in some cases it was feasible such as travel expenses being reimbursed, but the reporting of inventory needed to be identical. Planning was meticulous for the standard process and Wyeth recognized that such a huge task needed to be tackled cautiously. Implementation had to recognize that there would be issues with local language and requirements, and to be aware that legal regulations would impact IT. Design would also need to understand that pharmaceuticals can have different sales models which would require them to recognize that depending on which country pharmaceuticals could be sold to either governments or selling to doctors or hospitals. Globally the biggest countries would also have the largest sales and therefore would feel they had the ‘biggest’ voice in how implementation would be carried out. The development would be influenced by how the expansion took place, which country would be next, what would be the deciding factor, sales or geographical size.
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Wyeth had, in their vision, a Data Warehouse that fed the ERP system. That, in conjunction with its Global initiative, were why the two items went hand in hand. If they were to integrate the ERP system from SAP successfully into global platform, then indeed the data would have to be integrated in the same fashion., They had recognized, as referenced in the case, that this would help bridge the gap between over-the-counter and prescription markets data. As the globalization effort was developed, they then saw the true value of how the Data Warehouse could effect supply chain decisions. The ERP system to manage the transactions would integrate with the global data warehouse as a day forward process while the non SAP data was converted. Wyeth realized that there were many “localized” situations that were neither cost effective or productive prior to the globalization effort, so when the initiative gained focus, it indeed made sense to bring both of these projects in the Global implementation project
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Steven L. Johnson wrote a new post on the site Discussion for Last Name Starting H-M 9 years, 7 months ago
Two major components of Wyeth’s global IT strategy were its ERP system and its “Global Data Warehouse.” In what ways do you think that the global nature of these initiatives influenced their design, development, […]
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When looking at the global issues facing Wyeth I immediately thought of standardization and centralization. Without a formal process in place the various affiliates addressed issues such as assessments, evaluations, inventory, and regulatory compliance differently. There was even a lack of consistency with communication to the point that globalization itself meant different things to different people. Ultimately, globalization created confusion and IT was going to help Wyeth straighten things out.
This mean the ERP system and Global Data Warehouse were in place to standardize and centralize processes as well. As Wyeth began to implement SAP financials they sought to centralize legacy system feeds by moving non-SAP data into the global data warehouse. The long-term plan was to implement a global ERP transaction processing system based on SAP.
Due to products having various codes, and names, the warehouse was able to store the data and serve as a central location to assist Wyeth with the supply chain. The biggest challenge though was if the organizational culture was willing to accept the transparency that the global warehouse would produce.-
Will – I think there are two aspects of centralization, one of bringing information under a single source system and the second bringing a central group to handle the function such as a unified marketing group, IT shared service center or an HR shared service center. When I think of the global issues I think the first type of centralization which is brought by the major initiative most people focus on that area because in my opinion it’s the easier of the two to tackle and the much more systematic item. However, in order to become truly global I think the processes need to become seamless and in many regards centralized in order to encourage and ensure the process standardization.
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The design and implementation of the ERP and Global Data Warehouse were greatly influenced by Wyeth’s global IT strategy. The ERP transaction processing system was to be rolled out globally based on SAP, but due to the globalization project the data warehouse was a short to medium term key. Moreover, as a result of the global initiative there were about 3,500 to 5,000 different SKUs that needed to be normalized for the warehouse. With different regulatory bodies governing the production of drugs, unique codes were created in order to report to those governing bodies. These issues would not have arisen if these initiatives were created for a local initiative rather than a global one. Additionally, the Global data warehouse allowed historical data to be accessed over the web, which allowed all affiliates in all regions to access the information. The warehouse also employed the use of X-Ref due to the multiple coding schemes it would be required to cross-reference. The globalization of Wyeth had a significant impact on the creation and implementation of these systems. It is apparent that many of the characteristics of these systems were a direct result of the global initiative.
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When the implementation started during the technology shift, the original strategic design needed to be revamped. Concerns with budget played a role in the growth rate of the Information technology division. AS400 outsourcing was chiefly a cost saving initiative. The global nature of these initiatives helped transform Wyeth business processes and systems into a globally unified supply chain, rearranging product lines to decrease indirect goods and services and improved their systems information exchange by building comprehensible services. The global data warehouse project was originally seen as a tool to solve many of the long-standing reported problems and decision-making challenges. Wyeth’s course of implementation includes depending heavenly on internal resources, effective communication at all levels, support from senior management and several training methods. Using SAP software global warehouse implemented slowly, their aimed was to combine all of the purchasing data and to have global visibility across the organization.
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The global nature of the ERP system and the “Global Data Warehouse” would have had significant influence on their design, development, and implementation. For both of these systems there would be a significant challenge to bring together legacy systems and associated data. We saw this in part with the need to “normalize” data in the global warehouse. It goes beyond that, however. I would expect that date would have been entered into legacy systems under different field names and structures. The process of simply merging all of this data would need to be factored into the early design and development processes. During implementation, there would need to be an extensive quality control process in place to ensure nothing was lost.
Furthermore, any existing systems are likely connected to other systems. One immediate question would need to be answered during the design phase: how far does one need to go in replacing legacy systems? How interconnected is one system to others that are not tagged for replacement? There is a potential domino effect, and the effect is likely varied from region to region or even country to country.
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Chris,
I think that you asked a lot of good questions there. My company is currently structuring a fleet data management system and the questions that you listed were all one’s that we had to address. In Wyeth’s case the answers to those questions could significantly impact business. For example, they need to go back far enough to where they feel comfortable that the data can be effectively utilized. One of the biggest challenges for my company was inputting the data and getting it to the point where it could be utilized. My company didn’t take Wyeth’s approach and left it up the customer manager to input data. This was an incredible amount of work and created discontent within the organization because the normalization process was thought to be impeding daily activities. A common complaint was that there simply wasn’t enough time to do it. This led to my company hiring contractors to input and control the data. Wyeth was able to foresee this challenge and set up teams to defeat it. I thought that was a great approach. The domino effect is vary real and I think to your point, it can affect multiple facets of your organization.
-John
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Chris,
Great point. Data migration from the legacy is usually the challenge in these projects. Often in ERP and Datawarehouse projects the biggest challenge is data normalization or standardization of the data so you can move it. Legacy systems often have data in multiple formats or multiple systems have different formats. How do you get everything “cleaned” and “matched” so you can load that up into one new system. Multiply that problem by 60 or 70 countries and you can see the problems this would cause a company looking to globalize IT and consolidate systems.
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In an attempt to add value to the company, Wyeth used information Technology (IT) to develop a globally integrated company. With this view in mind, their technology must be customized to meet their specific business needs. Two major components of the company’s global IT strategy were their ERP systems and Global Data Warehouse. Both needed to facilitate enterprise-wide information exchange in real time so the design, development and implementation had to focus on the company’s needed be able to disperse R &D, manufacturing, production and marketing around the world. In addition, their IT system needed to help reconfigure their value chains to standardize functions such as manufacturing and R&D and address unique IT requirement while achieving integration at the enterprise level,
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Ryann, How do you feel about the money Morgan is investing in the global initiatives? It seems as if the funding was also a major issue with Wyeth and we saw Volkswagen’ face similar hurdles with it’s IT department earlier. Does Morgan advertise the investment made for the initiatives you’re talking about? Since the Wyeth case is a little dated, I’m just interested in hearing a more current perspective on how cost affects progress with this type of initiative. Any thoughts? Thanks.
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I think the key challenges with implementing the ERP and Global Data Warehouse systems globally involved standardization of data. As the case mentioned, global data was an issue because different country markets defined and priced products (e.g. medication names) differently. These differences would certainly have presented a challenge to instituting a singular global data warehouse. The same thing would hold true for ERP systems; each culture is nuanced in the way people interact, communicate, keep records, and manage other people, and these differences need to be reflected in ERP systems. Again, this would make it difficult to create a singular, company-wide ERP system. In order to meet and overcome these challenges, I imagine the company incorporated various levels of data filtration which took the differing data and standardized it in the global data warehouse. I’m not a tech savvy individual for the most part, but I imagine this filtration process would be technologically feasible. Ultimately though, the differences in data among the different countries and regions probably constituted the primary challenge when deciding how to design, develop, and implement these global IT initiatives.
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I think that the global nature of these initiatives drove their design, development and implementation. If you want to be a global company then your business process management software has to be able to integrate global data in order to effectively manage the business. ERP and SAP were incorporated with a long term vision of global integration and were a part of the IT globalization program from the get go. The process wasn’t rushed and was developed and implemented gradually ensuring success and expansion, albeit part of this was due to the funding available and the cultural shift needed to get the necessary backing. The Global Data warehouse coincided with ERP and SAP as the GDW role was to fuse data from a variety of categories and use them to provide information that could lead to cost saving initiatives and simplified planning and processing. The business realized that the data needed to be available and that it was going to be a difficult challenge to obtain it. To tackle this challenge Wyeth set up teams to acquire the data in an effort to alleviate the stress and obstacles of normalization. This was a necessary initial step to ensure data was being received. This team data acquisition approach got the ball moving and soon businesses started seeing the value of the data and how they could manipulate it to give them pertinent and beneficial information. Once this was realized, funding was positively impacted. Wyeth’s global IT strategy didn’t come without risks. As you expand globally you can sometimes leave yourself susceptible to other country’s abilities to be sensible. I think that Wyeth’s implementation of the strategy reflected their awareness to cultural challenges. For example, Wyeth chose to start in South America which was a smaller scale and whose organizational structure and culture would be more welcoming the change then Europe. Once they were able to have success there, Wyeth was able to take lessons learned and best practices to Europe. Wyeth was able to build a strong foundation and expand upon it due thoughtful implementation of strategy.
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The global nature of the ERP system and “Global Data Warehouse” strongly influenced their design, development, and implementation, particularly due to the industry Wyeth is in. Pharmaceuticals is heavily regulated in every aspect, from labeling and packaging, to billing, to traceability requirements, and the country that the company is in or selling to strongly affects setup. The same drug being sold in different countries may have different packaging, SKUs, warning labels, package contents, etc. Having an ERP and data system that can handle the back-end linking of similar or same drugs and other components in the different countries is a huge task, but with huge benefit as well. By linking product and managing inventory, the company saves money through reduced duplication of efforts and resources. If the company were selling only in the U.S., these systems would have been vastly different, less complex, and quicker and easier to set up. In fact a company operating from one location and selling in one country would not need to rely on a tool such as SAP at all if it deemed the application too expensive or over-complicated to run.
My company sells medical devices in the U.S., Canada, Mexico, and the U.K, and are based in Lancaster, PA, with only one facility and warehouse. We currently use an outdated version of Oracle to manage inventory and data that basically limps along, but with no detriment to operations except the annoyance that comes with using a no-longer-supported version of a program. If we were to expand facilities globally, we would certainly need to revamp our systems to handle a more global nature of business.
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The global nature of the ERP system and its associated Global Data Warehouse had a definitive influence on their design, development, and implementation. In order for either initiative to function effectively, data from multiple sources needed to be collected and standardized before being added to either the ERP or the GDW (for non-SAP data). The process of first collecting all the data, then organizing it to associate like information with like information, and then standardizing it (“normalizing” it, per the case study) so data is consistent, allowing it to be indexed and retrieved in a useful manner, is a tremendous task requiring extreme attention to detail, awareness of how information still-to-come is setup, and knowledge of how the system being designed will access and use the input, normalized data. The first stage of the ERP implementation I’m working on right now is the migration of all Lead-specific data. Lead information is coming from at least two different CRMs, neither of which were used consistently and which exported records very differently (activities could be collected in one record or could be associated with multiple records that themselves associated back to a main contact who then associated back to a customer record), plus some random Excel spreadsheets of data that were just discovered, and a Google Spreadsheet with half-correct information collected at a trade show. All of this had to be merged and normalized. Luckily it was under 1000 records, but the amount of time I spent doing this was considerate – I can certainly understand why Wyeth’s local affiliates balked at spending their time normalizing the data instead of doing their “regular” job, and the benefit of sending in a team to complete that process.
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The global nature of the ERP and Datawarehouse projects at Wyeth had a significant impact on their design, development, implementation and subsequent operation of these platforms. Both type of IT projects typically have a large number of stakeholders involved so the first consideration we need to look at is how do you do governance for these type of projects. Being global do you govern them by size of market potential/revenue impact, country/market with the most commercial opportunity or market with the most IT dollars. From a global perspective these type of projects have localization requirements primarily driven by regulatory, legal or local custom requirements. An example of this is in Canada French is required as the language of choice for certain provinces so an IT systems implemented for users in those provinces requires a French language option. Currency is another consideration since not everyone operates on the dollar and the current conversion. Global IT projects especially ERP projects often have to support local market requirements around specialized sales/marketing and finance models so these have a significant impact. A one size fits all model using the US or another major market as the basis for all markets never works well. From a Datawarehouse perspective each market management is going to want to get reporting/analytics specific to their needs to manage their market so this again drives local/customization requirements. The key in these projects is having an effective governance board so your not making every customization for every market or country otherwise you end up building a highly customized platform which is hard to design, develop and deploy. The costs would be significant and the project would run on for years. The balanced approach to this is to get consensus around the minimum required to move forward.
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The fact that these two initiatives were deemed “global” from the start impacted their design, development, & implementation for the better. There was no need to backtrack, redesign, or force a multinational installation into a global framework. The knowledge that these systems would be accessed and used globally helped the developers design the best implementation strategy. For the data warehouse, normalization of the data was time consuming but necessary to gain value from the data held within. Since the data could be output in a way that told a story, be it for supply chain management or cost savings, end users could see the importance of the project and support it as it expanded to other regions. This support was crucial not only to the success of this project, but also all future global projects.
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Two major components of Wyeth’s global IT strategy were its ERP system and its “Global Data Warehouse.” In what ways do you think that the global nature of these initiatives influenced their design, development, and implementation?
I am inline with everyone else’s reasoning regarding the ERP and Global Data Warehouse. Wyeth understood that it is a global company and it needed to pivot and make slight changes to educate management and expand the tools offered to utilize the changes in IT. Wyeth prides itself on being a “global” company yet some of the processes were local focused. What these two initiatives allowed Wyeth to do is truly become a globally “connected” company, linking all the regions together so that data flows effortlessly between the hubs. This allowed for a more efficient management of the company’s entities around the globe.
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I think the global nature of Wyeth’s environment influenced the decision to design and implement the ERP system and the global data warehouse. It was clear that Wyeth did not have the culture or business process of a global organization and that the IT department was fragmented based on individual country needs. It was also clear that this issue was impossible to ignore because 40% of all sales were made outside of the US without a global system to handle it. At the local level, divisions had different processes and software that resulted in different data definitions and classifications. I think it was important for Wyeth to establish a global strategy that addressed these needs. The ERP system would create a global ERP transaction processing system based on SAP. The global data warehouse would integrate the transactional data received from the ERP and offer metrics on historical data accessible over the web, cross reference file for products and supplies. The establishment of these initiatives would help build a centralized IT structure that would provide a wide area network to link divisions together and provide timely information that was accurate.
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Two major components of Wyeth’s global IT strategy were its ERP system and its “Global Data Warehouse.” In what ways do you think that the global nature of these initiatives influenced their design, development, and implementation?
The global nature of the ERP and Global Data Warehouse initiatives influenced their design, development, and implementation in many ways. First off, the global nature of these initiatives made integrating and normalizing the data in these programs difficult because each country had different ways of naming and labeling certain products so it was clear that if they didn’t take a global approach to designing and developing these systems then the means of product look-up and categorization would be flawed due to so many products having different names in different regions. Another big issue came with trying to educate employees and managers to the fact that they needed these new sophisticated global systems to handle global transactions and planning. The fear was that globalization would “end up reducing local innovative behavior” because managers would no longer be able to order in advance to predict increases they felt would happen in their area, so it was hard to get employee buy-in at first. But by taking this global approach these systems allowed managers to see what and where product was being manufactured so they would know when it would arrive. The issues that arose and were fixed by taking a global approach to these initiatives would have never been found if they didn’t have a global mindset when developing these systems which would have likely led to compatibility issues across the company in the future.
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The global nature of Wyeth’s initiatives definitely impacted the development and execution of its ERP and GDW systems. The problems Wyeth were looking to tackle were very global in nature, and centered on how differently the same processes were planned, communicated about, and executed from one country to another. Standardization then was a huge issue, from differences in how countries identified and priced their products, to the myriad of ways in which different cultures communicate, work with and store information, etc. As a result, the need to normalize the information coming into a global database (without force-feeding a one-size-fits-all approach) became a paramount concern.
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Wyeth lack a centralized and consistent approach due to lack of a company standard and process so the global IT strategy of the ERP and Global Data Warehouse initiative was put in place to change this. The design, development and implementation were initially delayed due to lack of communication but the global nature of the ERP and Warehouse are what eventually drove and influenced the design, development and implementation over time due to the fact that it was a long term strategy.
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Steven L. Johnson wrote a new post on the site Discussion for Last Name Starting A-G 9 years, 7 months ago
Two major components of Wyeth’s global IT strategy were its ERP system and its “Global Data Warehouse.” In what ways do you think that the global nature of these initiatives influenced their design, development, […]
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The design, development, and implementation of the ERP system and the Global Data Warehouse was one of the largest undertaking that Wyeth had to tackle on the road to Globalization. At the core of these changes was creating a standard language within the company that would facilitate communication. Without being able to aggregate data from all affiliates to preform analysis, the company would never be truly global. Wyeth had a culture of being locality centric instead of a global philosophy of “think global, act local.” Recognizing the situation as both a challenge and an opportunity Wyeth was wise to commit resources to preform on the ground assessments. This was a large step in helping not only collect the information needed to develop the standard language but also bring the message of globalization to the field. Wyeth also realized that not all areas were ready to make the transition, so focusing on financial and marketing units first created successful models for other units. Knowing that globalization could not be implemented without local buy-in, Wyeth could leverage these two systems to help drive additional changes.
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Great post Amanda!
Wyeth recognized the importance of normalizing its data to ensure consistency across all systems and data reporting. While this was a huge undertaking, it was necessary for IT and business units to invest in this initiative. When transitioning from multiple operating systems onto one system, the company I work for had to undergo similar information gathering to make certain the new system’s data was converted properly. We’re still in the migration phase so data cleanups are inevitable but we’re there’s an end in sight!
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Amanda,
You bring up a lot of great points. The saying “think global, act local” really sums up what needed to be done in this situation. I agree Wyeth had a system that was primarily focused on local operations rather than having standardization on a global level. Transitioning into a global organization from this type of set up can be incredibly challenging as we saw from reading the case study. It was wise of them to first focus in on key business activities such as information and data collection, product planning, marketing, shipping and distribution and cost. By standardizing these activities, it allowed other business units to see success in these pertinent areas thus potentially leading to decreases in resistence. I think this was a good strategic move on Wyeth’s end.
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Implementing an ERP and Global Data Warehouse across a global network requires significant design, development, and implementation. The ERP provides a standard business process while the data warehouse collects and stores data. However, this common platform interfaces with people speaking various languages, with differing measurement unit systems, differing date entry formats, and even difference in comma and periods in financial number entries. The design of a common platform therefore undergoes development with many unique implementations. The magnitude of the effort in attempting to serve unique affiliates yet still function as a common operating systems is tremendous and expensive.
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Hi Steve,
I like that you mentioned creating a common language even for people who don’t speak the same language. That is a great side effect of ERP and the Global Data Warehouse and is so important for global companies. Being able to cross not only cultural boundaries but languages as well can be a huge obstacle so it’s great Wyeth pushed these projects forward.
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While there has probably always been a need for these components, the global initiatives are what drove the projects. As much of a bottom line company as Wyeth was, it is hard to imagine a business case that would have been given budget approval prior to the global strategy. The desire to centralize all of this information influenced the design as the data needed to be accessible, accurate, and user-friendly in all of Wyeth’s global locations. It was also very strategic to allow marketing to push the initiatives forward, as stakeholders were able to make an immediate case for the system and warehouse and could help champion the project past resistant stakeholders as barriers were encountered. The available from these systems would truly aid in helping Wyeth make the leap from a multi-national company to a globalized organization. Finally, their global competitors were further ahead of Wyeth in regards to globalizing, thus these systems would help Wyeth immediately close that large gap and begin leveraging its data throughout the organization.
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Hey Eric – I’m glad you mentioned the example of marketing team leveraging IT’s strategic efforts to aggregate/streamline data. I work in marketing and we always track results/outcomes from our campaigns & product launches. Without meaningful data, it’s impossible to justify funding a project/objective again. To track effectiveness of a specific marketing email, we track/compare behavior of ‘targeted’ clients with ‘test’ groups who did not receive an email. We also use unique vanity phone numbers on marketing collateral so we can determine which magazine ad, or brochure motivated the client to contact us.
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The global nature of the ERP system and Global Data Warehouse were influenced by regional and local politics, laws and culture with respect to their development, design and finally implementation. Wyeth struggled over nearly a decade to tailor the overall system slowly incorporating each business’ local needs. The ERP system was used as the backend data system to support the Global IT initiative and as such needed to be centralized in location(s) that strategically fit management perspectives and facilitated multinational collaboration. They also had to be located in extremely reliable power networks and near major international cities, centrally located within a region. The choice of location also was influenced by available staffing.
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As I read the Wyeth case I was impressed with how thoughtfully their IT strategy was designed, developed and implemented and was reminded of the Four Season’s case we studied in our Human Resources class. Like the way the Four Season’s management carefully studied the French culture before refurbishing a hotel that was then rebranded as a Four Season’s establishment, and before they introduced the Four Season’s culture to the French employees they inherited, Fadem and his team carefully examined the different ways Wyeth operated in the countries where it had bases around the world as they examined and put together their strategy. I think the key to going global is adaption – not forsaking a key mission or abandoning an established culture, but understand that different approaches might be needed as a company expands into different countries around the world. They took the time to not only organize a “Road Show” to address widespread concerns about possible budget changes and layoffs as part of the IT globalization effort, but they smartly recognized that the Latin American region should be chosen for the first implementation of their RSC plan because the managers there were more willing to share resources and accept the changes than those in other regions. Recognizing the independent way Wyeth operated in Europe, they moved there more slowly. In fact there, they allowed the business case to support the implementation of the plan – a case the Europeans came to on their own to some extent. What is clear, is that ultimately the change in the transfer of budget line from local IT units to the global unit was absolutely necessary for Fadem and his team to be successful and carry on its mission, and really speaks to the change in the way IT was eventually viewed at Wyeth. I never realized until reading articles assigned for this class how much managers protect their own departments and how they almost jealously guard their budgets. This article is about a change that happened more than ten years ago. Are plans this ambitious approached now with more thought to having larger budgets for IT and IM endeavors, so introduction of a project as large as this one that by itself is intimidating and is associated with dreaded change, doesn’t also have to impact department budgets that traditionally go to other areas?
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Both the ERP system and the global data warehouse allowed for globalization at Wyeth. Due to its initial locally focused corporate architecture a significant investment of capital and time was needed to fully implement the programs. By centralizing product information Wyeth was able to streamline the business. The other possibly more important aspect was the common language that was produced and the common systems. In healthcare this lack of a common system has been a huge problem. Not only is data in multiple different systems but each practice has different systems that don’t communicate as well. This scenario arises due to the different requirements by the state and federal government. Wyeth not only had to deal with US issues but also had multiple countries with different requirements that probably added to the length of time to implementation of the systems globally.
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During the IT heyday, Wyeth was facing many systems issues when dealing with globalization. One employee stated that ‘we need global need and not just a global organization.’ Wyeth’s management implemented an enterprise resources planning (ERP) process to assist, strengthen, and expedite the organization’s globalization process. ERP allowed Wyeth to use a system of integrated applications to manage the business and automate many of its planning and transactional functions. In the case of Wyeth, Global data warehouse was this software. The software was viewed to be the short and medium-tem solution to the company’s IT globalization initiative. The process integrated transactional data from over-the-counter and prescription markets from various Wyeth plants using master files and automated transfer systems. The warehouse would serve a variety of purposes to include’ provide purchasing information; support forecasting; inventory; pricing and resale information. The global nature of these initiatives demanded for an all-inclusive information gathering system. The systems allowed affiliated from around the world to view information that was previously not accessible to all regarding transactions and planning. Furthermore, it allowed Wyeth partners to see what products were being manufactured and when they would arrive at various plants and locations.
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above is an error- should be in second discussion board
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The ERP systems and global data warehouses carry a global nature in numerous ways which ultimately contributed to Wyeth’s underlying design, development, and implementation process. In order for a company to grow on a global scale, there must be standardization especially in regards to cost, payments, inventory management, shipping and distribution, as well as product planning and manufacturing. Wyeth needed to design and implement both of these initiatives in a way that guaranteed standardization and consistency among these organizational activities. This was definitely a substantial challenge for Wyeth as normalizing data and rationalizing all products can present several challenges. At the end of the day, they realized that this initiative would ultimately result in cost savings. The ERP system and global data warehouse house would also allow affiliates from around the world the ability to see what is being manufactured and have an idea of lead times. It also essentially increases product development and revenue as it puts this activity on a much larger platform. The previously mentioned activities needed to be handled in a more organized, sophisticated manner and on a much larger, worldwide scale rather than being done locally. At the end of the day, Wyeth saw that the warehouse had several global benefits as it could standardize processes, create additional demand in other business units, and be cost effective. However, the biggest challenge clearly was the differences in cultures, variances in country regulations and laws, politics, and overall embedded attitudes from different parts of the world.
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Good point. It was surprising to me how lacking the reporting system was at Wyeth. I think we often assume that large firms are able to aggregate data globally to make important strategic decisions. I am not sure how this firm survived at the end of each quarter attempting to consolidate some type of global output to report to Wall Street and investors. The ERP and data warehouse program was an efficiency requirement, but also an internal control or compliance requirement as well. I am in the tax software world and a similar issue is rampant in Global tax today. Firms rely on disparate tax systems that do not talk to each other, leaving the home office helpless to consolidate and report on these compliance issues. We sell a solution that provides a global dashboard and reporting tool for all tax, which leverages the firm’s ERP and data warehouse technology. Even in 2015, firms still struggle with these issues.
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The ERP system and the Global Data Warehouse system were driven by the business needs. My company is having a similar ERP initiative where we are looking to implement one system to be used across all offices. Similarly to Wyeth, although on a smaller scale all of our offices are based in different countries and are on all different systems. It makes it difficult for reporting purposes to get all the information needed at the touch of a finger, which the way that systems have improved this is a no brainer. For instance if the Holding Company who owns my company, wants to know how much cash everyone has available to pay a tax or how much our aged debt is, they would have to ask each company rather than having one system that would produce all of this information. In Wyeth’s case, I believe that the businesses across the globe saw the need for this and I am sure had to do a lot of manual reporting to do and saw this as a solution.
As for the Global Data Warehouse, when reading this article I was shocked by the number of sku’s that each product had. Also it is extremely difficult to continue forecasting properly when no one knows what is out there, this new system was a must in order for Wyeth to plan properly. Globally this is a massive undertaking to get the sku’s in the system correctly as well as understanding the sales patterns. There will also need to be policies put in place globally when implementing the global data warehouse so that managers do not over forecast just to get the products they need. Wyeth will need buy-in globally from everyone involved in order for this to be successful. -
Wyeth was very immature with respect to their business processes and business structure. They used the implementation of the ERP system and installation of the “Global Data Warehouse” as a catalyst to transform their business model and IT delivery structure. A well implemented IT strategy with a focus on using the technology as an enabler of change is critical to the success. Additionally, the global implementation helped to drive the culture to synergize and reap the benefits of a worldwide organization.
The success of the globalization initiative was also contingent upon successfully adhering to the various regulations within the pharmaceutical industry. Additionally, while this was a global implementation effort, significant efforts needed to made to ensure that consideration was given to local requirements.
Wyeth was also looking to take advantage of economies of scale as a result of their implementation and created a new role within the organization to ensure that sourcing could be done on a global basis. While this initiative created initial challenges in the organization, the company likely experienced cost savings and efficiencies due to the initiative.
As is the case with many transformational IT implementations, a key consideration is around people. In order to most efficiency and effectively take advantage of the technology retooling and realignment of resources is typically a requirement. This was the case at Wyeth and the reorganization was initially met with resistance.
Key to the success of the implementation was appropriate communication and change management. This change management was executed within Wyeth and they were able to adapt the initial strategy based on feedback from employees.
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Scott, I know that you have experience with implementing new software for other companies. When do you see it fail? Is it because staff is so resistant to change that they ultimately do not accept the change or is it that the IT department did not think of all possible problems that could arise and therefore the system keeps having kinks and never works properly?
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Thanks for your response Kristen. Many projects fail due to a lack of collaboration between the business and IT. Key to success in any implementation clear and regular communication between the all parties impacted. Two other major reasons why projects fail are due to availability of key resources (or lack thereof). If people within the business do not have the time to be engaged in the project then key requirements could be missed. Lastly, data integrity and availability often has an impact on failures.
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It is unfathomable that a company of Wyeth’s size existed for so long without a befitting IT infrastructure in place. Wyeth’s ERP system and Global Data played a vital role in influencing the company’s design, development, and implementation. It resulted in a more nimble operation and cost savings by finding cohesion among the varying legal, language, and other operational factors that had left the company fragmented over the decades.
The initiatives enhanced the company’s ability to respond promptly to change in supply chain and manage business operations more effectively. It also established some alignment within the organization by providing the ability to generate shared incentives that align the interests of the affiliates that span across 50 countries with the global standard.
By and large. the development was necessary to jumpstart the organization from the On-Your-Own mode that previously plagued the many business units to a well refined, aggregate entity.
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Wyeth’s IT globalization strategy included the design, development, and implementation of the Global Data Warehouse (GDW) and ERP initiatives. These undertakings were very large in scale and vital for the company to succeed at the global level. Quite frankly, it almost unbelievable that a company this size (3,500-5,000 different SKUs between 50 affiliate countries) did not have standardized processes prior to this endeavor. Each individual project had a distinct timeline: short- to medium-term planning for the GDW and long-term for ERP. Therefore, the GDW venture was more critical to the immediate success of globalization efforts. It forced the company to reexamine how they designed and implemented common operating systems that utilized software and programs that could operate across borders. Regulatory restrictions by host nations, challenges in normalizing the data, and getting sufficient buy-in from local firms all needed to be addressed.
To this end, IT leadership and key staff realized that they needed to incorporate a “Road Show” into their plan so that they could receive feedback from each geographic region. This course of action allowed them to integrate new ideas as well as to address concerns from business unit heads in person. It also helped to calm fears of layoffs, budget cuts, and loss of control. In this case, transparency was key gaining support at their worldwide locations. Finally, normalization of data was absolutely crucial to achieve globalization in supply chain management with standardized transactional data, accurate forecasting, and exact purchasing information. This in turn would lead to significant cost reduction as well as increased flexibility and efficiencies across the organization. As illustrated, the sheer size, complexity, and global scale of these initiatives undoubtedly influenced the design and development of these systems. -
These two initiatives, the ERP system and Global Data Warehouse, were probably the most challenging of Wyeth’s undertakings, but a necessary investment in order to transform themselves from a multinational corporation to a global corporation. The ERP system was necessary to normalize the vast amounts of data and create consistency amongst the multiple affiliates and the Global Data Warehouse would be where Wyeth stored it all. The design was influenced by the need to think globally and act locally. The development was influenced by the need to have a common language for the entire corporation. And the implementation was influenced by the need to have globalization mean the same thing to everyone in the corporation. I think the hardest part was creating the business case for these two major components with an audience who was so entrenched in their little kingdoms after so many years of doing business under Wyeth’s original management style. Reading this case study made me consider how globalization existed without the Internet. I found this interesting link that discusses the Internet across the globe from its precursor, ARPANET, to Twitter using 40 maps: http://www.vox.com/a/internet-maps.
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Like any worthy endeavor, considerable effort needs to be invested to ensure successful results. Wyeth had come up with an initiative to improve its international presence, however numerous technical obstacles along with personnel morale. The use of Enterprise Resource Planning has certainly required intense preparation with the use of System Applications and Products. This, along with the use of Global Data Warehousing were done to handle of transactional retail data and cross-referencing files prescription market as par of the overall strategic plan to design and implement the globalization effort. In the end, the IS function grew in staffing from less than two dozen to over 1,800 with a budget starting at 3 million and reaching 500 million; along with several years worth of committed resources proved essential in accomplishing the desired results.
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Sorry Eduard, i was trying to hit the Thumbs up, I agree 100% of your comments. Like many of the items we have reviewed in our months in the OMBA program this transcends many disciplines. As much as this is an IT initiative it also touches HR, Finance, marketing, finance etc.
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Steven L. Johnson wrote a new post on the site Discussion for Last Name Starting N-Z 9 years, 7 months ago
What are the four major web services described in the case that are offered by Amazon.com? What does each service do?
Why would a company use these services from Amazon instead of maintaining their own […]
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The four major web services offered by Amazon include 1. Simple Service Storage (S3). This provides an interface for cloud storing and retrieving data. 2. Elastic Compute Cloud (EC2). This provides computing capacity within the cloud. 3. Simple DB. This provides real time querying of structural data and 4.Simple Queue Service (SQS).This stores data messaging between applications.
Companies chose to use these services for the primary reason of not having to invest in the infrastructure of developing these services on their own. The vast amount of money saved can be invested directly into product development and advertising to get the product quickly to the consumer. Cost savings on each service can be at least 50% in some instances. One of the main reasons for using these services is the quicker time to market. Startup can be as simple as reading the directions and paying the initial fee and entering a market within a day to a week. The pros of using these services are obvious: cost savings and early entry into the market place. The serious downside would be the reliance on these services to a point where any type of collapse of the cloud can lead to a halt in business operation. A business may also become hostage to the whims of the company in its control of the cloud in terms of fees and ownership of intellectual property. -
The four major web services were S3, EC2, Simple DB, and SQS.
Simple Storage Service (S3) was simply an cloud-based interface for developers to store and retrieve their data. Access to this secure, backed up data was allowed through gigabyte/month charges.
Elastic Compute Cloud (EC2) was a web-based computing resource for developers. Its selling point was its “elastic” ability to quickly scale up or down, and would work with S3 storage.
Simple Database (Simple DB) was another cloud-based service that allowed basic database functionality, though without relational database operations.
Simple Queue Service (SQS) was a cloud service that was billed as a reliable and scalable hosted queue for storing messages as they go between components.AWS services are a good business decision for many businesses. Why invest in complex infrastructure when you can hire AWS cheaply to store your data and access it for computing and database activity? What is interesting is that AWS focused directly on businesses first, then went after individual consumers with its Zocalo product. Dropbox, on the other hand, went after individuals first, then started going after businesses. Ironically, Dropbox actually was using AWS for years until very recently! And now Dropbox has gotten so big that it has its own data storage facilities, and Google has also become a competitor for AWS services. see:
AWS in fight of its life as customers like Dropbox ponder hybrid clouds and Google pricing
I work at Temple University Hospital. I do not know exactly where my work-related secure cloud storage files are kept, but they very well may be stored with a service such as AWS. The advantage would be that using S3 would allow our IT staff to focus on operations that are more relevant to patient care and related hospital needs. A disadvantage would be that there can be major multi-zone failures with AWS, simlar to what Alex is referring to above, and also discussed at: (http://blog.awe.sm/2012/12/18/aws-the-good-the-bad-and-the-ugly/#~p6ilhprJqkwmmT)
In addition, their Simple DB does not allow for relational database operations. Our orthopaedic department, for example, uses a patient database that was built on SQL Server (a relational database) and could not have been done with Simple DB. -
The four major Amazon Web Services (AWS) are Simple Storage Service (S3), Elastic Compute Cloud (EC2), Simple Database (SimpleDB), and Simple Queue Service (SQS). All four services targeted software developers in small to large companies. S3 provided an interface for storing and retrieving data from anywhere on the Web which allowed developers to store and access unlimited amounts of data. EC2 provided resizable computing capacity in the cloud which enabled companies to immediately scale up and down the amount of servers they needed. SimpleDB provided developers with ability to do real-time lookup and querying of structured data which was not intended to replace complex relational database operations but rather an easy to use alternative with the core functionality of a database. SQS provided a scalable hosted queue that stored data messages as they traveled between applications which allowed developers a mean to move and store data between applications without losing the data or needing the different applications to always be available. S3, EC2, and SimpleDB were designed to work in conjunction with each other seamlessly.
The best reason for any company to use AWS is they would no longer have to deal with all the complexities and headaches of maintaining their own infrastructure such as negotiating bandwidth contracts, buying/installing/maintaining servers, operating a datacenters, and building high available data transfer networks. In addition, the company using AWS are leveraging Amazon’s relationships and buying power with its software, hardware, and bandwidth providers. And finally, a company creating a software application should realize having their own infrastructure is not going to differentiate their business so having that capital expenditure to put back into their business is much more important.-
Duke good point. I do believe building our own IT infrastructure and systems could be expensive. To maintain a complex system if something should break is even more expensive due to so many variables involved. Leveraging Amazons Web services could be cost effective to some companies. They could also use cloud as a backup and they could use cloud to run some of its applications and some in house to distribute the risk. I agree to some companies it may be important to invest their capital in areas where needed most. but to others where they have capital at their disposal could use cloud and also use their in-house system.
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In many cases, I think it would be more efficient and cost effective for a company to pay Amazon than to maintain their own infrastructure. Amazon has priced their services low to get as many users as possible. Then, by having a lot of users, Amazon can further drive down costs for bandwidth and hardware. This allows Amazon to keeps costs lower than a company can likely get maintaining its own infrastructure. Amazon also decided not to charge an upfront fee and subscription fee like its competitors. Moreover, Amazon takes care of things other developers generally do not want to deal with such as negotiating bandwidth contracts or managing data-centers 24/7. And with Amazon, you only pay what you use so there is likely less waste. As such, it may make financial sense for many companies, especially start-ups, to work with Amazon to keep costs low so that it can focus on the core areas of its business.
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Jonathan, great points above. I was going to write a very similar post but figured I would piggyback on your discussion post. I recently worked with a company that utilized Amazon services in order to run their e-commerce website. They were able to run very lean on personnel due to the functionality and cost savings provided by their services. Being such a small company they also liked the “pay as you go” model as it helped them avoid overspending for services they would not otherwise use. Amazon’s strategy to have market leading prices in order to have a lot of users reminded me Google’s efforts last week along with our in class exercise. They were a price leader, however they were able to do so by having the most users. A strategy that seems to be consistent in the data services field. I liked that Amazon stayed true to their mission statement and realized the providing services for lower prices may not provide immediate gains, but fell in line with their long term growth strategies by cornering the market with the most customers on their platform.
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Steve, thanks for your reply. I agree that the pay as you go feature is great for small companies. I work at a fairly large company—about 40,000 employees—and while we do not use Amazon Web Services, we work with venders that provide a pay-as-you-go strategy when it comes to storing electronic documents and making them accessible to outside users in our litigations. More specifically, for each of our cases, we need to collect and host relevant electronic documents that are reviewed by our outside law firms and potentially produced to the other side. For each case, we may have hundreds of thousands to a few million pages of documents, which can be several hundred gigabytes of data. Instead of creating an internal infrastructure to host these documents, we rely on the outside venders to charge us by the gigabyte and then additional fees to de-duplicate the documents. The more gigabytes we have, the lower the cost per gigabyte. I did some searching online and it appears that some of the electronic discovery competitors that I have not worked with actually use AWS’ cloud-computing services to host the electronic documents for their clients. It may be a good time for me to reach out to a few vendors to see if AWS offers any advantages to what I am currently using.
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The four major web services described in that case that are offered by Amazon are Simple Storage Service (S3), Elastic Compute Cloud (EC2), Simple DB and Simple Queue Service (SQS).
S3 provides an interface for storing and retrieving data on the Web that developers can use to store and access unlimited data. EC2 is a Web service providing scalable computing capacity in the Cloud that is available on demand through the Internet for developers. Simple DB is a Web service providing real-time lookup and querying of structured data that provides developers with a user friendly alternative to more sophisticated relational databases. SQS is a scalable, hosted queue for developers to send and store messages as they travel between applications.Companies would use these services from Amazon so they could dedicate more time focusing on their customers and their core product development without the high costs and demands required to build their own IT infrastructure.
EC2 and S3 provide scalable computing power that allows developers to rent any amount of storage capacity and are priced on a “pay-as-you-go” basis. This is a great value proposition for companies since they avoid the capital and other fixed costs required to build and manage their own data center.I work for a bank and there would be many pros of using AWS given our vast IT infrastructure, servers and data centers. Capital expense reduction would be significant and we would probably have significant cost savings as result of the elasticity of the pricing model. In addition to savings on expenditures, we would be able to focus more resources on product development (potentially subsidize with some of the IT infrastructure cost savings) and deliver changes more quickly to the financial marketplace.
I think the cons would probably be focused on security concerns in the banking industry and ensuring compliance from a controls perspective as well as potential regulatory concerns (Office of Comptroller of the Currency, Consumer Financial Protection Board, etc). In addition, I think a con would be if we cut too deep in our own IT expertise. Banks are increasingly differentiating themselves by their technology solutions tailored to their customers’ desires for on demand services in digital channels. I believe a large amount of that expertise has to remain in-house to ensure consistency with your brand and customer value proposition. I think caution should be exercised in how IT is outsourced so as not to cut too deep due to expense constraints. I think we could benefit from AWS services with a balanced approach to recognize the benefits from outsourcing without losing core in-house expertise.
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Paul I agree, relying too much on a AWS service may lead to other problems that could be detrimental to the Banking services. A balanced approach could be ideal but where do we draw the line is the question. Having everything in house is not a viable solution to some companies, but for some it may be the only option. I personally feel giving away into the cloud computing systems/companies, is sometimes worrisome and dangerous eventually as the companies providing these services may monopolize and start jacking up the prices when they begin to know consumers have no other choices. This reminds me of the last week’s class exercise we did in terms of consumers vs developers – two sided game.
So if the providers do jack up the price and becomes expensive to the clients, due to contractual obligations and security reasons, the clients cant just take the business to another provider overnight as there is a always a chances of loosing or compromising data. So its a risk I’d say. -
Paul,
Once again your posts bring incredible insight. Your discussion of the cons for AWS are great. My initial thought was about the potential for a lack of control of your information. Security of that information would always be a worry based on the fact you never really know what is going on in another persons house. They can tell you and you can verify with periodic visits but who knows what happens when you are not there. I may be very difficult for a bank or company that is dealing with a lot of personal information to use a service such as AWS.
Thanks,
Bruce-
Thanks, Bruce. I guess now the pressure is really on to write something that makes sense in my posts:) I love your house analogy – thinking about what can be going on behind those closed doors is scary even if they meet required third party servicer standards. I guess I am a “trust but verify” person – especially in light of all the security breaches we have been discussing. Banks seem to be moving towards this but my instincts tell me it’s going to be tough with confidential customer information. I worked on the TD purchase of the $6B Target credit card portfolio (we own the receivables /Target retains servicing) that we closed about 6 months before the security breach so still a bit paranoid about relying on others:(!
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Paul – compliance is always a concern, but cloud services providers have been able to mitigate those concerns by gaining third party certifications of compliance (FIPS, FERPA, HIPPA, ITAR). In each industry lighthouse customers have paved the way for others. For example your CIO may say, if it’s good enough for Bank of America, it is good enough for me. With that said, different customers will always have different tolerances for risk. When cost significantly outweighs risk, opinions can change.
I have seen much bigger barriers for customers that routinely end up in litigation (not in a nefarious way). When a company is under litigation, the court can request information and the company must either file a counter motion to not provide the information or comply with the courts ruling. Ultimately, it is up to the company to determine how it will comply. If that company is using a cloud service, the court can also request information from the cloud service provider. The provider only has the option to comply. Legal interactions like this can make companies that have trade secrets or other intellectual property reticent to give physical ownership of their information.-
Hi Joel – I agree with you but it’s funny that you reference BoA since we were very happy when in 2011 they the led the way with a $5 monthly debit card fee in response to regulatory changes impacting their revenues. We and other banks were able to pounce on that and take a good chunk of their customers (account closures went up 20% year over year for BoA in that quarter) until they realized the mistake and pulled back from the fee. So I don’t think Brian Moynihan and his team always know best – they make mistakes like all of us. Sometimes it’s better to be a fast follower than leading the way to learn so you can learn from others mistakes and/or do it more cost effectively. Excellent points on risk tolerance – I agree each company needs to make the call based on their own risk appetite. Banks are starting to use AWS services so it will be very interesting to see how it evolves. Thanks.
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Paul and Joel, good points about compliance and lighthouse customers, and the fact that blind faith in an industry leader is not necessarily the best strategy. However, I do agree that cloud services gaining third party certifications of compliance, (FIPS, FERPA, HIPPA, ITAR) are the examples you gave, would greatly relieve a prospective customer’s concern. And your example of ‘if its good enough for Bank of America’ then many others will think it should be good enough for my company as well. And, yes, every big company, even those with good reputations, don’t make good choices 100 percent of the time. But, isn’t this the same as any other service in that regard. Companies may pick accounting firms or law firms based largely on certifications and also based on knowing who some of their other clients are. In fact, these firms may tout the fact that various Fortune 500 companies use them, to tap into the same mentality to obtain new clients.
As to the legal ramifications of using a cloud service, wouldn’t the company whose records are stored on the cloud have the ability to file a counter motion with the court to block the turning over of that information, the same as it would if it entrusted its written documentation to a document storage company?-
Good points Eric. In my experience, Banks, Education, Healthcare and Law firms more than any other sector want to know what comparable entities in their sector have adopted a product or service. There is a certain trust that comes with that knowledge that someone else has worked out the kinks. Paul points out some good reasons why it is tough to be on the bleeding edge, but in many ways bleeding edge customers set the precedent that others will adopt over time.
On the legal side, the answer is different based on the service and it’s terms of use, but the common theme is that cloud service providers have an obligation to comply with investigations that they believe are completed in “good-faith”. If you want to feel exposed, read the terms of service for Google https://www.google.com/intl/en/policies/terms/, specifically the “Your content in our service” section. It’s eye opening what they reserve the right to do.
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Of the four Infrastructure-as-a-Service (IaaS) offerings from AWS, the most important are its cloud compute (EC2) and storage (S3). The other services are database (SimpleDB) queue (SQS). Amazon’s compute and storage offerings have fueled major growth in recent years within the technology sector. It can be argued that cloud computing is one of the biggest reasons for the global mobile explosion. Because of inexpensive, usage-based cloud computing from Amazon, and other companies, everyone from app developers to global enterprises can quickly spin up resources to enable new business initiatives. Without cloud, the small developers responsible for creating hundreds of thousands of apps for iPhone and Android devices would not have been able to start their projects – the cost to own and manage the IT infrastructure too large to handle.
As a developer if you have an idea you can start working on it immediately – within minutes – by opening an account, providing a credit card, and spinning up a server within AWS.Before cloud a business would have to build their own IT infrastructure – in the Google case it is noted that its founders Brin and Page maxed out several credit cards to buy the first servers to start the company. Infrastructure is expensive – companies that build and operate their own data centers have to provide power, heating and cooling, buy hardware, constantly upgrade hardware, hire people to run it – and often this is not core to their business. Other service options have included co-location and hosting – which either still relied on a business buying hardware OR required contracts to utilize dedicated hardware resources (kind of like leasing).
A major advantage to AWS and other cloud services is that it is shared – available on an as needed basis. If a global enterprise needs to turn up some compute for a new project, cloud enables rapid delivery. When the project is complete, the servers are spun down – no hardware left over, extra headcount, etc. A retail store, for example, can utilize cloud compute from AWS to support their e-commerce platform during the holiday shopping season. The company can allow for ‘elastic’ compute resources as demand increases After the season, the services are terminated and the business is not paying for systems the rest of the year (and doesn’t have the data center wasting money).
Now my company – Verizon Enterprise Solutions – competes directly against AWS – we have our our cloud compute offering. AWS is the leader in the cloud computing sector. Other major players include Rackspace, Microsoft, IBM, HP, and Salesforce.com. While our value proposition is cloud computing for global enterprise companies, many of the other providers target all customer segments – from the one man developers to the global 2000, and everyone in between.
A major advantage to a global enterprise company building cloud into their strategy is for disaster recovery. Enterprises may not ever decide to get away from operating their own data centers – many CIOs still want to control every aspect of their data. Cloud can be used to spin up new resources in the event of problems at a data center or outage though. Cloud can also be used by enterprises to reduce the overall number of data centers within an organization – using cloud for ‘non-essential’ or ‘not mission critical applications’. A company may keep their email, CRM, and/or ERP systems in their own data centers but run their marketing applications in a cloud providers centers, for example. CIOs cite reliability (or the fear of not being able to access their resources in a cloud environment) and security as major cons to cloud.
In summary, cloud is an inexpensive and easy way to provide the IT and infrastructure for new business startups, businesses that are growing, and for major enterprises.
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Kevin – Interesting post. I guess each company can potentially find their comfort zone with regard to how they use cloud computing. Has your company taken this particular marketing approach? And does Verizon target businesses only, or individual consumers as well?
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That’s right Saqib, companies can dip their toe in the water and try the cloud for a non essential application or decide to move their whole operations into the cloud. Small-to-medium businesses have adopted cloud at a faster rate than global enterprises; small companies are often more agile, able to try new things sooner. Many enterprises see cloud as a capability to enhance their overall IT strategy; with very large enterprises planning to build their own private clouds, for example. Verizon markets services and sells to SMB separately from Enterprises, so there are differences in the cloud value proposition. But we’re selling the same Verizon Cloud to both customer segments.
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AWS has four services: Simple Storage Service (S3) which provides cheap but highly available unstructured storage, Elastic Compute Cloud (EC2) which provides a scalable compute capabilities, SimpleDB which provides highly available structured storage and finally Simple Queue Service (SQS) which provides a robust communication method between AWS applications.
Companies use these services in a variety of capacities, but the benefits are mostly based on flexibility, cost and scalability. With these services, costs are operational rather than capital and a company can control their cost by only paying for what they need. Consider a seasonal business like FTD. You can imagine that they would have a specific times of the year where they would need lots of capacity (like valentine’s day). Cloud applications allow them to dynamically scale up when needed rather than investing in infrastructure that will sit idle or underutilized. This same principle can be applied to other parts of a company’s infrastructure.
The biggest con for me is that using AWS would get me fired. I work for Microsoft on a team that delivers applications in the cloud; however, we use Microsoft’s Azure platform which provides a faster, more secure and more flexible service than AWS (http://azure.microsoft.com/en-us/campaigns/azure-vs-aws/).-
Joel,
That is an interesting perspective regarding the Microsoft position in your use of AWS services. Maybe a bit harsh, but interesting none the less. My question for you is does Microsoft see Amazon, or Google for that matter, as competition in their core market segments? I would think, based on a high level view hat initially they considered them a nuisance but are maybe taking them more seriously recently? What have you observed from inside Mocrosoft?
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Mike – Microsoft has taken Amazon and Google very since the race for cloud dominance began. All three companies compete heavily in the cloud arena. Each has their own particular strength but all three companies compete pretty fiercely. AWS launched first, Azure (Microsoft’s cloud platform) launched 2 years later. A key distinction between the two was that AWS launched a service that any technical user could leverage with nothing more than a credit card. Microsoft launched a service that required developers re-architect applications in a scalable/cloud-centric way. AWS had a much lower barrier to entry which made it more attractive to customers on many levels. AWS has done a fantastic job of exploiting that low barrier to entry. Fast forward almost 10 years and Microsoft is still catching up. In this world, the question is less if Microsoft takes Amazon and Google seriously and more, do Amazon and Google take Microsoft seriously. I truly believe Microsoft is on the right path and the next 10 years will unfold quite differently than the last.
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Joel, thanks for that perspective. It is interesting to see that the perception of all Microsoft services from those of us outside the IT Community, the reality may be that as a hardware / software organization that is competing with As a Service providers, they do indeed have some work to do.
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Mike – you hit the nail on the head. Amazon was born in the cloud and that influences everything they do. Believe it or not, Amazon makes changes to their online services ever 11.6 seconds. They have a very sophisticated build system which allows developers to deploy changes directly to their customers. Think about Microsoft’s lineage in operating systems, where a developer might see their code make it to customers every two years. Microsoft’s cloud platforms certainly change more rapidly, but nowhere close to every 11.6 seconds. If you think about that statistic from a product perspective, it basically means that you can learn and improve at a faster rate than your competition. Being nimble is a key capability for cloud service providers.
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And consideration has to be given to telecom companies, like Verizon and Century Link, and specialty providers, Rackspace, for example, are cloud providers. Defense contractors, including Locked Martin, are also offering their own cloud services targeted to government. The cloud computing environment is full of traditional and new providers.
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The four major web services offered by Amazon that are described, in this case, are, Amazon Simple Storage Services (Amazon S3) which provides customers with a basic interface for storing and retrieving data that is accessible anywhere on the web. Amazon Elastic compute cloud (Amazon EC2) offered Amazon’s customers computing capacity in the cloud that had the capability of being increased or reduced based on the customer needs. Amazon simple Database (Amazon Simple DB), designed to work with Amazon S3 and Amazon EC2, provided real-time lookup and querying of structured data. Amazon Simple Queue Service (Amazon SQS) provided customers with scalable hosted queue that stored data messages as they traveled between applications.
Companies would use the services offered by Amazon because it would provide a competitive advantage for them as they would not need to spend a lot of time building their own system from the ground up, those resources can be used to build their core business. Amazon services also offer scalable options that would reduce storage expenses for most business as they would only pay for what they need.
Amazon’s services would offer our company a flexible storage space for our data and we would not need to keep spending money on data storage capabilities updates. The con in using Amazon’s services is not having complete control of company data and there is also the possibility of data breach that would be a huge liability if clients/patients information was to be lost or accesses by unauthorized people. -
What are the four major web services described in the case that are offered by Amazon.com? What does each service do?
Simple DB is a database that is distributed by Amazon. It is used as a web service in conjunction with its other web services which charges fees for users to store and transfer data via the internet.
Simple Queue Service is a shared queue system that allows users to queue messages that another module in the application creates to be used by another module. These messages are stored as they travel between computers.
Elastic Compute Cloud is a web service that provides storage capacity within the cloud. It was designed to make web cloud services easier for developers.
Simple Storage provides developers and IT personnel with a secure data storage platform. The storage platform is easy to use with an interface that stores and allows data to be retrieved anywhere on the web.
Why would a company use these services from Amazon instead of maintaining their own infrastructure? What would the pros and cons of using Amazon’s services be for the company you work for?
A company’s primary reason for using Amazon’s service to maintain their infrastructure is the cost of building the interface and maintaining this type of service. My employer (Ford Motor Company) could use Amazon services to store and transfer data as well as many of its other services. This would alleviate some of the costs with supporting an internal IT department. However, since a great deal of data is for future engineering and innovative ideas in creating new vehicles, information that is hacked would be devastating to the organization. -
S3 is the basic framework for storing and retrieving data from anywhere on the internet. There is a small charge per gigabyte per month for companies using this service. This is much cheaper than the the cost to maintain your own servers and security software/protocol, and convenient due to the internet access points.
EC2 is a service that allows developers to run on Amazon’s computing environment. Users pay a small amount per instance hour and per gigabyte. The key feature of EC2 is its elasticity. Users can access Amazon’s massive servers in any capacity they need and still only pay approximately $70/mo. As mentioned in the case, Powerset estimated that they were able to cut their first-year capital costs by over 50% using EC2.
SimpleDB works with S3 and EC2 to offer real-time lookup and querying for structured data. Its value lies in its ease of use while maintaining the core functionality of a database. Users again pay small amounts per hour/gigabyte to employ this service.
SQS is a queue for stored data messages that travel between applications. It allows developers to keep messages available as their applications run and transferable while they do. Costs are again cents per use, and the service is scalable.
The main advantage of using these services at first appears to be cost, but when you look beyond the balance sheet, you realize that you also are accessing technology that most other companies couldn’t dream of assembling themselves due to cost and years of development. Amazon’s scalability is also a great value proposition. Not only do companies pay a small price for the services, but they also have the ability to pay for only what they use in a given month. Reliability, security, and a quicker time to market also draw users to AWS.
My firm does not use AWS or anything similar. We’re a small firm and we have our a little server room of our own. Not knowing too much about the ins and outs of IT and how we would put AWS to use, I can only think of somewhat flimsy reasons for us not to. One would be the fear of the unknown and the difficulty in achieving adaptation from users on our end. We’re afraid of change here and that can get in our way. The other is security. Amazon has a very well developed server system and I’m sure they are on top of everything security wise, but when something is out of your hands, you always worry about it at least a little. With the large user base, as well, it’s easy to assume that it carries a large target on its back for hackers.
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Hi Sam,
I work for a large corporation who for years operated under a philosophy of “it isn’t broke, don’t fix it”. Our company was fine with operating with a way that works and not dare think outside the box of what is cost efficient and operating efficient. I think this is similar to what you said out of the fear of the unknown. Likewise we handle privileged information on our customers so there are security concerns with operating on cloud. Since I oversee the payments of the bills for our building, I can see the hundreds of thousands we are dumping into maintaining are hardware and software. After reading the article and seeing the cost savings, some companies mentioning upward of 50% savings on IT costs, I don’t understand why more companies aren’t choosing to turn their infrastructure over to companies like Amazon who are constantly innovating. My concern with Amazon though is they have done such a fine job with their web services I wonder what else they can do different to improve on their security measures. I came across this article below regarding thunderstorms that compromised some of the safety of cloud computing through Amazon, affecting companies such as Netflix.
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Amazon created the four major services under their Amazon Web Services (AWS). These services allowed developers to get up to speed quickly. The developers that use AWS do not have to deal with all the backend technology issues and can focus on the business. Backend technology issues such as buying and selling servers, maintaining those servers, negotiation bandwidth, operating datacenters, etc. These issues can “take upwards of 70%” (pg.1) of a companies time to build and maintain. This “muck” (pg.1) does not necessarily help a company differentiate itself from competitors. Because performing these tasks yourself does not help your company breakout, it may be wiser to spend less time on the backend and focus more on the business at hand. Amazon figured this out and provided the four services of Simple Storage Service (S3), Elastic Compute Cloud (EC2), SimpleDB, and Simple Queue Service (SQS). S3 (released March 2006) “provided a basic interface for storing and retrieving data from anywhere on the Web.” (pg.6). EC2 (released August 2006) “provided resizable computing capacity in the cloud.” It also “was highly elastic, allowing for quick scaling up and down, and designed to work in conjunction with S3.” (pg.6). SimpleDB (December 2007) is “a Web service for providing real-time lookup and querying of structured data.” (pg.7). SQS (2004) is “a scalable, hosted queue that stored data messages as they traveled between applications.” (pg.7). All four of these services come with a Amazon’s Flexible Payment Service, Premium Support and Elastic Block Store. Seems like a decent deal to me.
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The four major web services described in the case study are Simple Queue Service (SQS), Simple DB, Elastic Compute Cloud (EC2) and Simple Storage Service (S3)
These services were brought about as a service targeted towards software developers in companies of all sizes.
Simple Queue Service stores data messages as they move between applications. Amazon SQS maintains the server and provides the service at a per-use rate. It works closely with Amazon Elastic Compute Cloud (EC2) and the other AWS infrastructure web services.
Simple DB is a Web service that provides real-time look-up and querying of structured data. It also works in conjunction with S3 and EC2. Users are also charged a low fee for data storage. The data is stored securely in the cloud.
EC2 enables “computing” in the cloud, allowing users to pay for the capacity that is actually used. The service is available on demand and allows for quick scaling up and down, which is appealing to developers who need to meet demands or spikes in traffic.
Simple Storage Service or S3 is a basic interface for storing and retrieving data from anywhere on the Web. There is no minimum fee or start-up cost and you only pay for the storage you use.
A company would likely use these services to keep costs down for their IT services. Having dedicated on-site staff can be costly. Using AWS offers low-costs to a company with a pay- as- you go system, which would allow a company to expand and use their budget for more result producing activities. Set up is easy and provides access to global resources instantly. However, these low costs may not always be the case and once concern could be once you have entrusted all of your information to the AWS cloud you are held hostage to the charges they may now want to charge for their services. Probably one of the biggest considerations for a company has to be the security with so many recent events occurring with hacking and stealing of information this would likely be the top reason to question using AWS. -
The four major web services described in the case are: Simple Storage Service(S3), Elastic Compute Service (EC2), Simple DB, Simple Queue Service(SQS). The S3 is a basic interface for storing and retrieving data from anywhere on the web. The technology used for the S3 is similar to Amazon’s internal operations which allows access to unlimited amounts of data and secure storage at multiple locations. Securing multiple copies at multiple locations allows access to files even in the case of a data storage center going down or a security breach at a data center where the data center can be shut down. The files can be brought back using other locations. Microsoft used the S3 as an example to distribute copies of Windows Vista. The EC2 is a web service that provides resizable computing capacity in the cloud. It allowed the developers to quickly scape up or down and could be used with the S3. Powerset and AidRSS are both companies that made use of the scalability of the EC2. When there were higher levels of traffic, the EC2 was ramped up and then slowed down during periods of slower traffic. Simple DB is a web service for providing real-time look up and searching of structured data. It provides an easy-to-use alternative to sophisticated relational database operations with a fore functionality of a database. SQS is a scalable hosted queue that stores data messages as they travel between applications. It store messages in transit while still able to perform different tasks.
A company would use these services from Amazon instead of maintaining their own infrastructure because Amazon’s services provides reliability, pay-as-you go service which does not require much IT infrastructure costs for the company. Amazon’s service is also very scalable and easy to use which allows smaller companies to have quick start-up times.
The pros for the hospital to use Amazon’s services would be for the secure storage of patient’s information provided that they are HIPAA compliant. The con would be that the hospital already has IT infrastructure present and so switching from the hospital’s own IT infrastructure to Amazon’s would create the loss of jobs and a waste of money since there is no infrastructure needed to be built(just upgrades). -
The four major web services include: (1) Amazon Simple Storage Service (Amazon S3) – An inexpensive option for storing and grabbing an infinite amount of data with the same technology Amazon uses for its own operations; (2) Elastic Compute Cloud (EC2) – A cloud-based scalable storage service; (3) SimpleDB – A web service to be used with S3 and EC2 that serves as a database that’s simple to understand and use; and (4) Simple Queue Service (SQS) – a scalable service where developers can store and easily move data between components and allow for easy retrieval of that data from those components.
A company could choose to use these services because it’s less expensive than keeping (building and maintaining) its own data center. Amazon has already done the hard back end work (building IT architecture, adding scalability, etc.). According to the website, one can be completely ready to begin operations in less than 20 minutes after beginning the process and be ready to get to market much faster than if they were to develop and maintain their own infrastructure.
My company, like so many others, is constantly researching ways to reduce costs. If using AWS is in fact less expensive than the company operating its own data center, this would definitely be a benefit for the company. Depending on the amount, the dollars saved could be allocated to other company resources. For example, our company is in need of qualified billable staff in addition to what the company considers to be OH staff. Or perhaps these dollars can even go toward office equipment including new/better company-issued laptops, production equipment, etc. I’m a fan of cloud-based solutions, but would be just as concerned about security initially as others. Also, if, for whatever reason, AWS becomes unreliable, unstable or has other service issues, this could be a problem for the company’s employees. Our company would be relinquishing a great deal of control with no guarantee that we will never run into service issues we cannot fix from our end.
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Amazon has focused their effort in twelve services, but the Infrastructure Web Service offerings are; Amazon S3, Amazon EC2, Amazon SimpleDB, and Amazon SQS. S3 is a data back up and retrieval service, EC2 allows customers to use computing resources in the cloud, Simple DB allows for simplified look up of remote data and SQS allows developers to move data back and forth between applications. There a couple of specific reasons to use these services. S3 can remove the onsite backup burden that exists in organization. Customers have struggled with redundant back u of operations via tape or back up server and while it is a means for business continuity and covers a potential disaster recovery need. EC2 would be an excellent option for companies that are engaged in a one time project based. The use of the service can eliminate the need for technological resources as part of the project. My company would benefit from both S3 and SImpleDB. We use a shared drive for information that is rarely updated and never accessible unless in an office and on the network. This would allow the reps and technicians to have real time access to resources. SimpleDB wold enhance that capability even more
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The four major ” Infrastructure Web Services” are Simple Storage Service (S3), Elastic Compute Cloud (EC2), SimpleDB, and Simple Queue Service (SQS). S3 provides an interface for storing and retrieving data from the Web (pg 6), allowing developers to securely store and access huge amounts of data for very low cost. EC2 is a cloud-based service offering flexible computing capacity within Amazon’s environment. Simple DB offers an basic database intended to be used in conjunction with S3 and EC2, which allows instant look up of structured data. SQS allows developers to “move data between distributed application components performing different tasks, without losing messages or requiring each component to always be available.” (pg 7). Essentially it allowed applications to send and store messages each other.
The biggest advantages to these services are the ability to quickly scale without needing significant capital, and the flexibility it offers in volatile markets or demand. It’s similar to using temporary employees in manufacturing. The pros are lower cost and a more elastic workforce. This allows a company to easily add or remove labor (cost) as demand changes, without the time, cost, and headaches associated with hiring and laying off employees. Amazon is offering the same pros. The biggest con would be additional risk associated with relying on a third-party supplier (what if their servers go down?).
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The four major web services described in the case are: Simple Storage Service, Elastic Compute Cloud, Simple DB, and Simple Queue Service. Simple Storage Service is exactly what the name describes – Amazon hosted online storage with an Amazon designed interface. Elastic Compute Cloud provided internet based computing using Amazon’s computing environment. It was designed to work synergistically with S3. SimpleDB is, again, what its name implies. It is a simple lookup and query enabled database that could be used in conjunction with other AWS services. Simple Queue Service is a web-based queue that stores data messages as they move between applications. All of these services offered excellent scalability and allowed customers to pay for only what they used.
These services would offer various pro/con tradeoffs depending on the current state of the business using them. The majority of the pros come in the form of cost savings. There is no need to buy, install, and maintain a complex IT infrastructure. This saves not only the cost of the hardware and software, but also the labor costs to maintain it. Additionally, it provides simplification. Getting a new business up-and-running would be much less of a headache if much of the electronic storage, computing, etc. could be “outsourced” to Amazon. These pros, I believe, would be greatest for new and small companies.
These services also have cons. Not in the services themselves, but in what is potentially lost by relying on these services. What a company get large and complex enough, the time will likely come when they will have need of deep IT expertise. If they have been relying on AWS, they may not have developed this expertise and might find their growth hampered by this. Additionally, should they then find themselves in need of their own data storage and computing capabilities, they will not have even begun developing the necessary infrastructure. They will find that beginning from scratch is a much more expensive proposition than simply upgrading an already existing system. Additionally, overdependence on outside services, such as AWS, could lead to some pretty big headaches should those systems fail.
The company I currently work for certainly has large-scale data storage needs with multiple systems that need to be in constant communication. There are certainly flaws in these systems, especially with the communication, that could benefit from such web-based services. And while it might be beneficial to study these systems and implement similar ones, the company is sufficiently large to both justify and need its own IT expertise and infrastructure. -
The web services are the Simple Storage Service (S3), Elastic Compute Cloud (EC2), SimpleDB and the Simple Queue Service (SQS). S3 provides data storage and can be used with EC2, which is the cloud computing interface. Simple DB is another service that can be incorporated with S3 and/or EC2 and acts as a database. SQS is a communication application used to manage data messages. These services are appealing to a company because they require less start-up resources and would allow for capital to be invested elsewhere. Furthermore, they have the flexibility of scaling up or down easily. The pros of using Amazon’s services would be the security component and that it could aid in compliance with HIPPA regulations in a healthcare setting. Additionally, it would be a way to archive large amount of data. The con would be that I’m unsure as to how it could be integrated with existing IT infrastructure of a health network or if it is compatible with electronic systems that are already in place.
Huckman, R. S., Pisano, G. P., & Kind, L. (2008). Amazon Web Services.Harvard Business School Case, (609-048).
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The four major web services described in the case were described by Amazon as infrastructure web services. In alphabetical order they were; Amazon Elastic Compute Cloud (Amazon EC2), Amazon Simple Database (Amazon Simple DB), Amazon Simple Queue Service (Amazon SQS), and Amazon Simple Storage Service (AS3).
Simple Storage Service allowed data to be stored and retrieved from anywhere on the web via a basic interface. Unlimited amounts of data could be stored and accessed using Amazon’s S3.
Amazon’s Elastic Compute Cloud, as described by Amazon, was a “a Web service that provided resizable computing capacity in the cloud” and was available on demand through the internet.
Simple Database provided real time lookup and querying of structured data, such as relational databases and spreadsheets.
Simple Queue Service stored data messages as they traveled through applications, which allowed components of an application to send messages to other components and created a place to store these messages for pick-up by the consuming components.
The reason a company would use these services from Amazon instead of maintaining their own infrastructure depends on the circumstances and needs of the particular company. But for many companies, using Amazon’s proven platforms saved them a lot of time and money. Time and money which would otherwise have to be invested building and maintaining the infrastructure, instead was available to the company to invest in furtherance of other business purposes. Plus, Amazon had aggressively priced these services to make them even more attractive as a cost saving alternative to a company building it’s own infrastructure. Another feature, was the scalability of the services, such that a customer/client would be able to almost instantly scale up or down the capacity they needed as required.
I am a medical school student but I am also a founding partner in a fledgling start up company that is not yet at the point of needing these types of services. However, when that time comes, it seems apparent that, at least while the company is new and growing, we will likely use services such as Amazon’s to save precious investment capital for other purposes. The only “con” I see at this point is the possibility of becoming too reliant on it. -
The four major web services that are offered by Amazon.com are: Simple Storage Service (S3), which provided a basic interface for storing and retrieving data from anywhere on the internet. Developers could store and access unlimited amounts of data using the same technology created for Amazon’s internal operations. Next is Elastic Compute Cloud (EC2), which is a web service that provided resizable computing capacity in the cloud. This service is available on demand through the web, which allows developers to run on Amazon’s computing environment. Third, is Simple DB, which is a web service for providing real-time look up and querying of structured data. This was designed to work in conjunction with S3 and EC2. Last, is Amazon’s Simple Queue Service (SQS), which is a scalable hosted queue that stores data messages as they travel between applications. This service allows developers to move data between distributed app components performing different tasks without losing messages or requiring each component to be available.
A company would use the Amazon platform because it is an established and reliable infrastructure. It would save time and money on having to maintain their own hardware and software. With Amazon’s pay as you go feature, you would only pay for the services you are being provided at a fraction of what it would cost you to maintain.
The pros of using Amazon services would be having a fast and reliable service. Likewise it would save on the costs of employee’s salaries and benefits as we would not need as many to maintain our infrastructure. This is also a con because in our business, we have a real need for an extensive IT staff with different areas of expertise. We are constantly looking to expand and grow and we would be unable to do that without having diversified knowledge. The biggest con for my company is possible security risks. We maintain millions of customer’s credit card and personal information and not maintaining that on a secure personal network could result in exposure of this information. While our customer’s access some of our services via the web, they are all linked to our very secure company database to reduce risk and maintain their privacy.
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Steven L. Johnson wrote a new post on the site Discussion for Last Name Starting H-M 9 years, 7 months ago
What are the four major web services described in the case that are offered by Amazon.com? What does each service do?
Why would a company use these services from Amazon instead of maintaining their own […]
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The article describes four major services described by Amazon as “infrastructure web services;” Amazon simple storage service, Amazon elastic cloud compute, Amazon simple database, and Amazon simple queue service. Simple storage service offers offsite storage for data from any company, start-up, or developer, anywhere on the web or around the globe. For small companies, this provides an opportunity to build data and memory in a completely scalable, “pay-as-you-go” basis without the cost of purchasing servers and maintaining storage. Elastic cloud compute serves as an extension to simple storage service, providing computing resources that can manipulate the stored data and be used by developers on a “per use basis” to build new web applications. Simple Database was exactly as described, a “simple database” that could be used for handling and manipulation of material in the storage and cloud computing services. Simple queue serviceis harder for me to define, as I am not a developer or IT specialist…I would simply restate from the HBS care review, this service “allowed components of an application to send messages to other components and created a place to store these messages for pickup by the consuming components.”
For small start-up companies and web developers, the attraction of these services is their low cost and complete scalability. Unlike other services available elsewhere, there was variable pricing and little if any up front costs and no minimums. For larger companies, these services allowed them an alternative to expanding their own storage facilities and buying additional servers and physical plant. In some cases, the Amazon web services may have even been less expensive than for these companies to expand their own facilities.
Our practicce, the Rothman Institute, is a large musculoskeletal care practice. We store data from over 500,000 outpatient visits per year and 40,000 surgeries. We have substantial backup capabilities in servers around the city. These services would be attractive to our practice, assuming there are no issues of privacy and HIPPA that may be violated by using third party services for storage of Patient Health Information.
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Alan,
You final comment about HIPAA would be the biggest concern from my firm as we handle a lot of protected health information. We routinely take steps to make sure our network is secure, so to get our Partners on board with Amazon seems doubtful. But if we could guarantee there are no issues I could see value in the scalability and pay-as-you go approach. I would be most interested in storing data from our consulting engagements so that potential clients can quickly look up outcomes and current consultants can look up different approaches that may help when confronted with an unexpected barrier. The other concern would be protecting the confidentiality of clients.-
Will – What is your perspective now that there have been companies like Anthem who lacked an ability to maintain appropriate security and data controls. In my mind I would much rather trust my data to that of an Amazon who is a technology company that can spend 100s if not 1000s of times as much as your organization could on data privacy and security. I’ve been to data centers for hosted environments and they look and feel like Fort Knox. I’m seeing a future where companies don’t want to be in the data privacy area and want to offload that need to companies that are selling technological solutions for data security and privacy. Organizations do better when they focus on what they are experts in.
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Alan, Will and Michael,
I appreciated your posts. I am not in the hospital industry but I think that one thing that would deter me from Amazon is the amount of users and businesses they support. Perhaps someone of Amazons stature could create a separate venture that only supports Hospitals. This way they could provide the resources that Amazon currently has but then also be able to customize their services to provide the personalization, security and privacy that Hospitals need. There may be other services out there that already do this but to Michaels point, do they have the capability of Amazon? Michael, you mention the future where companies don’t want to be in the data privacy area…do you think that is from a liability perspective?
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Michael,
I should clarify my initial post. I am with you when it comes to focusing on what you are an expert in. We are a healthcare firm and that’s what we do. When it comes to IT we outsource, but we do not use cloud computing. To get the Partners to move to cloud computing would be a monumental shift regardless of how logical or secure things are.
When I look at Anthem, they appeared to be a little arrogant in thinking they had things under control, but maybe we fall into that same boat because we think our security is up to date.
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The following web services were offered by Amazon.com:
· Simple Storage Service (S3): basic interface for storing and retrieving data from anywhere on the Web
· Elastic Compute cloud (EC2): Elastic computing capacity in the cloud
· Simple Database: Web service for providing real time lookup & queuing of structured data.
· Simple Queue service (SQS) : Hosted queue that stored data messages as they travel between applications.These services are ideal for any company because it provides the business with the tools they need without having to build the infrastructure or spend a large amount of money. Many of the developers thought the services allowed business to get to the market faster than they would otherwise. Most companies like that the services were cost effective and had no significant upfront capital expenditures, it was essential a pay for what you use service. The services that Amazon provided were also regarded as being reliable, simple, and scalable. The services provided were also easily customizable and had the ability to meet multiple requirements.
Implementing these services would have several pros and cons for the company I work for:
Pros – The scalability and customizable attributes of the service would make this very attractive for my company. We have large markets in the US and UK, as well as multiple locations globally. Each location has specific needs and requirements that need to be implemented in storing data. Having the ability to curtail our needs with one system makes it ideal.
Cons – The industry we are in is very competitive and we need to ensure that if we utilize this service that other company’s wouldn’t be privy to the data stored. We would be concerned that the data could be easily hacked and we would need assurances that there are security measures in place in the event of such a situation. Our businesses are very complex and span a global community so we would need to ensure that Amazon’s services could be accessed and supported in all of our global locations.
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The four web services are as follows:
Simple Storage Service (S3)- Allowed for Storage and Retrieval of Data from anywhere on the web
Elastic Compute Cloud (EC2)- Allowed computing capacity that could be expanded or downsized as needed
SimpleDB- real-time lookup and querying of structured data
Simple Queue Service (SQS)- Stores data messages as they travel across applicationsI had to think real deeply about this question, as I am removed from the corporate building and don’t have day to day interactions with the IT department, but as I thought, I realized that this would lead to a pro for using Amazon’s Services, namely S3. Through that system, Information and applications could be efficiently be used across everyone across our company, no matter where they are. Our register system can be updated using this system when needed. I have seen the efficiency of a system like this through our use of Office 365. The cons of using a system like this is if the network goes down or you don’t have access to the internet available. This can cause business interruptions. Our company uses a VPN and I have seen the problems that a network issue can cause. It would be on a much wider scale if we go purely cloud based and are not able to run our applications effectively.
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Brandon – recently my company had a discussion about moving to cloud computing. The sales and marketing staff were very excited mainly for the benefit you mentioned – updating our system in real time. However, I am in the accounting department with a greater need for historic data. So I was very concerned about the system going down and not having the relevant data available, but I am told that there would be great cost saving and the benefits will outweigh the risk. In the past, I’ve used both PeopleSoft and Great Plains (platform systems) so I’m a bit more skeptical.
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Brandon,
Great post and I hadn’t even thought of using these services as a backup in case internal services go down. One of the services I thought could be especially valuable was the use of Amazons flexible pay system. By allowing third party companies to use this pay system, Amazon is basically giving you access to their full range of partnerships with credit card and bank processors. This could be beneficial for smaller companies without internal systems already set up for transactions. -
Brandon – interesting post. I think you make a good point. Some businesses cannot operate purely on cloud computing. I am also very aware with the network issues associated with VPNs as my company uses them as well. I would be very concerned that having any internet disruptions could cause a lot of issues, especially when all of the company data is virtual. I think that there should be some back up in place.
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Amazon Simple Storage Service (S3) – Offers a basic interface that allows you to store and retrieve data, through a hosted service anywhere on the Web. The same technology that was created for Amazon’s internal operations is available for developers to store and access limitless amounts of data.
Amazon Elastic Compute Cloud (EC2) – A basic web service interface that permits developers to obtain and configure capability with the least amount of friction in the cloud. It allows you to run on Amazon’s proven computing environment while providing you complete control of your computing resources. It is highly elastic, allowing for quick scaling up and down, and you pay only for capacity that is used.
Amazon Simple Database (DB) – A Web service providing real-time lookup and querying of structured data. It was designed to provide high availability and flexibility, with minimum to no administration burden. (Pg. 7)
Amazon Simple Queue Service (SQS) – is a scalable, and reliable messaging queue service that store data messages as they travel between other components in the system. Developers can have the ease of performing different task by moving data between distributed application component to another, without losing messages or requiring the availability of each component.
Companies would use these services from Amazon instead of maintaining their own infrastructure because it is cost effective, no up-front expenses, no long-term contacts, Pay as you go-customers pay only for actual usage, reliability, massive storage space is provided, provides scalable and secure operations, elasticity, Amazon’s platforms allow consumers to build their own applications, comprehensive solutions, amazon can incorporate its services with customer’s previous solutions to provide even more cost-effectiveness.
Pros – My agency (Mental Heath) could benefit using Amazon services because it is flexibility, very easy to start up. Major upgrades on new hardware systems could be connected in an inexpensive and simple way. Set up cost would be at a minimum because my agency could use the same account that is used to order items from amazon, in just a click of a button. My agency would only pay for storage that is actually used, dramatically lowering operational overhead, which decreases the need to hire a lot operational staff. The agency’s information would be managed using Amazon’s online service, which provides unlimited storage and a simple and easy way to navigate through their system. Data are kept secured from unauthorized access through an authentication instrument. Data is accessible from any location.
Cons – It may pose a problem for my agency because virtual hardware doesn’t last as long as actual hardware, and challenges with security controls in the cloud may arise. Actual hardware could be protected by firewall on the premises but if an old disgruntled employee has continued access to the system through the virtual hardware (provided by Amazon), they could make changes from the outside. My agency may not be comfortable storing information to the cloud, especially with sensitive and confidential information (i.e. client files-Hippa). My agency may have security and privacy concerns, because the data is controlled by amazon
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Shenita, I agree that these privacy and control issues are quite vexing when it comes to health information, which is universally protected under the HIPPA statutes. It seems that although health care provision and management is being pushed towards electronic services, we are not really able to handle the material the same way as other businesses. I did not really want to go on to gripe about the problems of forcing EHR on health care providers (I think several of us did so in the past two weeks…!) but I really just wanted to commiserate with your comments regarding the limitations of cloud access with respect to health information.
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Hello Alan, thanks for your response.
If it was a way that certain companies (i.e. healthcare) could use Amazon Web services without jeopardizing the exposure of sensitive information, by meeting additional requirements and expecting them to adhere to government regulations pertaining to the protection of client’s personal data; so that companies hosting the cloud can’t control, monitor user activities at will and/or have access to the data in the cloud; could be very expensive.
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The four major web services described in the case include:
1. Simple Storage Service (S3) – This service provides access to cloud-based data storage, with a simple interface for storing, retrieving, or transferring data. The cost for this service is usage-based.
2. Elastic Compute Cloud (EC2) – This service provides online access to computing capacity, which gives users quick and relatively easy access to cloud-based servers. The service eliminates the cost and effort of purchasing and installing their own hardware, and can be started, stopped, or scaled at any time based on the options selected.
3. SimpleDB – An online program that provided basic database functions (lookup and querying of data).
4. Simple Queue Service (SQS) – This is a message queuing service that stores and transfers data between applications.
A company may use these services as opposed to maintaining their own for several reasons.
First, they are quickly scalable. This enables companies to respond rapidly to growth. The article notes one company, Animoto, whose membership went from 25,000 to 250,000 in three days. The scale-up capability of computing power enabled the company to keep up with demand and grow.
Second, the services are cost-effective. AideRSS, as noted in the article, was able to save $12,000 per month by using AWS services rather than set up their own hardware and develop their own programs. Linking cost to scalability, AWS allows users to scale up or down and only pay for what they need and use. Whereas purchased equipment has been paid for, AWS services are pay as you go, so in slower months, costs are lower.
A strong pro of using AWS in my company would be access to storage space, as well as AWS backup features. We are currently moving to paperless but have retention requirements for data, leading to the need for a lot of space. The usability of SimpleDB would also be helpful as much of the data needs to be cross-referenced frequently.
A potential con of using AWS is that I’m unsure of its interaction with other programs, such as Oracle. I do not know for certain if the systems we use would require us to have hardware at our site, in which case there would be redundancy in using a cloud-based system as well.
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Dan, great discussion and summary of the case. Essentially the decision to go with web-based services comes down to a present value analysis. For a start-up company, while the initial cost of the infrastructure requirements would be high, once established the maintenance costs become relatively low. The question is whether these costs would be lower than paying for the AWS equivalents, and whether this PV analysis would favor purchasing or subscribing in the long run. It seems to me that Amazon could likely enjoy lower maintenance costs for reasons of scale economy; whether these savings are passed on to the user after their markup is one potential concern. The other consideration is flexibility because a start-up may not be able to accurately predict the demand for their product or service, in which case going with AWS would offer some obvious advantages.
I agree that using the AWS databasing and query features can offer some great functionality for a business and employees. There may be potential compatibility issues with other existing services such as Oracle although Amazon would likely prefer you switch entirely to SimpleDB instead.
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The four major services described in the case are Simple Storage Service (S3), Elastic Cloud Compute (EC2), Simple DB, and Simple Queue Service (SQS).
S3 allows customers to store information in the cloud at very cheap rates – at the time of writing $0.12-$0.15/GB/mo for storage, $0.10 per GB uploaded and $0.10-$0.17 per GB downloaded. Those prices were similar to, though slightly more expensive than, hard disk prices per GB (e.g. here). However, when you buy a physical hard disk, you are often paying for unused capacity. In other words, you may by a 2 TB hard drive, but only use 800 GB of it, meaning you bought 1.2 TB too much memory. The beauty of the S3 is that you only pay for what you use, which makes it scale much easier.
EC2 instances allow developers to flexibly start up and spin down programming environments.As Bezos mentions in the article, that means you can have access to a top of the line server at $70/mo OR access to 700 servers for one hour for the same price. As with the S3 storage, this allows incredible flexibility and you only pay for what you use. At my company, we EC2 instances all the time do our analytics, which has proven much cheaper than buying new hardware to manage our systems.
SimpleDB is allows EC2 instances and S3 storage to “talk” to each other. By using SimpleDB, you can access information you’ve stored on S3 through an EC2 instance, again completely scaled to your needs, providing a cheaper alternative to running an Oracle database in the cloud.
SQS allowed developers to create a queue of messages to be delivered at a later time to a new component or instance. Again, this allows developers to build scale, this time by allowing separate components to build work queues before spinning up an instance to run through all of the work orders at once. As with all of the AWS systems, this gives you the ability to only pay for the machine time you use.
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The four major services offered by Amazon described in the case are: Simple Storage Service (S3) – a platform for storing data and retrieving data from anywhere on the web; Elastic Compute Cloud (EC2) – a web service that enables developers to build computing capacity through Amazon’s cloud based environment; Simple DB – a database program that provides real-time lookup and querying of structured data; and Simple Queue Service (SQS) – a system that provides a queue to copy and store messages while they travel between applications.
The main reason I see for companies using these programs through Amazon is the ability to build capacity without increasing capacity. As noted in the article, the services are priced by Amazon to get as many people using them as quickly as possible so there is a recognized cost savings in using them. The cost savings is also recognized by companies as they don’t have to invest in equipment such as servers for their data. In addition, using these services often eliminates a company’s need to hire significant staff because, again, the Amazon resources provide capacity building capabilities for startups and other developers.
I am not very familiar with any of the processes mentioned other than what was provided in the case study. But, it reminds me a little bit of the IT Investment discussion from last week in that having these resources available as a developer or early stage company will help alleviate the pressure to over invest in capital, human or otherwise, that might not be the best way to invest during earlier stages of a project or company. -
Four major web services are described in the case:
– Simple Storage Service (S3): A pay-per-use cloud-based storage and retrieval system. It gives companies the ability to quickly scale their storage and retrieval capabilities based upon real-time need, and also provides those companies with necessary redundancies (companies’ objects are duplicated and stored in multiple locations) to keep their data safe. It saves companies the necessity of investing in storage-related infrastructure (hardware, people, software, etc.) and the built-in redundancies provide a safety net companies may overlook.
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– Elastic Compute Cloud (EC2): A pay-per-use cloud-based service that gives companies access to as much processing capability as needed based on real-time demand. Like other AWS products, a company’s use of EC2 services is automatically scaled up or down based on current need, and companies are charged based upon usage. It gives companies access to processing speed and power they likely would not be able to provide on their own without a major investment of time, money, and people.
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– SimpleDatabase (SimpleDB): This service works in conjunction with S3 and EC2. SimpleDB is a cloud-based structured database that provides the functionality to look-up objects stored on S3, query them, and return a response (object) based on the lookup and query, all using the processing power supplied by EC2. The web-based structured database isn’t designed to replace more advanced databases, but instead to provide quick responses. Similar to EC2 and S3, SimpleDB charges based on actual use, and also charges a monthly storage fee based on the size of the structured data being stored. Like the other AWS services discussed, it automatically scales up or down depending on real-time need.
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– Simple Queue Service (SQS): This cloud-based service provides a place where messages can be stored as they travel between applications. The scalable nature of SQS means that developers do not need to worry about losing crucial information as it travels between applications (for example, using SimpleDB to query something in EC2) because the service automatically scales up or down as needed. On the customer end, the behind-the-scenes scaling means a person is less likely to get an error message or a “timed out” message when using something that is taking advantage of SQS in conjunction with other AWS products. SQS charged based on actual use.
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The main advantage of AWS products is the scalable nature of each of the services. AWS automatically scales the services based on real-time demand, which means companies can ramp up much faster than they could on their own. For start-ups and most businesses other than large corporations, cost is another advantage. The resources required to develop and maintain data centers based on potential demand are tremendous, and often beyond reach. The case study used the example of a start-up that estimated it saved about $12,000 a month. For a start-up, that is capital that can used to promote the product, hire great people, or pay rent. Additionally, Amazon can take advantage of its existing relationships with hardware, software, and bandwidth providers, and pass some of those savings along to its users. A third advantage is the built-in redundancies associated with each of the AWS products – data is duplicated on geographically-different servers, meaning if something happens to one location that renders those servers inoperable, the data is still available and ready-to-use in another location, reducing down time to nearly nothing. Building and maintaining that redundancy individually is a costly enterprise, and usually out of the question for start-ups and small businesses.I used the following sources to help develop my explanation:
– http://aws.amazon.com/simpledb/details/
– http://aws.amazon.com/sqs/details/
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Why would a company use these services from Amazon instead of maintaining their own infrastructure? What would the pros and cons of using Amazon’s services be for the company you work for?
-Companies would select Amazon’s infrastructure services because they are scalable and they are affordable. Compared to some other large software/hardware companies, Amazon remains by far the cheapest. One benefit of this is that it significantly reduces the cost of capital required to start a new business or test a new system process.
As I was reading about these services, I continually thought about how applicable these services would be in a hospital setting. I think hospitals, and specifically Temple, could directly benefit from these services. Currently, hospitals spend millions to build out large date networks, but then struggle to afford regular updates and maintenance efforts. Additionally, hospitals spend small fortunes outsourcing management of these systems. Many hospitals employ small internal IT staff and then outsource the larger tasks. At Temple Hospital, the networks are particularly slow.
The pros to using Amazon’s services would be reduced costs and transfer of the management of hardware to Amazon. Additionally, the health system would benefit from the efficiency of powerful servers that are state-of-the-art.
There are some cons, however – in particular is whether these Amazon databases are HIPAA certified and compliant. Also, one would need to consider the security of these services.
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I’m still so surprised when people are concerned about security of something like a amazon web services. If you take a look at the following link http://aws.amazon.com/compliance/ you will see all of the assurance programs that Amazon participates in. There is no company not focused completely on technology (like a google) that could even consider competing with being more compliant and meeting more industry regulations when it comes to data privacy and protection. To simply put Amazon has basically written the book on data privacy and security and has 2 whitepapers focused on using AWS that are HIPAA focused, including creating HIPAA-Compliant Medical Data Applications with AWS.
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Michael – I’m not in the health care industry, but do have a question for you related to HIPAA since you obviously have technical expertise related to this week’s discussion. If people are using AWS for HIPAA-related storage, wouldn’t they also need a secure connection between AWS and whatever device the records are being viewed/edited/etc in addition to the secure AWS services, or is that encryption (between AWS and the end user) part of the connection already? I think what I’m really trying to ask is this: How does the end-user’s access (device, connection, etc.) of information from AWS services impact the security of the data?
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Great question because your data is only as secure as the weakest link. The connectionsmto these services are encrypted and secure regardless of the device you are accessing it from, but where it becomes a risk is where you start seeing people use devices that have key loggers, Trojans and viruses that essentially leave your connections and passwords at risk. I always forced my users that have any enhanced access to connect from a company device that I know has updated software, virus scanners and the entire drive is encrypted. Simply put the connection is secure but local computers need to be protected.
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A company would likely use Amazon’s services instead of creating their own infrastructure as a way to cut IT costs, especially if usage or storage rates were minimal. The family business I work for is certainly not in a financial position – nor is there a need – to invest in our own network storage or heavy computing infrastructure. However, we would certainly consider investing in web-based services such as those offered by Amazon on an as-needed basis, in order to either store important information (S3), or create company systems using the elastic computing services (EC2). SimpleDB could also be a valuable tool for organizing and storing employee and customer records in a secure and centralized location. Ultimately I think small businesses or even larger companies without a constant need for these services would find them valuable, to use on an as-needed basis.
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The four major web services described in the case that are offered by Amazon are: Simple Storage Service (S3), Elastic Compute World (EC2), Simple Database (DB) and Simple Que Service (SQS).
S3- A very basic cloud based interface for storage and retrieval of data from anywhere on the Web that utilizes a pay per use pricing model.
EC2- A on demand cloud based web service that provides sizeable processing capacity on an as needed basis utilizing a per per use pricing model.
DB- is a cloud-based structured database service that works in conjunction with S3 and EC2 to look-up and query stored data.
SQS – This cloud-based service provides a place where messages can be stored as they travel between applications.
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– Simple Storage Service (S3): Allows customer flexibility by providing a pay-per- use cloud storage system. S3 streamlines processes by storing and providing readily accessible information. This enables the customer to free up capital as it alleviates the need to invest in supporting infrastructure needed to accommodate this type of service.
– Elastic Compute Cloud (EC2): Allows customer flexibility and accessibility as a pay-per-use cloud-based service providing processing capability based on demand that would otherwise not be obtainable without a significant investment of capital and resources.
– SimpleDatabase (SimpleDB): Cloud-based database that allows the customer to look up data and request information. Advantage is speed based on Amazon’s processing power.
– Simple Queue Service (SQS): Provides the customer a means to store data as it transfers between applications. This can help prevent the loss of information during transition.I think it really comes down to what industry you are in as to whether or not Amazon is a good fit versus your own infrastructure. Reading some of the posts, a lot of people in this class are in the Hospital industry. While Amazon’s services might make sense, there are other variables such as security which is a concern. I think a company uses Amazon services instead of maintaining their own infrastructure for a variety of reasons. The main reason is that the services allow you the ability to grow if needed but only requires you to fund exactly what you need. It allows you to be flexible with your capital and with your resources such as people and time. The result can be significant cost savings. If you are a start-up company, you may not have the capital to build an adequate supporting infrastructure. Amazon services provide companies with access to premium processing speed and data storage at a relatively low cost. Amazon services also provide comfort in knowing that you data will be available because the data is reciprocated within their systems. Working for GE, I don’t think that Amazon’s services would best suit us. For one, we are in a position to fund our own infrastructure. Most importantly though is the security of proprietary information. From a GE perspective, if you have the funding and resources it is best to ensure your own security then it is to rely on an outside party.
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Why would a company use these services from Amazon instead of maintaining their own infrastructure? What would the pros and cons of using Amazon’s services be for the company you work for?
Three words come to mind when I think why would a company use the Amazon services instead of maintaining their own infrastructure.
1) Cost – You don’t need to maintain a large IT staff, nor hardware. You now just pay for exactly what you need and can add when you need to.
2) Reliability – From my experience the uptime on Amazon services are substantially better than the typical uptime of software and hardware you are hosting internally. You are dealing with a firm that specializes as opposed to one that does technology to keep the lights on.
3) Scalability – When you need to increase either computing power, space or services it’s essentially checking a few boxes and paying the bill. You don’t need to keep additional servers, routers, software on hand in order to be prepared for a what-if scenario. It’s ready whenever you need it.At the firm I work for we are starting to move technology to the cloud. We find it to be quicker to release upgrades, less expensive to manage, extremely reliable as opposed to the old lotus notes databases and extremely feature rich focused on offering high functionality that is simple to use.
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Hi Mike,
Your post is a good summation of reasons why Amazon services can be utilized over a company’s own infrastructure. While reading the case I kept thinking about the cost savings for a company and how the cloud diminishes reliance on servers. Also, the reliability of Amazon’s services lets a company focus on profitability measures like increased marketing and sales. I work in healthcare so HIPAA regulations dictate that Amazon’s services can’t be used. But for other company’s not bound by strict regulation, the service is beneficial and should be utilized for maximization of IT resources.
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The four major web services offered by Amazon are Simple Storage Service (S3), Elastic Compute Cloud (EC2), Simple DB, and Simple Queue Service (SQS). Each offering provides services to developers, with S3 and EC2 identified as the two largest. S3 provides basic, secure storage capabilities for data. EC2 provides computing capabilities in a cloud-based environment. SimpleDB offers basic database capabilities that work together with S3 and EC2. SQS hosts data messages between different applications.
Two main reasons come to mind for a company to use these services: cost and speed to market. Several examples are presented in the case that suggest that companies realize tremendous saving by not needing to build their own, nimble, robust infrastructure systems for storing and managing data. Furthermore, a company can get to market much faster by focusing instead on its own differentiated offering.
I think this is summed up well by Jassey in the case: “… having reliable, scalable, inexpensive storage or computing doesn’t differentiate their business … [but if they don’t have it] they are dead on arrival.”
My company already has extensive data and computing systems built, but I could see Amazon’s AWS offerings being particularly useful for new initiatives, especially for ones that do not need to rely on the full technology platform. It is a secure, heavily guarded system, and so accessing it can be a difficult process. In Marketing, if we want to pilot a program, I could see us using Amazon’s offerings. It would allow us to try out a program in an inexpensive, quick way, without needing to commit the full resources of the company. -
In 2008 Amazon Web Services (AWS) was actually offering twelve services, seven of which are described in the article. Four of these could be described more as products whereas the other three were more for support or to augment the other services. The four major services then are Simple Storage Service (S3), Elastic Compute Cloud (EC2), SimpleDB, and Simple Queue Services (SQS). S3 was essentially a pay-as-you-go online storage system, EC2 was a flexible cloud computing interface, SimpleDB was used to run data queries, and SQS provided a messaging service.
The advantages to using AWS are similar to the other cloud computing discussion questions. Companies can outsource their IT and computing needs and thus maintain fewer employees and smaller infrastructure requirements. In addition businesses can enjoy much faster (almost instantaneous) start-up and expansion times. The main disadvantage is cost as these services are not cheap, although they do seem reasonably priced especially when considering all that is offered. Another disadvantage is that the businesses don’t have palpable control of their own data and services, and in the off-chance that the Amazon “cloud” should experience a glitch or go down, the firm is at the mercy of their IT specialists to get it back up and running again. The trade-off really is a trust issue; instead of relying on your own IT specialists for security and reliability, that trust must be transferred to Amazon who, although they may be more capable, are a faceless corporation rather than “Tom in IT” who you know and can talk to directly.
My company could never use AWS for a variety of reasons. First and foremost, the data we utilize to perform clinical research is covered by the Health Insurance Portability and Accountability Act (HIPAA). By law this data must be kept safe and protected with a number of regulations in place regarding access and security. I don’t imagine any cloud service would meet these qualifications, although that may change in the future as the government increases it’s online presence and gains comfort with the idea of cloud-based storage. The other data we access such as operation reports, discharge notes, office visits, radiographs and imaging results, could likely not be stored on the cloud for similar reasons. The main advantage to a cloud-based service would be accessibility and flexibility as physicians, researchers, and other ancillary staff could access information from home. The company I work for already offers remote access to most of the services however. Another advantage might be cost; if Jefferson and/or Rothman could do a cost-benefit analysis they may find subscribing to AWS cheaper than maintaining their own pool of IT specialists and computing infrastructure requirements. However I see it unlikely they will explore this path in the near future for the security reasons mentioned above. If a cloud service such as Amazon, Google or other were to perform the required tests, lobby the government, and jump through whatever hoops they would need to, and advertise that their network meets the HIPAA security specifications, then certainly I could see some healthcare networks going down that road. -
Many others have commented on the four major web services offered by Amazon, and Mike Jacobson listed the reasons why a company might be interested in this technology, so rather than repeat those observations, I’d like to focus on the pros and cons for my company. However, I can only think of cons. Much like Paul above, my company could likely never use Amazon Web Services due to data security reasons. Our client data and trade data is too important to risk it falling into the wrong hands. Cloud technology has been around for a number of years now but there are so many unknowns about who might be able to access the data (malicious or otherwise), what would happen if the virtual server went down, and future cost considerations. AWS seems reasonable now, but what if the day comes when we have all of our data on it and Amazon decides to hike the price to unreasonable levels. We would be left scrambling to find an alternate storage strategy. All of these reasons make AWS an unlikely candidate for a company like mine. Certain groups within the company have recently begun investigating Hadoop for “big data” number crunching, which is a huge step for us because it hasn’t been around that long and is open source. Depending on the results from this experiment, we may explore other new technologies down the line, provided the security component is either a non-issue (like Hadoop) or locked down like Fort Knox.
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Amazon’s four major web-based services are Simple Storage Service (S3), Elastic Compute Cloud (EC2), Simple DB, and Simple Queue Service (SQS). S3 is a software interface that allows customers to store and access their data from anywhere on the internet. EC2 provides highly scalable, cloud-based computing capabilities that work with S3. SimpleDB is a cloud-based database allowing real-time lookup and querying of structured data, and which also works with S3 and EC2. SQS is a hosted queue service that serves as a storage area for messages moving between applications on the web, which is also scalable.
All four of Amazon’s cloud-based applications area affordably priced, work on a pay-as-you-go basis, are highly scalable, and are intentionally designed to be easy to start up, and easy to use. Company’s using these services enjoy the distinct advantage of not having to spend precious resources generating huge amounts of “back-end” capabilities that do not specifically help them differentiate themselves from their competition. Companies using Amazon’s services can therefore focus more of their time and money on what will make them successful, rather than on establishing the required IT infrastructure to conduct business. In addition, IT personnel costs can be reduced, and problems of scale can be addressed in very short order, given the flexibility provided by Amazon’s cloud-based services.
As for my company, we are so far behind the times when it comes to IT, just about anything other than what we’re doing right now would be an improvement. However, my particular end of the operation involves engineering and facility management, and in theory, the Amazon services could be a great boost to our work order management processes. Right now these functions are contained within a database whose DOS-based interface is the textbook definition of non-user friendly. At this point, I have to perform double entry (first into an Excel spreadsheet, and then into our database), in order to be able to effectively look up details of previous work orders for the customers who follow up on them. Honestly, most of what I need improved at this point involves the interface, but I’d think that if this information could be hosted in the cloud, that would not only free up a good deal of our server space, but also free up some of our IT personnel’s time to address other areas of the center’s operations.
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Steven L. Johnson wrote a new post on the site Discussion for Last Name Starting A-G 9 years, 7 months ago
What are the four major web services described in the case that are offered by Amazon.com? What does each service do?
Why would a company use these services from Amazon instead of maintaining their own […]
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The Amazon Services described in this case are all part of the Amazon Web Services (AWS) business and include: Simple Storage Service, Elastic Compute Cloud, Simple DB, and Simple Queue Services. Simple Storage allows developers to store and access information from anywhere on the Web. Elastic Compute Cloud provides computing capacity in the cloud using Amazon’s computing environment and it’s elastic because of it’s ability to scale up and down. Simple DB was designed to work with the first two services and provides real time queries of information. Simple Queue Services was designed for developers to be able to send messages from one application to another and storage the messages. Many companies are interested in using these Amazon services because of the convenience and cost savings they can capitalize on. Amazon has already invested in the technology to develop these platforms and by offering them to others for use they have recuperated their costs and have created a new revenue stream. Outside companies are in turn able to access systems that took millions of dollars to develop at pennies on the dollar. I think people would agree that while this was a nontraditional move for Amazon it was a smart one that is paying off.
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Hi Amanda,
Great summation of the article and view point. I like the idea of Amazon offering the abovementioned services to other companies in order to recuperate their expenses. The one thing that came to mind is once they sell their software and/or systems, who would be in charge of system maintenance? Amazon or the company who purchased the product. Also, would selling their idea to others take away from their bottomw-line? I am only bringing this up becuase once sold, Amazon no longer will be the only company offernig such systems and services; therefore, no longer the leader of the pack. Are they able to recupe the expenses incurred from the services just through their own product sales? The article gave way to many more questions that I would definitely like to research.-
Mori,
Interesting idea. I didn’t get the impression that Amazon was going to sell the systems but rather sell the use of them. I agree with you that if they sell them it could mean decreased revenues in the future. There is definitely a lot for Amazon to consider going forward with this business model.
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It is hard to answer these questions and not be repetitive but I’ll do my best. S3, EC2, SimpleDB, and SQS are the four major services offered by Amazon. S3 is online file storage. EC2 delivers virtual computers for rent, allowing users to scale their usage up or down quickly. SimpleDB provides real-time lookup and querying of structured data. It is supported by Amazon’s database servers. Finally SQA allows developers to send messages of data between components and stores them, preventing the messages from being lost.
The services are enticing to a start-up or entrepreneur that wants to test new technology without spending the money on their own IT infrastructure. It is also scalable which is very appealing in that you are only paying for what you use. A business working on a new technology can test with confidence and launch without having to invest resources to support anticipated demand. Businesses can also focus on their core ideas or other areas without investing a whole lot of money in hardware and IT resources. It isn’t always a good thing. I know bloggers who used AWS servers to host their blogs when they launched due to the low start-up costs. However, those bloggers got hit very hard with fees when stories went viral and the traffic greatly increased to their site. The bloggers weren’t necessarily prepared to pay the additional fees that come with the quick scaling. It is very important to consider those potential costs when using an AWS service.
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Clearly you have a good perspective on cloud services. I talk to many people that get lost in the “cloud” terminology that they do not realize why an Amazon, Google, Microsoft are more than happy to provide the service. You insight will help educate people to realize how many is being made through cloud services. Thanks, great post.
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Hi Eric, I agree it is hard to answer the question again without repeating what someone else wrote. One thing that you mentioned that I never realized was the cost would go up dramatically once the traffic increased. I was wondering though, if a small business did use Amazon, Google, or whomever to start their business up, do you think they could learn from them and then create something that is less expensive and fits their purpose? I would tend to think that once I saw and used others services, I would maybe be able to replicate a similar service that I could use at a low cost or maybe their systems are so complicated it would be impossible for someone with minimal IT skills.
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Eric,
You made a good point regarding AWS and cost. When I read the case study, I saw the numerous cost benefits for start up companies that would result from them using these web services. When using AWS, they really can invest their money in other areas and resources rather than having to put out large up front expenses for IT infrastructure. This can be really appealing to new businesses. However, I agree that they should look at the long term costs that might result as you mentioned. I feel as though that is where a lot of businesses make errors as they look at short term benefits and profit and overlook the long term financial outcomes.
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Yes, Eric, tough to answer this questions and not repeat a lot of what has already been written. AWS includes Simple Storage Service (S3), which is a service that offers an interface to store and retrieve data from anywhere on the web. An example given in the article was that Microsoft used the “space” to store a copy of the Windows Vista operating system to allow wide scale distribution through the web. Another service offered was Elastic Compute Cloud (EC2). EC2 was designed to run in conjunction with S3 and offers users the ability to tap into Amazon’s huge computer resources rather than a company who wants to launch a product needing to purchase and develop resources of that magnitude. A third AWS product was Simple Database, launched in December of 2007. This service offered real time look up and querying of structured data and was designed to work with ECS and S3. Simple Queue Service (SQS) is another AWS product, which allows data to move between distributed application components without the loss of any data. Three other major services were listed under the heading of AWS Services the first of which is Amazon Flexible Payment Service (AFPS). It launched for developers in 2007, allowing them to electronically collect funds. To provide one-on-one technical assistance with S3, EC2 and SQS AWS launched Amazon Premium Support (APS). Amazon Electronic Block Store was launched to allow data storage independent of a customer maintaining and EC2 service. I think it was creative for Amazon to share its extraordinary technologies with developers and established businesses, and it certainly provided additional revenue streams. I generally don’t like to get locked into user fees, but understand that many companies could not get off the ground due to the capital investment needed to launch their product if it wasn’t for what AWS has offered. My guess it is not easy to transfer to a competitor that might offer a similar product, so there is a level of vulnerability associated with subscribing to an AWS. I think my business is too small to utilize an AWS, though it is likely that a company like Carbonite, which I subscribe to automatically backup all my workstations, could be using an AWS and my guess is I wouldn’t know it.
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amendment: the last three services I wrote about are not the four major services we were asked to write about! The first four are the four major services.
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Simple Storage Service is a storage entity that provides multiple copies of data in different locations to prevent loss of the data that can be accessed from anywhere on the web. Elastic Compute Cloud is a system that allows for customizable scaling of computing power through the web. Simple DB is a database that allows for simple look up of data through the web. and Simple Queue Services allows for messages to be sent between locations and then stored.
The benefit of using Amazon’s services are mostly related to scalability and cost. By not maintaining their own corporate infrastructure a company can quickly scale either up or down the amount of computing power necessary to maximize utility. From a cost standpoint The potential savings can be quite large. Without having to spend on IT staff and equipment the company can focus this money on other necessities. Since I work in healthcare I am unsure as to the capability of using Amazon servers due to HIPPA compliance and other medical requirements. If this was not an issue then using Amazon’s services could significantly decrease our infrastructure costs and allow for us to only need iPads at work to view patient charts. That would prevent the need for PCs which we currently have in each patient room. All of our charts could then be stored on an Amazon server which again would significantly decrease our infrastructure costs. other than the HIPPA compliance issue the major con is the situation where there is a loss of Internet in the offices which would then prevent patient from being seen.in this type of scenario the entire day would have to be canceled which not only would be poor patient care but would also cost the practice a significant amount of revenue.
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Why would a company use these services from Amazon instead of maintaining their own infrastructure?
Amazon’s Simple Storage ServiceS3 is a service that companies who do not want to provide the infrastructure for data storage would use. This could be a smaller company that does not have an IT department and houses larger files. At my current job, I license a hurricane catastrophe model and if I was a consultant, I may use this service to store my client’s book of business that would be used to run the model.
Elastic Compute Cloude EC2 is a virtual computing environment that allows you to increase or decrease computing capacity using web service APIs. Back to my example from above, if I receive requests from clients to run their business using the catastrophe model, I would to ensure I have enough servers available to handle the request. Currently, I use 8 servers to run a book of business that’s approximately 1M records (not sure of the size) and it takes about 3 days to produce the results. If I need to run more than one book at a time, I would use this service as it would provide the adequate computing capacity necessary to run the business simultaneously.
SimpleDB allows users to create and store multiple data sets that are easy to query and return results. The data’s automatically indexed so it’s easy to find information. If I was building an online game and didn’t want to worry about data storing data, I could use this service to store the data from the online users such as scores, achievements, user’s settings/preferences, game session status, etc.
Simple Queue Service (SQS) is a hosted queue for storing messages that travel between computers. An example for using this service is an online photo processing service where customers can edit pictures such as re-coloring, cropping, redeye reduction, etc. When a customer adjusts their picture, there is a message that’s being queued into the Amazon SQS where the application stores the revised photos in Amazon’s S3. The message in the queue contains the operation to be performed (e.g. picture is cropped) with the photo processing operation and then points to where the photo is, which is now stored in S3. The photo processing server runs the EC2 instance, reads the messages from the queue, processes the request and posts a status message to the response queue. Then, the customer prints their picture in the comfort of their home without knowing any of this happened!
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The four major web services provided by Amazon are:
1. Simple Storage Service- A storage service that allows users to use Amazon servers to store and retrieve information remotely
2. Elastic Compute Cloud – A service similar to simple storage service except, with the capacity to scale up or down the amount of space and computing capacity used
3. Simple DB – a data-base service that works in conjunction with the above two services to allow real-time data manipulation
4. Simple Queue Service – a message storage service that allows the storage of messages sent by applicationsThe main benefit of using these services is that there is little investment required on the part of the user. For start-ups especially, the few precious financial resources could be used in other aspects of the company. Moreover, there is less risk involved because the company doesn’t have to spend money or time developing an extensive IT structure, obtaining servers, etc. Therefore, if the venture fails, there is less to lose. However, there is also an inherent risk in trusting basically all of the data and information crucial to your business to some unseen, omnipotent entity. Although Amazon has a vested interest in providing quality, safe services with excellent customer service should problems arise, they are not personally invested in your particular company. Therefore, businesses are basically trusting strangers with information that is crucial to their livelihood.
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Super succinct response couldn’t be more elegantly described. Read your response after mine, everyone said this nicely, but I particularly agree with your wording. The risk of having data in the hands of anyone else comes up in the other readings as well.
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Thank you for your kind words David!
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Amazon Web Service (AWS) business packages 12 services into four “Infrastructure Web Service”: Simple Storage Service (S3), Elastic Compute Cloud (EC2), SimpleDB and Simple Queue Service (SQS). Their Simple Storage Service (S3) provides a user-friendly interface for gathering and storing data from anywhere on the World Wide Web. Amazon’s Elastic Compute Cloud (EC2) offers users internet based computing capacity and can be scaled up or down based on their users’ instantaneous needs. SimpleDB works in conjunction with S3 and EC2 and assists users with immediate and organized querying capabilities. Finally, their Simple Queue Service hosts data and moves data between application components without record loss or component downtime.
These systems simplify the processes needed for companies to maintain hardware and software in-house. By streamlining this process, AWS makes many IT support roles unnecessary and therefore creates overhead savings. The role of network administrator is performed by AWS. It saves users time that would otherwise be spent on hardware and software maintenance. Additionally, Amazon had “fast growth” in mind when developing AWS. Their services react extremely quickly to changes in business structures and performance. Companies abound see the value in this type of flexibility. Finally, because Amazon charges their customers for AWS services per use, customers can comfortably predict these expenses and can rest assured their technology costs rise and fall with business activity.
While customers receive all of these benefits from AWS, they make themselves susceptible to issues intertwined with outsourcing one’s IT network and support. The distance between the company and their internet-based web services creates a delay in troubleshooting and problem remediation. Furthermore, internet connectivity issues interfere with usability. Lastly, updates and capacity changes are performed by the provider, Amazon, and out of the user’s control.
I believe my company could save greatly from the resulting reduction in IT support staff if they were to contract with AWS. Our group’s IT department is located at our site with our physical servers. This hardware and support team would become redundant under Amazon’s Web Services. I expect our weekend and overnight outages for server re-boots and maintenance would also diminish greatly. Furthermore, our group of companies is ever-growing. We could benefit from the elasticity of AWS as our data usage and activity increases, sometimes quickly and drastically with business acquisitions. Contrarily, my company embraces a very conservative, manufacturing-minded, hands-on and simple philosophy. While I would favor this change, I think our President would shudder at the idea of releasing control of our in-house systems and moving our network to Amazon’s Web Services.
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The four primary web services that are offered by Amazon include Simple Storage Service (S3), Elastic Compute Cloud (EC2), Simple DB, and Simple Queue Service (SQS). Simple Storage Service (S3) provides a simple interface that can store and recover data from anywhere on the internet/web. This service ultimately allows developers the capability of storing and accessing indefinite amounts of data. The Elastic Compute Cloud (EC2) is a web service that provides resizable computing abilities in the cloud. This allows developers the ability to run on Amazon’s computing setting. Simple DB provides present look up capabilities and inquiring of organized data. It also has the essential functionality features of a database for users. Simple Queue Service (SQS) serves as an accessible queue that is hosted and stores data messages as they move between applications. It allows developers to transfer data between dispersed applications performing unlike tasks without losing messages or requiring each component to be available at all times.
Amazon claims that companies prefer their web services versus their own infrastructure due to several factors. The primary reason surrounds the variable of cost. AWS does not charge substantial initial capital expenses on data centers or even the servers. The company only pays for what they use. This is especially important for startup companies as it allows them to put funds elsewhere that may be more important rather than having to put their venture capital and finances towards servers. A second reason is related to simple use and implementation. AWS allows developers to get started and working quickly. Amazon states they deal with all the initial implementation processes so the developers don’t have to. Therefore, developers don’t have to deal with time consuming initiatives such as bandwidth contract negotiations, buying and installing the servers, managing hardware, and so forth. Overall, getting started on one of Amazon’s web services can take as short as days to even minutes.
I currently work for a regional medical center so we generally do not use outside web services. Due to HIPPA and patient confidentiality, all of our databases are kept on a secured intranet and internal s-drive that is continuously scanned by our internal AIT security team. As far as documents and databases not related to specific patient charts, such as transfer agreements and contracts, our organization still does not want them kept on any outside web services. I believe the reason is primarily surrounding the IT security question. Also I think there may be a fear of losing databases. I am interested in knowing if any hospitals utilize outside web services and if so how does AIT security keep them protected. -
Amazon maintains a vast infrastructure of network and servers. In recognizing revenue-generating opportunity, Amazon offers four services utilizing the infrastructure.
Simple Storage Service is just that. Storage of data accessible through internet pathway. Data is redundant to reduce risk of loss and access to the data is through any internet-connected device.
Elastic Compute Cloud provides scalable capacity depending on required space and computing capacity for the given application.
Simple DB provides a database service integrated with simple storage and elastic compute cloud providing the ability to organize index and query stored data.
Simple Queue Service. As many article as I have read now, I can honestly say I really have no idea. I can repeat what I read, but not idea what it means. Simple Queue Service offers scalable-hosted queues for storing messages as they travel between computers. This grand feature allows each messaging to be decoupled from the applications, eliminating speed and access reductions. There are many other benefits relative to work being produced faster on one end then the other end can receive, but I’ll not push my luck any further. I have a headache already.
Amazon provides all these services on a fee basis so an individual company does not have to make the investment for hardware, software, training, upgrade, training, expansion, asset renewal, and more training. This can allow a company to concentrate on their core competency without having to become experts in IT. -
Amazon’s four major web services are known as “Infrastructure Web Services.” Their main services include, but not limited, to the following:
1. Simple Storage Service (Amazon S3, founded in March 2006): is a service that provides developers with inexpensive, secured, highly scalable, user-friendly data storage services as an alternative to buying or building in-house data centers.
Provided basic interface for storing and retrieving data from anywhere on the Web. Pg.6.
2. Amazon Elastic Compute Cloud (Amazon EC2, founded in August 2006): In addition to the same services as S3, EC2 is a computing platform that provides developers with the ability to rent virtual resizable computing capacity in the cloud on Amazon’s proven computing environment.
3. Amazon Simple Database (Amazon SimpleDB, December 2007): A Web service with a core functionality of a database such as data indexing and querying in the cloud. It was also designed to be compatible with S3 and EC2.
4. Amazon Simple Queue Service (Amazon SQS, 2004): A scalable, multitasking, hosted queue that stored data messages as they traveled between applications. All four services primarily targeted software developers working in companies of all sizes.A company would use these services from Amazon instead of maintaining their own infrastructure because:
1. Quicker access to market: There is no need to hire additional staff or figure out how to build a scalable architecture. No need to negotiate internally for more servers or test a new service or feature. It’s very easy and provides instant capacity.
2. Economical: It is a viable, highly efficient and cost effective alternative. It requires no major startup capital to build highly accessible data transfer networks, buy and install and manage servers, as well as, operate datacenters.
3. Effective media marketing and credibility through positive blogs and publications reviews.I work in a huge health-care organization that operates its own 24/7/365-staffed datacenter. Due to stringent privacy laws and policies applicable to hospitals, AWS may not be appropriate. My employers endeavors to have in-house everything (including food and parking services) in order to maintain certain standards and be in sole control of operations.
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Having a fully staffed 24-hour operated data center is a big financial commitment. Consequently, my employer would save a lot of money utilizing AWS. In contrast, utilizing AWS denotes being completely at the mercy of the service provider (Amazon), meaning whatever befalls the company befalls their cloud customers.
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After read all the posts above, it is difficult to write something new. To my understanding, the question is asking us to summarize what we read, therefore, it would not hurt if I repeat some of the above observation or learning. The four major web services that offered by Amazon are including: S3 (Simple storage service), EC2 (elastic compute cloud), Simple DB and SQS (simple queue service), S3 provides basic interface to store and retrieve any data on the web; EC2 provides resizable computing capacity in the cloud, which was running on Amazon’s proven computing environment; Simple DB provides real time look up and querying of structured data, and SQS allows developers to move data between distributed application components performing different tasks, without losing messages or requiring each component to always be available. These service are offered through Amazon Web Services and fee-based.
All services offered through Amazon Web Service are self-services, easy to use, reliable and scalable with outstanding performance, It allows developers to get up and running quickly, and low cost with pay-per-use price model without up-front cost, visibility of offerings in the developer communities. In addition, Amazon does not use competitor focused strategy. Amazon has lots of experience in hardware, scale and capacity through its retail services. Its cost are much cheaper as compared to own infrastructure and maintenance those infrastructure, especially for those small size companies. Therefore, companies could use their limited resources to develop their core products. The only cons that I can think about is a possibility to lose your valuable data in the Cloud.-
Hi Xiaoying,
I agree with you that it can be difficult or virtually impossible to avoid being repetitive in our various posts as well as replies. Accordingly, I normally post my original comments before reading any other posts to at least, alleviate the feeling of sounding monotonous.
I also agree with you that companies of all sizes could effectively utilize Amazon’s amazing web services prowess to their economic advantage. It is cost-saving, dynamic, and highly reliable. Although there were reports of a few glitches due to defective hardware, Amazon consequently offered a 99.9 percent hitch-free agreement for the affected service(s).
Considering the level of Amazon’s success in this particular field, and since any system cannot be 100% perfect, Amazon’s services may be deemed even safer for most companies than relying on internal/individual cloud technology.
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Late to the game as well, but I’ll throw in my 2 cents. Simple Storage Service is a place where data can be easily stored and retrieved for cents per gigabyte of usage. Elastic Compute Cloud was essentially the same idea of storage service, but for computing on Amazon’s servers instead of a home server. Simple DB essentially was a search query system aimed at combining the first two services. Simple Queue Service was a service designed to coordinate and store messages between multiple applications.
A company would choose Amazon’s services for the reasons perfectly identified in the case analysis. If you have precious VC or angel funding and you need to spend your money elsewhere to grow, you can flexibly expand your IT system without heavily investing in your own system.
For Temple Hospital, I’m not sure there’s a lot of sense or practicality in storing or querying data for patient’s health information, but if in the future, health systems had the legal protection of offload patient information and studies, you could easily scale an EMR across an entire health system rapidly with a simple front end software interface. There’s no con to this except perhaps patient safety and the potential for down time with regards to cloud computing. Putting data in the hands of someone else has this potential risk no matter whether it is in a cloud or in someone else’s physical space that you might lose access to.
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Why would a company use these services from Amazon instead of maintaining their own infrastructure? What would the pros and cons of using Amazon’s services be for the company you work for?
Over last few years, Amazon Web Services has dominated the cloud space for IT solutions for companies or small players. As illustrated in the case, the AWS provides a server and storage for its customers. The reason the company may want to turn to AWS is to off load majority of its startup and management cost to house the data in cloud. For a small company, hiring and operating a separate IT department may come with significant cost, which AWS helps eliminate. Biggest benefit I see is the company avoiding spending time determining issues and challenges associated with management of cloud data, instead they can spend those resources to build the program to communicate with the servers. Additionally, the AWS can help company go through unexpected demand instead of being crashed after an unexpected market demand. The AWS enables companies to expand its occupied space within fraction of second to process more transaction to download software or support more traffic on web service. Downside is that AWS offers various price models, which can hurt company if they don’t use it properly. Although the company is pushing the start up cost of management of servers to Amazon, they need to carefully evaluate the spend on each transaction. My current company works with a medical device that is slowly breaching boundaries toward web applications. The AWS can be a perfect solution for even such a large company with existing IT infrastructure as it provides hassle free management on supporting data from the application. However, the case did not provide much clarification on the security of the data stored/operated on AWS. As a medical device firm, the security and privacy of the data from customer is such a sensitive subject that has prevented advancement in our field when rest of technology sector is leaping forward with one year product life cycle.
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Nil good post. I agree with your assessment on security. This may not be as big of an issue for a start up firm as you mention above, but for a large enterprise like J&J it could be very serious. Any time you utilize a Cloud solution, whether it be AWS or a SaaS offering, security becomes top of mind. This is especially true when the data being stored or managed is sensitive in nature; whether that be medical records, customer data, personally identifiable information, etc. When I worked at both ADP and Kronos, we sold SaaS offerings that housed employee data and large firms would often be hyper-sensitive during contracts processes to protected themselves in the event of a breach. They would also ask numerous questions pertaining to our data centers, redundancy, staff qualifications, disaster recovery and the like. However, smaller firms did not ask as many questions and would often move ahead without too much back and forth. AWS is an effective tool for start ups and mid-size firms, but it would seem that larger firms should protect their interests when playing in this sandbox.
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Why would a company use these services from Amazon instead of maintaining their own infrastructure? What would the pros and cons of using Amazon’s services be for the company you work for?
To answer this question, I thought I would find an example of a company that uses Amazon. Adobe is just one of thousands of companies that use Amazon’s services (http://aws.amazon.com/solutions/case-studies/adobe/). Adobe’s Creative Cloud uses AWS because of the fact that Amazon has a well built out infrastructure that can support the heavy demand that is required of allowing Adobe’s Creative Cloud users to upload their files to the cloud. It then allows for Adobe to focus their time and resources to build out their products.
But when Amazon goes down, other companies that heavily rely on the services go down too. For example, the one time that Amazon went down in late 2013 for 45 minutes, it took down companies like Vine, Instagram, and Airbnb during that time (http://www.zdnet.com/article/amazon-web-services-suffers-outage-takes-down-vine-instagram-others-with-it/). So relying heavily on these services like are doing now, they’re really left to the whim of the servers on the cloud to not go down and disrupt services.
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Thanks for the informative post, Jon ! Amazingly, I never knew the extent of Amazon’s web lines of operations. I had always looked at the company from its core retailing operations perspective only. This week’s assigned AWS article is indeed an eye-opener for me. It is interesting how a vast many people have know idea how the services they utilize run. For instance, there are usually outcries whenever a service such as Instragram is interrupted without users knowing the underlining facts behind it.
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AWS (Amazon Web Service) include the following: S3 (Simple Storage Service) this is a storage that users can access from anywhere on the web. The storage system makes many copies of the stored file to ensure safety, and the system utilizes the same Amazon’s technology. The cost is limited and the space available is extremely large. EC2 (Elastic Compute Cloud) this is cloud space that can be expanded or retracted (it is elastic) and is used by computing developers in addition to S3. This, also, utilizes the Amazon’s internal technology. Simple DB this is an on-line database available to to users from everywhere on the wed. It is designed to work together with S3, and EC2. SQS (Simple Queue Service) this is a system that allows component f an application to send messages to another component of the same application. In addition to that it allows storage of messages for later use of them by the application’s component.
The way I see AWS is as if it was a virtual, low cost, IT service that can be use at demand. The advantage of using AWS is the low cost of operating a web base IT service, the main disadvantage is the lack of versatility of the “machine” when compared to the human (IT professional). Probably, the best model is a humanized web based IT service – a hybrid between the two services that offers the decreased costs,and at the same time the ability to interact, plan and execute IT projects with IT professionals.-
Cataldo,
I like the idea of a hybrid model. You made a good point when pointing out the pros and cons of utilizating AWS. I agree AWS ultimately reduces costs, but they aren’t as flexible as the IT professional. I know where I work the organization utilizes a full IT department, however more employees are starting to inquire about utilizing AWS and other web services. I think this humanized web based IT type service is a great idea. I am interested in finding out which, if any, businesses are incorporating this model and whether or not they have found success.
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Mary, I come up with the humanized IT idea/definition. Maybe we should consider starting such a model and incorporate it for business proposes. What do you think?
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Great idea. I am in healthcare administration and I think a hospital would be a good place to start.
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I think with any company you need to look at your business needs. Can you purchase something out of the box or do you need various customization? I work in sports and entertainment and in many cases the league will mandate certain business practices or software for our teams. However, our company is made up of several teams/properties (MLS and NHL). This is a huge reason why we can’t always go with the “league recommendations” because it doesn’t fit our business model. We then end up dishing out huge amounts of money to VARs to then customize certain services so we can utilize it for each of our teams. What I really liked about your approach is the “hybrid model” which would totally work for our group – cost efficient and flexible.
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Amazon has established themselves as the premier provider of cloud computing services. They have built the infrastructure and capabilities to continue to be dominant in this space. Below is an overview the services offered:
Simple Storage Service or S3: Simple Storage Service or S3 is a straightforward storage tool enabling a user to share and access data across the web. S3 shared a similar platform to the internal file sharing service used internally by Amazon employees. Amazon ensured that the data uploaded was secured by replicating the files uploaded and replicating the file multiple times in several locations within the US. Unlimited data could be stored by companies are $.12-$.15 per gigabyte for storage and .10 per gigabyte uploaded and $.10-$.17 per gigabyte downloaded.
EC2: In 2006 Amazon introduced their first platform in which they used a reference to cloud computing. The platform EC2 is a storage solution which allows businesses to resize their need based on demand. This allows business to access massive amounts of storage at a minimal cost.
Simple DB: Simple DB was launched to provide companies with a solution to have a web-based database tool which provided real-time querying capabilities of structured data. While Simple database was not meant to replace complex databases, it provided a scalable data repository source with basic loading and extracting capabilities.
Simple Queue Services (SQS): This services allows for the passing back and forth of messages between various components of an application.
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What are the four major web services described in the case that are offered by Amazon.com? What does each service do? The four major Amazon web services are: Simple Storage Service (S3) – simply an online storage service using Amazon servers; Elastic Compute Cloud (EC2) – similar to S3, but allows user to scale their needed space up or down; Simple DB- real time look-up data-base service that was designed to work with S3 and EC2; Simple Queue Service (SQS) – a message storage service that prevents messages sent between applications from being lost as they are sent back and forth. Why would a company use these services from Amazon instead of maintaining their own infrastructure? A company, especially a small or growing company, would see Amazon web services as convenient and cost effective. Small and/or growing companies trying to make a name for themselves incur a lot of other expenses and this would be something they could capitalize on because Amazon has done all the grunt work for them. Why recreate it when it already exists. A company would save on the investment dollars they would have needed to create it themselves and that doesn’t guarantee theirs would be as good a group of services. A question that was brought up both others was the long term investment and any hidden operating costs such as increased costs due to capacity usage. What would the pros and cons of using Amazon’s services be for the company you work for? The pros of using Amazon web services at the company I work for would be the convenience and cost savings of creation and managing. Our data-bases have massive amounts of data. The cons of using such a service would be the security of classified and confidential information. For that reason alone I don’t believe the company will ever use an outside server.
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Like others have said – it’s hard not to be redundant with these questions but I’ll try to differentiate my post in potential pros and cons with regards to company applications. The four major Amazon Web Services (AWS) are:
1) Amazon Simple Storage Service (Amazon S3): A file storage interface that guarantees a 99.3% uptime rate. It can provide web-hosting, image hosting, and storage for backup systems. Replicates all files to multiple locations for redundancy.
2) Amazon Elastic Compute Cloud (Amazon EC2): Allows developers to use virtual systems to run computer applications in conjunction with S3 services. Highly scalable, or elastic, in either direction so users can tailor it to their ever-changing requirements.
3) Amazon Simple Database (Amazon SimpleDB): As implied in the name, a simple database created to provide a no-frills service with core functionality and was designed to be used with S2 and EC2
4) Amazon Simple Queue Service (Amazon SQS): Application management service that allows messages to be transferred between components by placing them in a queue where they await pickup.
As mentioned in the case, these interfaces were primarily designed and intended for software developers who needed inexpensive computing and storage services. As a result, AWS provided companies like Animoto, AideRSS, and the New York Times instant access to scalable architecture that allowed them to growth exponentially faster than if there were required to run these services themselves. All of these services are provided for nominal fees based on the amount of information that users store on or pass through Amazon’s infrastructure.
I began to ponder the pros and cons of the Department of Defense (DoD) using Amazon’s services. Honestly, I could only think of one or two positives like redundant file backups – stuff like that. The rest were cons – and there were a lot of them. So I decided to do a little research because I thought that there was no way possible the DoD was buying what Amazon was selling. The first article I opened from this past August led with this line: “Amazon Web Services has become the first commercial cloud provider authorized to handle the Defense Department’s most sensitive unclassified data.” Luckily for all US citizens, this applies to the entire Federal Government as well. What could go wrong? Hilary’s emails are now the least of our worries. Russia is, at this moment, infiltrating Amazon in an effort to search for a back door into our secure networks. Keep in mind, this is not Top Secret or Secret information but it still screams bad idea. Snowden or Bradley Manning anyone? Personally, I don’t even like the idea of them storing my personnel files with my PII, medical records, etc on there. At least when Al Gore decides to flip off the switch to the internet at least there’ll be a couple of backups.
http://www.defenseone.com/technology/2014/08/amazon-expands-its-cloud-services-us-military/92090/
http://aws.amazon.com/federal/-
Bill,
Great post and interesting links. Didn’t realize this was happening and quite shocked that DOD thinks it is a good idea. I wonder how this will affect Amazon’s relationship with the federal government in the long term. The one link had an advertizement for public sector drone use next to the article. Makes you wonder how this business relationship will help Amazon influence the DOD in supporting their future endeavors. Russia’s infiltration of Amazon is an interesting topic for discussion as well since we have learned in other material that the weakest links provide the easiest modes of entry into an otherwise fortified infrastructure. For official use only and unclassified documents still hold valuable information that can be manipulated by eager hackers to formulate a plan to breach security measures using easily accessible information. My first thought was the previous article we read about the number of employees who freely provided information when they were contacted by telephone. Amazon employees will have access to government information even though they were not hired and vetted by the government. It is an interesting business relationship. It is not like other government contractors who sell a product to the federal government. This is the federal government giving their “product” to Amazon to hold onto for them.-
Clint,
Not sure if you have ever been stationed overseas and watched the Armed Forces Network (AFN). If you have, you probably remember the Operations Security (OPSEC) commercials. One commercial has a foreign intelligence operative gathering small bits of unclassified data, writes it down on a post-it note, and puts it on a wall with dozens of other post-it notes that provide clues to the “big picture.” That’s all I could envision while reading the article and then your comment: “For official use only and unclassified documents still hold valuable information.” I understand that the cloud is supposed to be more secure according to all of the “experts” but something about this whole situation doesn’t feel right. At the very least, the greatest potential is for widespread identity theft as a result of decades worth of PII being hacked. I completely agree with your comment about the article where employees voluntarily provided information and that people are by far the weakest link. Let’s hope for the best and prepare for the worst!
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Bill,
I couldn’t help but chuckle while reading your post about Amazon’s contract to handle storage of DOD’s “most sensitive declassified data” and can’t help but wonder about the confusing description. It seems to lack common sense from a safety perspective. If the data is of sensitive nature (although “declassified”) then, how wise is it to make public knowledge where it is stored ?!? It feels like an open invitation to your average teenage hacker to have fun trying (and at times succeeding) to gain access because it’s out there. From the business side it makes sense as an alternate method which is probably more cost effective. And, like you noted, if “Al Gore decides to flip off the switch” – more chuckle….-
Eduard,
Glad I could provide a laugh or two. I read those AWS articles with absolute incredulousness. The term “sensitive but unclassified” is something that the government has been struggling to define for years. They can’t figure out whether to exempt it under the Freedom of Information Act or outline what truly constitutes “sensitive but unclassified.” I wouldn’t be surprised if the government were using AWS as a bridge between building their own datacenter for cloud operations – mostly because they were probably so far behind the civil sector. Thanks for the reply and, once again, glad I help lighten the mood on a serious topic.
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The four major web services offered by Amazon.com are Amazon Simple Storage Service (S3), Amazon Elastic Compute Cloud (EC2), Amazon Simple Database (SImpleDB), Amazon Simple Queue Service (SQS). S3 used the same technology created for Amazon’s internal operations to provide a basic interface for storing and retrieving data from anywhere on the Web. EC2 was designed to work in conjunction with S3 and was highly elastic, allowing for quick scaling up and down. EC2 was a Web service that provided resizable computing capacity in the cloud. SimpleDB was designed to be an easy-to-use alternative to sophisticated databases as a Web service for providing real-time lookup and querying of structured data. SimpleDB was designed to work in conjunction with S3 and EC2. SQS is a scalable, hosted queue that stores data messages as they travel between applications. This service allowed components of an application to send messages to other components and created a place to store these messages for pick-up by the consuming components.
Amazon Web Services (AWS) offers services such as data storage, computing, database functionality, messaging, etc. at a low cost. Amazon has tremendous buying power and leverage which means better terms for Amazon and ultimately for AWS customers. Another way of lowering costs for companies is to reduce their on-site hardware because AWS handles the IT environment from the cloud. Also the AWS offerings are very easy to use. Customers can go to the Amazon website, read the information and start making Web services requests to add data, download that date, etc.
Pros – We could cut our costs for hardware and maintenance of our IT system. The cost structures are based on usage so a small firm would have the same low rates as a large firm.
Cons – You are at Amazon’s mercy. You lose some control of your IT. We are a small firm and we may not be able to get the support from an AWS representative. -
Amazon’s genius proves once again to bring ingenuity to the virtual market by continuously providing new other products to increase their revenue- client services with easy to remember acronyms for the Big 4. All offer convenient access to data storage, such as the S3- Simple Storage Service, EC2 as Elastic computing cloud, SQS for Simple Queue Service to handle the movement between storage applications and Simple DB for real time look-up of structured data. The pros for using any of these is low upfront cost for any company which will not need to invest in the hardware and software including maintenance contracts and service upgrades. The cons, it may be more expensive in the long run and there’s some perception of uncertainty and the real possibility of inaccessibility if internet access becomes restricted for a long period of time.
My employer owns, runs and maintains multiple data centers, with built-in backup and redundancy. This is done to manage, among other things, sensitive patient data. However for non HIPAA related information, cloud computing and storage is used for miscellaneous data.
If it were to use any of Amazon’s services it would most likely do so behind the scenes with a seamless transition and no apparent evidence of third party involvement. -
Amazon web services comprised of for services: Simple Storage Service aka (S3), Elastic Compute Cloud aka (EC2), Simple DB, and Simple Queue Service aka (SQS). The first Amazon web services offered by Amazon to its end user who are developers, was Simple Storage Service, which was referenced as (S3). The S3 provided service for developers to store information and receive or download information from any web site. Amazon received their revenue stream by having its users pay for the amount of Gigabytes they used for storage. In order to ensure information was not lost, Amazon backed up everything that was stored by making several copies and storing them in many areas. The second was Elastic Compute Cloud otherwise known as (EC2) that works in conjunction with (S3). Instead of companies incurring server costs one can partake in the Elastic Compute Cloud, which is essentially cloud computing. Each computer on the network is engaging in several tasks and looking to upload or store data. Various technologies from employees or other companies can be plugged into any number of servers and it provides the elasticity or flexibility, which minimizes the costs for the same amount of space that is being utilized. The third is Simple DB is a virtual database where the end user can run queries and look up information within a timely manner. The fourth is Simple Queue Service (SQS), which is essentially providing the ability for developers or end users to store and transfer data from varying parts within the network without losing data. These services will help improved IT related system and storage costs, which helps improve operational efficiency costs the attribute to the BTL.
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correction- four services:
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Managing internal IT hardware and infrastructure is expensive and often not practical for new or emerging businesses. Even large firms have experienced the pain of managing data centers effectively. Competing forces across a firm demand larger levels of storage and capacity, which increases challenges for internal IT staff. On Amazon’s website they offer six reasons why firms would seek to outsource some or all of their IT development and storage requirements to the Cloud. These are, “trade capital expense for variable expense, benefit from massive economies of scale, stop guessing capacity, increase speed and agility, stop spending money on running and maintaining data centers, go global in minutes.” It would appear that Amazon’s target audience are firms that either have limited IT resources, but need macro-scale; or large enterprises that are bogged down with older technology, outdated infrastructure or expensive operating environments. AWS can become an efficient and cost effective alternative in these cases. From a pros and cons perspective at my firm, I do think we would benefit in some regards as we currently do not outsource any of these functions today. I have not asked our developers their opinions and I will, but I know we manage our own data centers and servers for both software clients and internal development. I would have to assume that we have some level of issues with space constraints and or accessibility restrictions. Disadvantages of relying on AWS would have to come down to security and/or reliability. There have been reported issues with EBS and EC2 with respect to reliability, which could have serious consequences for larger firms such as mine. Additionally, outsourcing this function and storing massive amounts of possibly sensitive data off site would open up some liability issues for a tax software firm. These must be considered and handled contractually if AWS were to be utilized. The bottom line is that AWS is likely a no-brainer for start ups, but could have some additional considerations for more established firms.
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The four major web services described in the case that are offered by Amazon.com are the following: (1) Elastic Compute Cloud (2) Simple Storage Service (3) Simple Database (4) Simple Queue Services. Elastic Compute Cloud (EC2) and Simple Storage (S3) Service allow developers to rent any mount of storage capacity they require on Amazon-owned servers. Simple Database or DB is intertwined with the first two services as it provides real time queries on information. Simple DB was not designed to replace EC2 or S3, but provide an easy-to-use alternative. Lastly, Simple Queue Services (SQS) allowed developers to send messages from one application to another (while creating a space to sore these messages). From personal experience, we bought one of Amazon services because we needed a quick solution. We need a cloud-based hosting platform for our global CRM data and when we looked at Verizon the process took too long and would have prevented us from meeting our deadline. Amazon is extremely turnkey and flexible for various IT deparments.
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Amazon targeted software developers for its 4 ‘infrastructure web services’ – including: Amazon S3 (secure storage), Amazon EC2 (server computing capacity), Amazon Simple DB (real-time look up/querying of structured data), and Amazon SQS (hosting/storage of data messages). They are ideal customers, because they might not have the time, or resources to reinvent the wheel, especially when it comes to ‘website innovations’ and ‘ecommerce infrastructure.’ Instead, they save money and maximize efficiency, by outsourcing these components to Amazon. My industry is so heavily regulated – financial services — so I don’t believe we would be allowed to outsource any of these areas (due to archival and privacy concerns). In fact, we have a massive ‘super computer’ in Phoenix AZ that members of the IT community regularly visit as a tourist attraction. Or at least that’s what I’ve been told. We are
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S3 = simple storage service – sells storage by GB
EC2 = elastic compute cloud – scalable, elastic computing environment to run instances/apps
SimpleDB = core-functionality web-based database for real-time lookup and querying
SQS – simple query service – allows different applications to transmit messages back and forthPROS
1) The best description of the “pros” of using these services is in Jassy’s explanation related to startups. Jassy:”As a startup you don’t have to take hard-earned venture capital or angel-backed financing and spend it on servers, you can take those funds and apply them to the pieces of your business idea that can make or break your company.” By outsourcing the IT overhead (buying, maintaining, and servicing servers and building redundant systems for downtime, etc) at affordable rates, companies can invest more capital in “features or people that differentiate your applications an dbusiness, rather than on servers or datacenter operations that do not.2) A quickly growing company can quickly scale up by ‘leasing’ servers and computing capacity from AWS, as in the example of Animoto Videos (pg 14).
3) A company gets services from a large, proven service provider that has a reputation for reliability. Amazon depends on its IT infrastructure entirely for the success of its operations, so there is some security in knowing that your business is sharing in and protected by the same levels of redundancy and IT security. 99.9% uptime for S3 is hard to beat.
CONS
1) The main drawback is loss of control over the IT functions of your company. You are bound by service agreements to an external provider. Amazon has done a good job of stripping down the services to the core essentials that companies will need, without adding complicated frills that make it cumbersome for some to use.2) Process Control Risk – there is a risk that AWS will not invest sufficiently in upgrading server capacity, for example… if you control the IT within your company you can decide where and when to invest in upgrades. If you lease this from AWS, you are hoping they will keep investing in the level of technology that your company will need.
3) Shared risk with competition – if you and your competitors are both using AWS, you share the same risk. Say AWS crashes or is hacked… your company can’t claim competitive advantage over another company who was also depending on AWS.
4) Cost as you Scale Up – AWS is perfect for small startups not willing to make large IT investments without first seeing real potential for growth to support it. At startup, investments in IT overhead exceed the usage capacity, so you can do things most cheaply by outsourcing those things to AWS. However as your company grows, it might be more cost-effective to leverage the scale yourself and maintain the IT infrastructure in-house. Of course Amazon could offer discounts to high volume users to keep them from walking away from AWS when they grow larger and require more bandwidth.
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Hi, Dan, very good summary on pros and cons. I especially like the idea that “Amazon could offer discounts to high volume users to keep them from walking away from AWS when they grow larger and require more bandwidth”. I do not know how AWS make money from the service that they have provided to all users, but they have been making great profit as no equivalent competitors in the market yet, I agree with you they have advantage to quote any price they prefer.
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Steven L. Johnson wrote a new post on the site Discussion for Last Name Starting N-Z 9 years, 7 months ago
This question is inspired by this reading: Is Your Organization Multinational or Global?
Do you think that information technology has enabled the emergence of global brands? Also, do you think that information […]
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IT has become clear that Information Technology has allowed many companies, especially Wyeth in our readings, to morph form being a multinational company to a global country. Economy of scales and proficiency of operations have allowed companies to utilize central processes through global information technology to avoid the expense of recreating and the time constraints of developing a supply chain from de novo. These efforts detract from the bottom line and productivity of a company. An informational technology company that builds a reputation within a particular industry will clearly be able to become a global brand as would a product company. It would do this through the mechanism of cloud computing where it can offer platform technologies and skeleton services to companies to help them reorganize their businesses to make them competitive in a global environment. Once up and running and demonstrating a track record over time the IT Company will earn a global reputation and be sought after by companies that want to make the transition from a multinational company to a global company.
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Alex, great analysis on how a multinational can leverage information technology providers to transition to a global company. I think that this approach may have helped Wyeth with its globalization effort as it could have reduced the capital expenditure in building out the regional support centers’s infrastructure. Without the capital expenditure in infrastructure, the global IT team at Wyeth could have invested in other IT projects to help the company’s reach it’s globalization goal.
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Alex – There are several other enabling factors that I think of around global brands. First, IT enables communication and coordination from anywhere without significant cost. Second, IT enables anyone with a translation engine and a couple lines of code to target market to people in their own language. Third, the Internet provides instant reach to a world of potential customers. Fourth, if your product is digital, logistics are almost non-existent. Put these factors together with what you have already outlined as well as a low barrier to entry and it is easy to see why the world is much flatter than it used to be.
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Information technology has definitely enabled the emergence of global brands. SAP and Oracle are great examples of information technology providers that have enabled global companies to build global brands such as Coca-Cola, iPhone, and Mercedes Benz. Additionally, SAP and Oracle are also great examples of information technology providers that are becoming global brands themselves much like Amazon Web Services, Salesforce.com, and Google Apps. With the proliferation of information technology in all business models and functions, the myriad of information technology providers are more and more likely to become global brands much like consumer goods.
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Duke, I agree that the emergence of global brands is influenced by information technology. My company, Ford Motor Company, is in the final stages of implementing SAP,s Extended Warehouse Management system in all of its parts distributions centers in the US with global launches slotted in the 3rd quarter of this year. Since we have installed the SAP system, efficiency, productivity, and management flexibility have all increased along with profits from our division. Also, I think that the sharing of technology allows for many of the smaller companies to compete with larger corporations by being able to access the same platforms in globalization.
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Kerry, great to hear that Ford is able to leverage SAP to gain so much value added benefits. I have been a fan of corporate ERP that are done right because of all the reasons you have noted with your implementation. And yes, you are absolutely right that the information technology providers have really leveled the playing field for smaller companies to be able to have a global present against their much bigger competition which in the end benefits the us, the consumers.
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IT definitely is, and will continue to enable companies to become global brands. And I don’t think there is any reason to believe that IT providers are any less likely to become global brands themselves, and as Duke and Alex point out, many have already. Some other simple examples of helping a brand go global through IT are by automating shipping processes, developing mobile apps that can be customized as needed for the local economy and customer preferences, and speeding communication processes. Cloud computing service companies, in particular, have made it much easier for small to medium sized businesses go global as well as themselves.
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I agree with others that Information Technology has certainly enabled the emergence of global brands. Some of the top global brands, like Microsoft, Apple, and Google, fall into Professor Porter’s description of a company that has become a global firm pursuing a unified strategy to coordinate various national operations. Each of these companies has products that connect people worldwide and these companies leverage efficiencies around the world to do business. You can also find them on stock exchanges around the world, which also decentralizes their locations. And more importantly, these companies did not just sell products or become the first of their kind to sell certain products; they developed and maintained brands that have been communicated through IT to consumers who now associate these brands with reliability, power, and being the best in the business.
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Information technology has definitely enabled the emergence of global brands. Google, Amazon and other websites that can monetize information and advertising have helped brands become more globally recognized. Companies such as Microsoft, SAP, salesforce.com are solution providers that are strategically placed to help companies and brands that are experiencing significant growth manage and maintain it. I’m with a company that has experienced significant growth and finally realized the importance of updating our archaic AS400 and JD Edwards software programs. The integration of a Microsoft AX allows us the opportunity to do so many more things with our brand, customers, and supply & demand that we will be able to continue growing at the same rapid pace. Another example of brands that can grow rapidly are service providers, such as Uber, VRBO, etc. that we discussed earlier in the class.
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Information Technology has certainly enabled the emergence of global brands. With the evolution of the internet, there was many technological advancements all over the world. The world became flat, many countries/cities became easily accessible, as there was always a way to connect between various countries or cities. Google, Apple, Microsoft IBM, Cisco, Amazon, Ebay, McAfee, Intel, only to name a few are all global brands because of this evolution. Their existence could not have been any easier without adequate advancement in information technology. Companies like Oracle, SAP, Cisco are all good examples of IT providers that has linked many countries via their applications or software’s or IT systems. Even Microsoft with their OS and server technology, Google with their applications, search and advertising technology, cloud computing and other various technological systems have connected cities or countries as though there are no boundaries. A international phone call that could have taken hours to reach a colleague on other side of the world can now be done in seconds via VOIP or TC, video conferencing, etc. Communication across various locations/sites around the world for any global company is fairly simple and inexpensive. So many of these Information technology providers have become global brands.
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Kumar,
Thank you for the great post. I noticed that your examples of global brands are all IT companies. What about companies such as McDonald’s that was at least multinational if not global before IT became so pervasive in our lives. I am sure we sat down and thought about other large companies we would find than many companies were global before the emergence of IT. If this is true than wouldn’t that mean that IT did not enable the emergence of global brands?
Thanks,
Bruce-
Bruce good question! I never had thought about it when I wrote it.
Well if a company was doing business in several nations, without any use of computers or technology, in order to reach economies of scale or sustain their business/growth, their tasks may have been much harder and a bit overkill in the past. They could not have operated as effectively or efficiently as they would with adapting/implementing the technology than without it. I think McD was not taking any inventory with a notebook and a paper or were managing their supply chain without any use of Technology back then.
I believe McD didnt even exist in any other countries other than US prior to the evolution of internet. I agree that, if we were to sit down and think about some companies as how they operated back then without any IT, then it may be true that IT wasnt an enabler initially but once they had it, then things were much easier and better for them. A simple communication between to two regional heads or a country heads would have taken hours/days to get a phone connection or even sometimes flyout to meet, but with the IT, they could just communicate within seconds, that’s a huge leap for a company in making any decisions. In some cases, without choice, companies may have found a way to survive without the iT but once they got the taste of it, they had to change/switch in order to sustain competition and to gain a competitive edge.-
Kumar,
Your point is very well taken. IT does make being global much easier, their is no denying that. Communication and the sharing of information simplifies the issue. McD entered their first country of New Zealand in 1975 and they used New Zealand made cheese instead of US made. They did this to keep the logistics costs down. The World Wide Web as we know it did not come around until 1989. Prior to that it was all ARPANET which was used mostly by the government and a few others. McD is not the only example of a company that went global prior to IT, an even older one would be the British East India Company. They were global before the invention of any modern technology.
Thanks again for the great comment.
Bruce-
Bruce, thanks for sharing the info. I didnt know McD was in NZ even before I was born. But I cant make an excuse just bcos I was born after – right 🙂
Should have done some research about McD, would have learnt some cool things about it. Anyways am sure, like you mentioned there may be many companies out there who are successful and who did good without any IT back in the days. Its just may be a matter of ways things were done , some could have been more efficient/effective but others may have become worse, so its a balance I guess. thanks again
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I believe Information technology has enabled the emergence of global brands by allowing companies to connect with each other from different parts of the world. When communicating with different parts of the world was once very difficult with snail mail and terrible phone line connections, the internet has created a new form of communication that now allows for quicker response. This allows for companies to place important operations or customer relations departments in local countries as communication is of paramount importance. I would say the information technology providers are in the process of become global brands. Since information technology is a relative young field, it is growing very fast. Most of IT innovation is currently in the Silicon Valley. Once the internet is available all over the world, information technology providers can become global. An example is that Google, currently has campuses all over the world including Ireland. Consumer goods aren’t the only global brands.
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The emergence of information technology has made globalization easier but been the sole enabler. If you look at companies such as the British East India Company in the 17th-19th century. Companies like this were global companies that became their own entity free of governmental control. They would conduct business in multiple countries towards one common goal. The goods they “traded” for supplied money and resources to develop a fairly large army not beholden to any government. I do believe that information technology has made communication across so many miles much easier. Due to this fact becoming globalized has become much easier. Instead of only have one or two globalized businesses now we have many.
Information technology brands are more likely to pervade into several countries. Although I am not sure you can call them globalized if they do not have an actual physical footprint in multiple countries. Several of these companies such as Google have opened facilities/offices/campuses in multiple countries. Most of this is probably to lower their tax bracket since a physical presence may not be necessary in order to provide a service in that area. An IT business has a much easier go of moving into several countries than consumer goods which require more logistics. I believe as IT continues to grow the market will begin to fill up and make becoming global a little bit more difficult. Becoming global may be easier now but wont be in the next 50 years.-
Interesting point about the future of globalization. As more and more companies become global, surely the barriers to entry for newer companies will become more difficult to overcome. I wonder if perhaps that might lead toward a swing back to more multinational corporations as described in this article that focus more specifically on their own regions rather than their parent brands.
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Sam,
Great point! The one thing I have noticed is that the more companies become global the less options available. I can buy the same products here that I can buy in any western country and even some eastern countries. For instance Starbucks and Seattle’s Best Coffee are both available in the UAE. Maybe people will grow tired of this fact and want products that are specific to their area. If this is so then what you said may come true.
Bruce
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IT has absolutely enabled the emergence of global brands. While maybe not an absolute necessity, it sure makes things a lot easier. As we saw in the Wyeth case, IT can be the unifying device that knits together multiple business units spread across the world into one global brand. The ease of information transfer and sharing, the standardization of processes, and the normalization of unique data that IT provides has knocked down several obstacles to creating global brands. Accordingly, I do think that IT providers are more likely to go global than other consumer goods. If they can provide a key component for other companies that wish to globalize, they will likely be pulled into globalization themselves as they develop a more and more diverse client portfolio. Consumer goods may be more limited in their ability to go global as regional demand and resource availability come into play more than they do for IT providers. The resources required for IT providers are minimal and the demand worldwide has been demonstrated.
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I don’t think we can say IT has solely enabled the emergence of global brands as much as it has reduced some of the most significant barriers. IT has definitely reduced the cost a becoming a global company as well as improving an organizations ability to communicate, manage global inventory, distribution, information…etc IT has also made it easier for small-to-medium businesses to more rapidly expand their global capability. My company is currently a Multinational striving to become a Global company. We began expanding back in the late 40’s due to high demand for some of our products in Italy and France. For 60 years we continued to expand (140 countries) by essentially developing a mechanism to sell and deliver product. The down side of this rapid expansion was virtually no connectivity between regions or countries.
Just to give you one example of some work in IT. Our global websites were all managed independently on different platforms until six months ago. Our global teams would literally copy/paste from the US website and then attempt to create their own separate website that looked similar to our US site. Now all sites are on one platform with navigation to each. We’re looking into managing a global supply chain, with local sourcing, for our manufacturing operations in China, UK, Brazil, and the US.
I do think IT companies would be more apt to go global since their customer’s needs should more similar. Company’s in consumer goods need to invest considerable time to understand new markets, their needs, and potentially even adapt products to better suite the local customer. While individual IT needs certainly change, the relative infrastructure/need should be fairly consistent. This, in my opinion, would allow IT companies to seek scale more quickly than a consumer good.
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Ron.
Can only imagine the frustration that went alongside the ‘cut and paste’ of the websites. Do people have access to the US website and make comparisons. We ran into similar problems that Wyeth did with pharmaceuticals passing different regulatory credentials. We also had a huge language barrier and to hire locally to develop the website to have the ability to switch from english to mandarin and as we expand we have found that emerging markets are proving longer to open up in, primarily due to language and secondary products being approved. In some cases we have had those access the US website and try to obtain things that way. Because we are a product brokerage it has cut down on any manufacturing issues, but all products primarily come from the US, so we have had to increase warehouse/storage facilities in the overseas operations which are up and running. There is seems to be a fine line between as you have said that IT has solely enabled the emergence of brands but it has certainly reduced costs in some areas and allowed exposure in markets that were not even a consideration in a previous year.
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I can think of several types of companies that were, in the past, clearly multinational in nature that were not involved in IT. Actually they were multinational brands well before the internet, computers, etc. Car companies routinely imported or exported their cars from the country where their factory existed throughout the world. Granted, their domestic market was by far the most important, but by the 60’s “foreign cars” had started to increase their presence in this country, as an example. Also, United Fruit Company, tobacco/cigarettes and some liquor companies are examples of global brands which have existed for some time.
However, with the internet, and information technology, the world has become a much smaller place. Instead of there being a token amount of global brands and truly global companies, the ability to share information quickly and easily between offices in countries all over the world, has seemingly exponentially increased the numbers of companies thinking globally. So, to answer the question directly, yes, information technology has very much enabled the emergence of global brands. And, information technology providers seem to be one of the most natural fits for becoming a global brand.
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Steven L. Johnson wrote a new post on the site Discussion for Last Name Starting H-M 9 years, 7 months ago
This question is inspired by this reading: Is Your Organization Multinational or Global?
Do you think that information technology has enabled the emergence of global brands? Also, do you think that information […]
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I think that IT has definitely enabled the emergence of global brands. The seamless communication and systems integration needed for a company to be global in the sense of the article (rather than just multinational) would not have been possible without the advances of IT, in terms of infrastructure and cost. IT advances allow people to meet face-to-face even if they’re in different locations. It means people don’t have to worry about how long a phone conversation to a foreign country lasts and how much it will cost, because they can communicate via VOIP. Cloud-computing allows employees across the globe to work within the same system and see the same information simultaneously, allowing for better collaboration and more strategic decision making. A company I used to work for moved its entire customer call center from DC to Arizona because both labor and rent were cheaper there, and this move was only possible because the call center employees could access the cloud-based order entry system to assist with order issues, and had instant access via instant message, video conference, or phone to whomever they needed to reach to resolve a customer problem. Granted, DC to Arizona isn’t global, but the technology that enabled that seamless communication from the west to the mid-Atlantic also enables global companies to communicate and coordinate among their various locations.
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I’m not sure if information technology providers are more likely to become global brands than consumer goods. I feel like it should be more likely because of the nature of their business, but I also wonder if certain factors, like security concerns, privacy laws, and the specialized nature of the infrastructure make the providers more multinational than global in terms of their operations.-
Rachel,
Really good post and I agree with everything you wrote. You piqued my interest when you wrote, “Cloud-computing allows employees across the globe to work within the same system and see the same information simultaneously.” This got me thinking of the time difference barrier mentioned in the article. In theory companies want to different locations to communicate with each other, and access information as quickly as possible. If a company has headquarters on the West Coast and a key supply chain location in Australia you’re looking at an 18-hour time difference. This would leave me feeling uneasy because I need to trust that IT has built a system that communicates well and is automated to handle key processes without human input.
I also agree that IT providers are more likely to become global as they are setup better to succeed, but you do raise valid concerns about privacy laws. The organization will really need to examine the country’s culture and understand all of the laws associated with IT sort of like how Four Seasons did in our previous class. Examine the culture and adjust core principles when necessary.-
Will — I agree that the time difference issue could create a need for IT to be able to correctly enable key processes without human input, but I think the advances in IT also enable the folks in Australia and the folks on the West Coast (to use your example) to look at the same information on their screens simultaneously, if necessary. For example, let’s say I had purchased a marketing trinket from a manufacturer on the West Coast (I’m located on the East Coast). The samples I received were bad, and it turned out the entire run was bad. The manufacturer had to redo the job, but there wasn’t time to redo the job AND send me a new sample for approval before shipping. It had to be shipped ASAP. The solution: the manufacturer and I could video conference so I could “see” the trinket before it was shipped. Going back to the West Coast and Australia example, if the need was urgent enough, the two teams could find a mutually-agreeable time to meet and review data in the system simultaneously — something that would not be possible without the advances of IT.
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I went for the thumbs up and clicked down by accident!
I agree with you regarding that IT has enabled global brands to expand and reach more people. The “cloud” has enabled many global brands to expand into regions that could not have a physical office and enabled a seamless form of communication regardless of location. I’ve seen more and more businesses move to cheaper states and just recently Mercedes-Benz has announced they are moving to Atlanta. Even though Mercedes’s main port is in NJ, IT advances have enabled it to continue its day-to-day operations regardless of location.
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Ali — Well, I clicked on the thumbs up to balance out your accidental thumbs down, but it doesn’t seem to have done anything (or other people also clicked thumbs down). That’s interesting that Mercedes-Benz is moving to Atlanta. Do you know what advantages Atlanta gives the company? I’d imagine there are other less-costly cities, but maybe the close proximity to a large, international airport played a large role?
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Pearson makes the argument that in order to become a global company, communication is key. To that end, IT certainly has an impact. Never before has the process of communication been easier. Technological advances enable faster modes (texting, e-mail) as well as more efficient and robust processes for sharing information. However, a company must first have strategic intent to become a global company. In doing so, it opens itself up to many more challenges that cannot be resolved from IT alone. One example is extensive cultural challenges, both in terms of reaching the target customer and ensuring internal employee collaboration and effectiveness.
To that point, I do not believe that IT providers are more likely to become global brands than consumer goods. In fact, I think it is more likely that consumer goods become global companies. IT providers seem to skew towards service providers or consultants and would likely have more limited and streamlined supply chains. Consumer goods on the other hand have extensive manufacturing and supply chain needs, in addition to extensive needs to customize products based on cultural norms. Between the two, I would expect consumer goods to find greater strategic need to be a global company.
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Hi Chris – I agree that consumer goods companies have a greater strategic need to pursue a global strategy, but I wonder how many of them actually are able to pull it off. For example, Procter and Gamble has struggled for years in adapting a global strategy because too much power and control are tied up with the heads of their individual country teams. Certainly, if P&G could develop a global strategy, they would reap many economies of scale, but so far, at least, they’ve had a difficult time breaking the corporate inertia.
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Adam/Chris – It’s funny how so many of these cases/articles keep bringing me back to the Leadership Challenge book. It seems like many, if not all, of these companies are struggling at one point or another because they haven’t established the “buy in” from the company as a whole for the IT initiatives. As Adam points out with P&G struggles, it wouldn’t matter what they sold – they will struggle to go global until their organizational structure is designed to fit a global scenario. Maybe that’s not meant to be for P&G and reorganizing to be a global company is not cost effective. But, I think that has much less to do with product than it does process/practice. After reading everyone’s comments on the topic, I think maybe the only thing that would make an IT company more likely to become global is the relative standardization of the products involved. But, I think that would only make them more likely to TRY to go global. The organizational buy in is what is going to make or break them when they try.
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Totally agree, Rich. These initiatives need to start at the top in the C-suite, but having executive backing isn’t enough. These companies that are attempting to make major changes to their business model would be wise to follow Kotter’s steps in creating the environment necessary for change.
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Information technology has clearly enabled the emergence of global brands. Without a strong IT infrastructure, the cross-function and cross-country communicated needed would not be possible. For example, Dell Computers could not support plants and offices in Texas, Florida, Poland, Ireland, Malaysia, China, and India without the IT infrastructure in place to support each of the offices, and such coordination would have been in possible before widespread use of the internet. This allows Dell to take advantage of cheap labor in East Asia and Eastern Europe, while still serving customers worldwide.
Information technology providers are probably more likely to become global brands, only because the differentiation and specialization are already part of their DNA, since they’ve “grown up” in a connected world. Consumer goods companies such as P&G or Philips use/used a multinational strategy because as they went to new markets, the infrastructure was not in place to use a truly global strategy. On the other hand, new players in the market may have a natural predilection for the global strategy, since they won’t be constrained by previous best practices.-
Adam – I like your thoughts around IT as opposed to consumer goods. However, there are many global brands that have been around for a very long time and could actually be considered just as well known as IT organizations. The big one that first comes to my mind is Coke. Wherever you are in the world I don’t think you will find a single human being that isn’t familiar with it. I’m actually of the belief that as time goes on we will start to see many more global consumer brands as well because we are now a global society as opposed to where it used to take major effort to release a product into another country, people are going to the same exact websites to read reviews and learn about products. I do agree with your perspective of technology providers have grown up in the connected world, and that is why I think that newly formed companies growing up in this world will enjoy the same benefits.
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But isn’t Coke really using a multi-national or multi-domestic strategy except in their marketing department? Outside the US and Canada, they export responsibility for bottling and distribution to licensees (e.g. Coca Cola Enterprises in Western Europe or Coca Cola Hellenic in Eastern Europe – which are not owned by KO in Atlanta) and only ship the syrup needed to make Coke and other soft drinks.
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Adam – This is an interesting question because I can see both points. From my perspective Coca-Cola uses bottling companies which are essentially franchises that make the product per spec and requirements of Coca-Cola. Coke is also providing the syrup, infrastructure, marketing and essentially everything about the product and company with the exception of distribution. With that being said I’m just not certain but I think of them as a global brand, regardless of their company structure maybe being a multinational company.
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Information technology is definitely one of the primary enablers for the emergence of global brands. But, I think advances in things like transportation, communications and production have also helped companies with the establishment of their global presence. Technology improvements in all these areas as well as information technology have made the world a “much smaller” place. I think the ability to standardize systems is one of the biggest ways information technology advances have helped by allowing companies to focus on other factors required to become successful in the global marketplace.
I’m not sure information technology providers are more likely to become global brands than consumer goods. I think the ability to go global depends on much more than simply your product type or area of business. For example, many of us read a case study about Four Seasons in the HR Management course last month. They are successful as a global brand because of their service standards and ability to replicate a business model in any country and adapt to the subtle (or not so subtle) differences in each different culture. I think information technology providers, similar to consumer good providers, will become global brands if they have a business culture in place to replicate what makes them successful on the local level. Without that in place, I’m not sure becoming a global brand is possible for any company.-
Rich,
You make a great point about a companies ability to go global being tied to more than their product type or area of business. To simply classify business’ likelihood to go global based on their products or line of business alone would be short sighted. You must also take into account the policies and procedure they have in place, as well as the management. It has been said that a company not only needs the IT infrastructure to go global, but must employ “global people” as well. This included those that understand the significance of globalization and all it entails. You brought up a perfect example with your Four Seasons reference. That company not only had centralized values and a singular strategy, but they also allowed flexibility in their model to adapt to the various idiosyncrasies within each country. If any organization hopes to be successful in globalization they will definitely need to be able to adapt to changing markets around the globe.
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Chase and Rich,
Great points from both you you. One thing that I think is crucial is cultural awareness. In the references you gave, Four Seasons, Wyeth,etc, one thing they all did was send in teams and incorporate leadership from a wide variety of platforms during the implementation process. This allowed them to have a better understanding of business needs going into a situation. Undoubtedly, this contributed to both companies being able to go global by adapting to different cultures while maintaining their true entity.
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Rich, I didn’t even consider the communication and transportation side to increasing global presence. You bring up a great point though. If you look at companies like Ebay, their entire business runs on streamlined transportation and without it many global brands likely wouldn’t even exist. I know with Ebay you can order items directly from China and have it shipped straight to your door at a low price. This like you said, really does make the world a smaller place. I also agree with you that information technology providers might not be so likely to become global brands over consumer goods. You bring up a great point with the Four Seasons article too because they were only successful because they adapted to the culture of the areas they were servicing vs just using a cookie-cutter approach to spread their business. I think this is the same concept that has allowed so many global consumer brands to emerge because they have either adapted their product or means of sales to fit localized regions. Take for example the chocolate industry. Hershey’s chocolate is well liked in the US but overseas it is considered bad “fake” chocolate so Hershey’s has invested in “real” chocolate companies and production abroad to reach more consumers with different tastes. I think this is something that would be more hard to replicate with IT vs consumer goods. Great post.
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Information technology has certainly impacted the globalization of the marketplace, and I believe is a major contributor to the emergence of global brands. By streamlining communications, enterprise systems, finance records, and a litany of other business expansion capabilities, IT has allowed companies to go global much more easily than what has been historically possible. I think “going global” was certainly possible before the internet, thanks to other methods of communication and air transportation. However, IT has unleashed global enterprise in a new way and has expanded global access for smaller firms. I do not think there is an increased or decreased propensity for technology firms to go global, as compared to firms from other industries such as consumer goods. I think IT makes globalization possible but I don’t think Apple is better positioned to maintain a strong global presence than say, General Mills, just because Apple is a tech firm. Apple and General Mills both face the same challenges with regard to optimal manufacturing/food prep locations, target market segments, etc.., and this doesn’t fluctuate based on whether or not the company is from the IT industry.
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Andrew,
Good point identifying small firms as the primary benefactors. I got that same sense from the Amazon article – these services put in reach capabilities that were previously reserved for larger firms with deeper pockets. In the case of Amazon, a larger company could more likely absorb the costs of underutilized equipment and resources in order to have them when they needed them, whereas a smaller or younger company could not, potentially missing opportunities as they took the time to slowly scale up. Similarly here, larger firms would be able to utilize “going global” strategies available before the internet, but a smaller firm would probably miss out. Now, connecting around the world is in many ways just as easy as connecting locally.
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Technology advances have become the driving force behind the ease and speed at which information becomes available. These technological advances have enabled companies to compete on a global scale, delivering their products/services across the world at competitive prices. In this dynamic and fast-changing environment, a basic requirement such as having a company website is pivotal to survival. Technology also allow distributors and warehouses to more accurately track inventory levels and fill order shipments, resulting in lower overall operating costs. In addition, computerization and automated manufacturing equipment has led to decreased product, improved efficiencies and an increase in the speed and volume in which products are produced and services delivered.
Information providers are more likely to become global leaders because we have seen increase in certain trends. These trends have grown in importance, and are shaping the nature and the future of the business environment. For example, there is a vast increase in the number of internet connected devices and more companies are accepting payments by mobile phones. In addition, the integration of digital and physical experiences is creating new ways for businesses to interact with customers, by using digital information to enhance the individual consumer experiences with products and services. Finally, consumer demand is rising for products/apps that are free, natural, and user oriented so it is my belief that companies like Apple, Google and Amazon will lead in globalization. -
I think that information technology has certainly enabled the emergence of global brands. Through basic information sharing companies are able to coordinate logistics in a virtual space the same as in an office environment, allowing employees to work in the corporate headquarters, at satellite branches in other parts of the country or different countries entirely, or even from their homes wherever they may be. The Temple OMBA program is a good example of the ability to use IT to enhance learning outside of a typical classroom environment. Classes may be taught and coordinated by a professor in one location, attended by students in other areas, work graded by TAs in still more locations, etc. In many classes I’ve been in so far the professor has been in a different country with no trouble communicating and keeping up on student questions, grading, teaching, and other activities. Similarly companies can use IT to build global brands, where, as defined in the article, operations are run in a seamless, coordinated manner from any location, with no boundaries or distinctions drawn, barring the necessary customs and regulatory hurdles.
IT providers are just as likely as others to operate globally, but have more incentive to at least have product offerings that cross boundaries. This is because the other companies who are trying to build their global brand will rely on IT services to do so. If an IT provider is not global, companies will move to competitors who are, and eventually weeding out those providers who do not move multinational.
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Dan: I think you raise an interesting point related to competitive advantage that I had not previously considered. I had been thinking of IT as primarily an enabler or corporations to operate globally. You’re correct, though. Any IT provider that hopes to play in the big leagues will need to be a global company in order to support these efforts. But I wonder if these companies need to be global companies or simply international ones. For example, on a small scale, we could look at Dropbox. Dropbox had a profound impact on how people can share files and data across machines and between people. Several competitors have since cropped up. But does Dropbox truly need to be global to influence other companies’ global expansion? Instead, I believe it can operate as a domestic operation working internationally. I guess it depends on the product offering itself.
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Chris,
To be honest I’m not sure how to answer your question due to my lack of IT technical knowledge. For a company like Dropbox to offer superior service in Europe, would they be better off having facilities and equipment there? Does proximity affect things like speed of data transmission? For a casual user like you or me I’m assuming the answer is no, but for providers like Amazon or Oracle who handle huge amounts of data storage and processing, I can’t say. Maybe someone else can chime in.
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That’s interesting, Ryann. How did your company decide to make a move to a centralized ERP system? Did they go through an NPV analysis or did it “just make sense?” I ask because a lot of the companies I work with are spending a lot of money installing SAP or JDA right now, which makes a lot of sense to me for the reasons you listed, but I find it hard to believe that they’ve been this successful without an integrated ERP solution before.
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I think that information technology has been a key driver in the emergence of global brands. With IT becoming increasingly more available, today’s
companies are more equipped to go global than ever before. IT allows companies to have better communication regardless of location, and allows
easier information sharing. Without IT, companies in different regions would have a great disconnect. My current employer utilizes IT often. When
company wide training is needed, a single trainer in Los Angeles, CA communicates to all regions across the country via Webex (the same Webex we
use for this program). This allows training to be consistent across the board regardless of the location. The same method is used for our annual
profit sharing meeting, where company growth, profitability, and strategy are communicated nationwide. IT allows all offices to receive this
information simultaneous and eliminates the risk of information getting lost in translation. Although we use IT on a national level rather than a global one, the same information technology could be utilized by global organizations. IT makes the world a much smaller place, and allowsindividuals to communication, collaborate, and share information as if they were in the same room. This in turn, allows many more companies to go global.I expressed my opinion regarding whether I think information technology providers are more or less likely to become global brands than consumer
goods in my response to Rich’s post. To sum it up, I think the likelihood of a company going global has less to do with the product offered and more
to do with the strategy and management of the company. If the organization wishes to go global the likelihood of doing so is closely tie to
management’s vision and understanding of globalization. The information technology needed to go global is more accessible than ever before, so creating an IT infrastructure to support the initiative is no longer a major barrier. The more prevalent issue today is ensuring that your company has the right personnel in place. -
Customer’s needs have changed dramatically, and using IT to reduce time constraints related to acquiring, interpreting and acting on information gives a competitive edge. IT has led to a decline of global barriers to time, space, information sharing and communication by providers, merchants and customers. IT drives creation and growth of international brands, while it plays a significant role in sustaining brand awareness and marketing products globally. IT offers strategic solutions to help drive a company’s brand growth and profitability by delivering global sourcing and enhanced communication and collaboration through technology, faster and more efficiently. Combining customers needs with IT technology will help a company have the ability to influence today’s global trends. IT providers could offer customers more choice and lower prices because there is no overhead cost.
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Shenita, I totally agree with your point of view. As technology brings changes to every aspect of the customers’ lives, it’s also changing expectations for customer service in many areas. This is good news for businesses as, an improved customer experience creates the opportunity for increased sales. When I think about it, there is one major trend that should drive any IT development and that is, the customers need for self-service. Whether it’s in the Bank, at the Airport or the Supermarket. Fueled by our round-the-clock, tech-savvy lifestyle, the desire for self-service options, from online shopping to touchscreen menus in public spaces, is growing. Rather than ignore this growth, companies should encourage their IT personnel to find creative ways to tap the potential of self-service to provide anticipatory services.
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Yes, information technology has enabled the emergence of global brands. Industry trends, customer preferences, and competitor data is now readily accessible so companies can target their next move. Further, speed to market for new products has increased dramatically with technological advancements. Companies are much more in tune to what divisions within are doing and have the ability to utilize this information for supply chain management and cost reduction opportunities. I don’t think information technology providers are more likely to become global brands than other industries. At one time, this may have been true, simply because of the nature of the business – information technology providers were more nimble and the product was virtual so there really was no supply chain to worry about. Technology has allowed other industries to catch up and become more flexible with their business development. Global markets have so much potential value that lackluster information technology is no longer an option if companies want to remain competitive.
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Great summary, Nicole. I think the lines between IT competence, overall success in the marketplace, and global expansion have really become very blurred, and there is now just a great deal of overlap between the three pursuits. While one can enjoy success without necessarily globalizing, I can’t see globalizing happening in any significant way without a major level of IT competence. With the amount of coordination that is required within global firms, and with the pace at which today’s business moves, I can’t imagine how one could successfully pursue the establishment of a global brand without first securing one’s ability to fully leverage IT.
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I think that information technology has absolutely enabled the emergence of global brands. As far becoming more or less global brands than consumer goods, I believe that information technology certainly has that potential but is not there quite yet. I think IT is likely to become global brands going than consumer goods because the vast markets they are able to reach and also IT companies now serve as a major entity for providing consumer goods. Information technology has contributed greatly to the emergence of global brands because of the amount of information that is at our fingertips, accessible to anyone, anywhere, any time. Information is not the only thing available, but goods and services and also the ability to communicate. Information technology has accelerated globalization and made it easy to conduct business from anywhere. I realized this firsthand when I took an assignment last year in Kuala Lumpur. From a customer support standpoint, IT has made it standard for queries to be responded to within hours as opposed to days and weeks it could take before IT. This has helped develop brands through the ability to provide better customer support thanks to IT. It is hard to argue that IT providers such as Google, Microsoft or Amazon aren’t more of a global brand than any consumer good. However, one aspect of IT that could hinder global branding is a countries restriction. Countries like China prohibit companies such as Facebook and Google from being truly global.
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IT has made the management of global consumer brands better. Email, text, web conferencing enable communication and collaborative effort on effective strategies to bring consumer brands to market. As technology continues to advance, information technology providers will reach the status of consumer goods and may even surpass it. Future business sustainability means IT investment and prioritization leading to competitive advantage and increased profit generation. IT reigns in business operations and is the main mechanism in which consumers are reached. Given the proliferation of IT in business as well as society, it is and will remain our ultimate connector to each other, services, goods, and the world. The current and future dominance of IT will keep it in the forefront of everything we do and give it increased acclaim over consumer goods.
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Yes IT has certainly been an enabler for “going global”. Any company with a software platform that can be accessed via the internet can become global at relatively less time an expense than, say, a consumer goods company. Netflix for instance was founded in 1997 and now has subscribers in over 40 countries, with most of their customers in North and South America and Europe. The main barriers to growth for Netflix involve licensing and language issues. For most IT services language and translation will be a concern, but this can be overcome relatively easily. For a consumer goods company there are many more issues, such as establishing manufacturing, storage, and distribution in the various operating companies, trade embargoes, import/export tariffs, and so on.
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Do you think that information technology has enabled the emergence of global brands?
I do think that information technology has enabled the emergence of global brands. Before the advent of the modern internet, many consumer goods were regionally locked meaning a majority of that goods sales happened in the specific region it was produced in or exported to. But now, anyone with a computer can order almost any good and have it shipped anywhere in the world. This is all because of the emergence of information technology and its integration with consumer products and goods. Global brands have been able to emerge because information technology has allowed these brands to market and sell across international borders. A prime example of this is Ebay. A majority of “best priced” items come direct from China and because of lowered trade restrictions, a U.S. consumer can now have an item shipped from their door directly from China. This wouldn’t be possible if it wasn’t for the emergence in IT and these well-known international brands wouldn’t be sold internationally if it wasn’t for IT either.Also, do you think that information technology providers are more or less likely to become global brands than, say, consumer goods?
I think information technology providers are less likely to become global brands than consumer goods because of the sheer volume of customers that purchase consumer goods vs invest in IT providers. IT providers focus more on organizations and contracts then individual consumers which limits their reach as far as customers. Additionally, there are many more established supply chains for customer goods then there are for IT services so again the likelihood of consumer goods becoming global brands it much higher than IT providers. Also with the IT industry, regulations regarding security and privacy limit the overall reach for these providers vs a company who just produces and exports consumer goods. -
Ryann – Thanks for sharing. I think that is great that your company is moving to a centralized ERP system. I think that while IT plays a vital role for our company, our IT systems are still divided. I think part of the problem is that our company customizes our systems to meet the needs of our multiple customers while still reducing cost. Our US division went to a shared services model and our UK partners will be moving to the same model in the next 2-3 years. I am hoping that our iT is looking at how we can centralize some our systems.
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In my view IT has enabled the emergence of global brands like Ebay, Amazon, Google and Microsoft as examples. These technologies companies have built a product set which is used by users across the globe. In many ways IT has also allowed traditional brands from companies like Disney and Procter Gamble to also expand as technology provides a medium for these company to build brand awareness and educate consumers on their value proposition. Technology brands like google, yahoo, and ebay have already been global brands as people now often referr to google for something when they mean search. People leverage ebay to sell all of their old items and say i will list on ebay, not sell on ebay. A paradigm shift has already begun where IT brands are more than IT providers they are buzz words, and common language we speak in every day conversations. You no longer have to be an IT person to use email or find something on the web. As consumers continue embrace services like Uber more and more IT brands will become mainstream brands in the marketplace.
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Steven L. Johnson wrote a new post on the site Discussion for Last Name Starting A-G 9 years, 7 months ago
This question is inspired by this reading: Is Your Organization Multinational or Global?
Do you think that information technology has enabled the emergence of global brands? Also, do you think that information […]
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I believe that information technology has enabled the emergence of global brands. New technologies has allowed companies to operate within various countries based on region specific resources and resource demand from customers; and the availability, cost, or expertise of potential employees. Finally, information technology is more likely to become a global brand at a faster pace than consumer goods. This is primarily due to the level of accessibility providers have to systems, information, knowledge of regulations, and various other factors. Furthermore, when regarding information technology, there is less reliance on the ‘human’ contact. Many IT systems and solutions are automated; therefore, easier to reach and controlled within global boundaries.
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Mori nice post. I like your last point that many IT systems are automated. Prior to the latest surge in information technology there was always a barrier when it came to language. Nowadays you can choose the language you want to read the webpage in and it automatically changes everything to that language. Also, for example on Facebook, if someone writes to me in Spanish I can hit translate and it translate the post to English. All of this is automatic and it is making the growth of information technology even more vast.
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Great points both Mori & Kristen, that the automation feature definitely provides services that further enhance someones ability for people to connect and businesses to operate and expand globally. I was at a women’s leadership conference this week and one speaker spoke about a small percentage of women who advance to executive level positions and the C Suite. An alarming 27% of women who are senior level executives are married. So we began to discuss the reasons and develop solutions on how to improve these numbers. Especially since there is a business case for the need for gender diversity in the work place. The business case is 80% of consumer spending is from women. Women are making most of the purchasing decisions, therefore a larger percentage should be reflected in women being promoted senior leader positions. Also, diversity of gender and ethnicity bring diverse thought. Diversity of thought brings better products and services to market. One reason the number is so low is because women tend to feel more guilty about advancing to these positions because they think they will have to compromise spending less time with their family. They also don’t think they would be giving 100% to their family or career so they torn and choose not to pursue the C suite or senior level positions. So as a solution we began to speak about how far IT has advanced and it’s changing the workplace. Some companies are eliminating the requirement that an employee needs to relocate for positions in order to move up within an organization. Reason being, a leader can be placed in a position, work remotely, and utilize IT resources to help them manage effectively in global or domestic roles. Software, like “the Cloud”, and hardware like Virtual offices, VOIP conference calls have really connected the world globally. IT providers are becoming global brands for business enterprises.
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Everyone, enjoyed reading this discussion. Mori, I agree with Kristen about your last point. Automated systems allow for further reach because they can vet queries until human involvement is required. Kristen, I like your point about being able to translate languages. This automatic IT feature bridges the gap between cultures and enhances a global business’s footprint. Jenica, our MBA program was the first thing that came to mind for me with your mention of companies eliminating the requirement that an employee needs to relocate. I do wonder about human contact as Mori mentioned or having less of a reliance on it. Playing devil’s advocate are we getting to the point where IT is smarted than humans and capable of tasks we as humans don’t understand ourselves? I was listening to an NPR broadcast the other day during the TED talk hour and they were discussing math and algorithms. It was mentioned that IT is creating algorithms that we ourselves don’t understand. It talks about when do lose a sense of the world we have created. When do we lose control because we have less and less human contact? http://www.ted.com/talks/kevin_slavin_how_algorithms_shape_our_world?language=en#t-137884
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Personally, I do think technology has enabled the emergence of global brands. It has streamlined global connectedness on all levels but particularly in marketing. Faster and broader than ever, advertisements hit the eyes and ears of possible customers. Branding broadcasts wildly via the World Wide Web. Where internet connectivity exists, so does branding. Contributing to this emergence, internet accessibility has increased drastically worldwide.
The following interesting article notes four of the top ten global brands are Tech firms: Apple, Google, IBM and Microsoft. The Technology industry brands were valued highest among all industries. While information technology providers may or may not be more or less likely to become global brands greater than consumer goods due to the sheer disproportioned presence in the market, they certainly have exceeded the value and popularity of their consumer counterparts. I am not surprised by these findings. Technology has rapidly changed our communication environment and has bolstered data accessibility. It has transformed the way we drive, listen, talk, write and all-around live our lives. Technology branding will grow as humans’ reliability on technology increases and this upsurge has no slowdown in sight.
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Jordan,
I couldn’t agree more. Marketing has been hugely effected by technology and it goes beyond just access. As we discussed last week, the ability for companies to closely target audiences has turned traditional marketing on its head. While many argue that companies shouldn’t be collecting information about their users I personally prefer to receive ads that I might be interested in than just the same random noise. If we have to be subjected to ads they should at least be relevant!-
Amanda,
Thanks for your excellent reply. I completely agree with your targeted marketing points. Thanks to the internet and modern technology, gone are the days we have to flip through jeans ads when we are not in the market for jeans (or even more memorable, those smelling perfume/cologne ads). Like you, I’d rather companies like Google store some of my search information and sell targeted advertising space than not offer their crystal clear and almost always accurate link to my interests.
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Perhaps because I’m a millenial, I can’t really remember a world before Information Technology and, namely, Internet were synonymous with oxygen. In high school, a sociology teacher gave an interested few of us copies of “The World Is Flat” by Thomas Friedman. When I was reading the book, I remember thinking that none of the “flatteners” Friedman described could be possible without information technology. Whether information technology is the service itself, or whether it facilitates the globalization of a consumer goods brand, it would be impossible to execute marketing, operations, messaging, and other operations necessary to globalize a brand without strong IT infrastructure. As this article pointed out, for a company to develop into a global brand, the essential ingredient is communication, which would be impossible without IT.
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Information technology has enabled the emergence of global brands. Many companies have IT departments that work across countries, whereas other support departments are located in the local countries. Where consumer goods are typically customized to the location that they are serving, most information technology providers provide the same service anywhere around the globe. An example of this is how Google provides more or less the same service no matter what country you are in. They are able to customize the search and also customize the language of the particular country that they are servicing. I am sure that in most countries around the globe they would most likely know what an iPhone vs. a Big Mac or an Air Jordan. Information technology has made the world an even smaller place and I am amazed at the capabilities such as Skype that allows me to talk face to face with family members that live in a remote part of Chile.
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Kristen,
Interesting that you should mention Google. I am always fascinated that when I type in Russian words (in english instead of cyrillic letters) into my regular Google browser, the actual cyrillic words come up. How the heck does google know what I’m trying to spell out, in what language, and that I’m phonetically spelling russian words with a foreign alphabet?! This is truly impressive and I think it’s capacities such as this that allow the company’s global presence to be so extensive. Making it so easy for me, a simple user, I can only imagine what these types of capabilities mean for global businesses.
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Great point Mariya! Google must have some sophisticated coding that allows it to be able to understand words in different languages even when not typed in properly, its one way they are staying ahead of the curve.
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Technology enables diverse cultures to collaborate more efficiently, in every sphere, which results in people and organizations working closely together. True global companies are better at communication, transportation and production efficiencies as a result of advanced technologies. The Internet provides companies around the world with a tool to research and learn more about its potential partners and suppliers. Video conferencing improves communication on a global scale and enables each party to see who they’re speaking and more importantly, see body language which is one of the key elements used to understand what’s really being said. Transportation technology through tracking and GPS features now allow companies to move raw materials and finished products across borders and continents. Technology that tracks work efficiency measurements have enabled these global companies to recognize and improve processes which save on its bottom line. So yes, I believe information technology has enabled the emergence of global companies.
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Absolutely. Information technology has expedited the process of global branding dramatically through rapid transfers and exchanges of information and ideas. I’m not sure it would be fair to say though that an information technology company though is any more likely to become a global brand though than any other company, most specifically consumer goods. I think this comes to a point brought up in another reading where it refers to a consumer brand sourcing in one country, manufacturing in another yet, and then selling in yet another and then providing support to other countries as well. In fact, the outsourcing of information technology providers has clearly made them all global entities if they choose to be, but they are now helping to facilitate globalization of organizations that previously had difficulties with management of information across time and space.
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I strongly believe information technology have made emergence of global brands. Technology provide platform and interface for all employees working on same task simultaneously all over the world, allow instant exchange of information, idea and techniques. Technology further enables a solid connection with all of places with differential advantages, such as natural resources; the availability, cost and expertise of the talent pool; the local regulatory environment; and/or the needs and resources of the potential customer base; it also gives companies the ability to truly leverage these competitive advantages and build an integrated global enterprise. Therefore, information technology are more likely become global brands than consumer goods. For example, China has developed a communication program, called WeChat, similar to facebook, but it is much easier to use as it can be used in any device, as long as it could receive internet signals. I could talk or write to my friends all over the world instantly, and it is free. The information goes so quickly to friends groups, I feel my friends are so close to me, even they live in the other side of the globe. In addition, it is a tool which have connected all of my friends here in the states. I no longer need to write email, just text, speak, or share any information, photos, music, videos by one click.
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When I think at the difference between multinational and global, in the way they are described in the reading material, and all the interconnected pieces that work together in a global organization it is absolutely clear to me that the web, and IT are essential components of anything that is global. Actually as far as I remember, the world globalization did not exist in the pre-internet era. Consumer goods can be the end result of a global manufacturing process. Therefore, in my opinion, IT enables the global production of consumer goods: consumer goods and IT are interconnected at the global level, a level developed by IT.
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Cataldo, you bring up a great point about how IT and consumer goods are interconnected. IT has really further enhanced and broadened CPG companies distribution models. IT provides a more efficient way to expand their product reach to consumers or markets in a more cost effective way, which wasn’t even possible 10-20 years ago. As technology further advances, it will be interesting to see globally how both the manufacturing and distribution processes change. How they will increase speed to market for Goods and services even more.
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Jenica: IT, and the web have changed the way we leave. It is great to be part of this hystorical change!
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I think information technology has enabled the emergence of global brands because Internet access is no longer a luxury – although the cost of that connectivity might still be in certain corners of the world. Technology is what has helped bridge the gap between the cultures of the world. I think global branding goes hand-in-hand with IT marketing, but most importantly I think IT provides the communication needed to be global. I do think that IT providers are more likely to become global brands because there is such a limited footprint needed if they so choose. I think this link provides insight into why IT providers are more likely to become global brands when you can get your product to the far-reaches of the globe with minimal impact: http://inhabitat.com/unicef-upcycles-oil-drums-into-solar-powered-digital-kiosks-for-uganda/digital-kiosk-uganda-6/
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I believe that information technology has enabled the emergence of more global brands. However, IT did not create global organizations. Many different events in modern history – not just the information age – have all helped to contribute to global branding: capitalism, the Industrial Revolution, the discovery of flight, government deregulation to stimulate global trade, and so on. America has long been the birthplace of global brands such as American Express, the New York Times, DuPont, GE, 3M, and, in the case of this week’s readings, Wyeth – all of which were founded in the 1800s with the exception of 3M (1902).
IT, for the most part, has helped these companies continue to grow and become even more profitable. Entrepreneurial spirit has allowed people to move new technologies from their garages (Apple and Google) into the mainstream and allowed them to handsomely capitalize on their innovations (http://www.bloomberg.com/ss/07/06/0608_tech_birthplace/source/1.htm). Information technology has allowed all brands, new and old, to evolve by refining and expanding their services into new and dynamic sectors. An example from this week’s readings would be Amazon who started off as a retailer but has become a leader in cloud computing. Finally, I believe that information technology providers are able to scale as global brands just as well as consumer goods. Obviously, there are huge global IT companies and there are enormous global consumer goods companies. The common theme is that IT uniquely facilitates and supports the growth for both entities.
Where I think that information technology has the potential to flourish numerous global brands is in emerging markets. Cloud computing has undoubtedly empowered startups in those regions and provided them with access to massive amounts of infrastructure to immediately scale their businesses in the population dense areas. Because of cloud computing, these markets have been able to leapfrog old technologies and methodologies which required significant investment in hardware. Now, they can operate in a strictly virtualized environment. As such, emerging markets may be able to usher in a whole new era of innovation and inguinuity.
http://www.huffingtonpost.com/ben-uretsky/the-future-of-cloud-hosti_1_b_4632226.html-
**ingenuity**
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I wholeheartedly believe that information technology has enabled the emergence of global brands. Recent technology has broken down huge walls in regards to communication barriers and has allowed information to flow more easily and allow transparency. Within my company, I’m constantly connected to our employees in China and Australia and according to my boss, “with the resources we have provided you, there is no reason for you to ever skip a beat”. With that being said certain technology provider still have the same barriers as consumer good when entering new markets. Our VAR (value added reseller) for our CRM system is the most most popular system in our sports industry and is ranked #1 YoY against its competitors. However, other than our company they lack a global presence. They are still learning how international teams do business and how it differs from the states. In many cases accounting principles are different, exchange rates policies, and laws regarding sales. They have to take all of this into account and determine if they need to change their own business model and if they need to customize their product.
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I really do think information technology has enabled the emergence of global brands. IT has become a major architect of business activities in today’s global economy. It is a facilitator of fundamental changes in operations and management of organizations due to its vast man y capabilities. With the rapidly growing popularity of information technology, I also do think that IT providers are more likely to become global brands with inevitable presence.
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Do you think that information technology has enabled the emergence of global brands? Also, do you think that information technology providers are more or less likely to become global brands than, say, consumer goods?
Wyeth case was ample representation of the role of IT in developing a global organization. Although the brand recognition occurs through availability of the product in those markets, the IT helps delivery of the brand into each region building the global brand country by country. The IT has indirect influence over global brand development. Solutions provided by IT enables large company like Wyeth to ensure the product is managed properly and consistently throughout the world. The IT systems globalization within organization equips each regional company to push its products to local market. On the other hand, the emergence of IT had leveled playing fields for the consumers to get exposed to the marketing messages from the companies. The small advertisement on twitter is now viewed across the world. With the emergence of global infrastructure with rapidly growing technology, any company is able to become a global brand. In last few years, we have seen start up become global brand such as Uber or Airbnb. Each off the company, as we studied earlier, was able to utilize the latest IT systems to build its business model. These models were then globalized both from consumer demand that was generated from global marketing and company’s ability to push through new market using the IT infrastructure. Direct to consumer advertising has played a big role with growing IT platforms that any company is able to become global brand.
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Yes, IT has enabled the emergence of global brands by allowing geographically distant parts of an enterprise to coordinate their operations with reliable data. “The left hand knows what the right hand is doing” thanks to IT. Best practices can be determined by analysis of huge amounts of data, and processes can be modeled and simulated in ways that were unimaginable before the information age.
IT is more likely to be a global brand/service than consumer goods. As evidenced by the Wyeth example (pharmaceuticals), consumer goods face a complex web of regulatory challenges to roll out products in different countries/regions. IT more easily crosses borders, though there are examples of regulatory snags that can be hit. Look at issues of censorship, Google in China…
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Steven L. Johnson wrote a new post on the site Discussion for Last Name Starting N-Z 9 years, 7 months ago
This question is inspired by this reading: BYOD Drives Communism Out of IT.
To what extent is BYOD (bring-your-own-device) supported in your workplace? Do you see any tradeoffs between individual productivity and […]
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At the Rothman Institute every employee is allowed to use their personal mobile devices to access patient data as long as they use the encrypted RI or Jefferson email services and avoid ever discussing sensitive data over personal emails. This is appropriate for many reasons at it respects the privacy of patients as well as being in line with HIPAA regulations. We have the ability to access the PACS system (imaging archive system) from our mobile personal devices with the caveat that that nonredacted images are not stored on the device. This allows for greater access and freedom of connectivity anywhere in the world. The downside however is the potential for Spyware introduction which recently occurred and resulted in the deletion of a large portion of patient files. We fortunately were prepared for this and had available back up files. We need to continue to define rules and regulations to have all personal devices inspected and approved with rules on how to avoid the potential for viral spread. BYOD has revolutionized the ability to provide clinical care 24/7
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BYOD is currently a very hot topic at my workplace now. A policy change was finally enacted 2 years ago to allow our personal smartphones to access the company’s email system. At the beginning of 2015, a new secured Wi-Fi network was created for our employees with the purpose for employees to be able to connect personal devices in the office. In my opinion, the intent of the new Wi-Fi network was to build employee satisfaction in the form of added perk for working at the company. The other intent was to improve personal productivity and efficiency for the many employees that had to leave their work spaces in order to use their personal devices as data connections were very bad at many work locations.
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Duke its very interesting to learn that BYOD was an initiative to build employee satisfaction in the form of a added perk at your workplace. I guess you are right, in a way employees get to chance to catch up with their friends and family and other personal day to day activities/chores etc, which essentially is part of promoting a work life balance and flexible workplace.
But this is very beneficial to the company, because if you have happy/satisfied employees with many other perks such as this one including, you build a culture where employees become more responsible, dedicated, loyal employees that end up resulting in a high performance organization. Kudos to your company’s IT strategy-
Kumar, thank you for the feedback. As you noted, any perk that provides employees with a work life balance and a flexible workplace is huge for any company. And it doesn’t hurt that the company can get all the benefits that comes along with happy and engaged employees.
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Absolutely, I agree too. We all will feel good as employees and the culture that is around it, will make it even better for all of us.
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Very interesting Duke. Have you found more people choosing to work away from their desks now that they have Wi-Fi capability? I have found the one of the most interesting aspects of personal smart phones having access to the company’s email/calendar/contact revolves around some of the privacy issues. For example, many company’s can erase your calendar and contact information if they choose (typically when someone is let go.) I’ve also heard pilot programs that require employees to sign permission for IT to sweep phones for security purposes. These type of issues are often scene as necessary risk management precautions, but how much access should IT have to our personal smartphones? I wonder if you have been asked to ‘agree’ with anything like this? Does your company’s Wi-Fi have WebSense or another filtering system?
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Ron, thanks for the feedback and the great questions. Employees have had the ability to work wirelessly for a while now and almost all of us take advantage of this. The BYOD network is strictly just for personal devices and does not allow access to the intranet. As I noted to on another post, my company has an implicit agreement that anyone using their personal smartphone to access company’s email will allow the company to do a remote wipe of just the app and not the entire phone. I am not familiar with WebSense but I do know we use FinJan which I assume is similar.
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Duke I agree. The writing discusses having a dual network where employees can use their own devices on one Wi-Fi network and then access their personal information on another. That would provide the security necessary for the firm but allow the freedom of movement and convenience for the employee. It is interesting how your company provided this service as an added perk for employee satisfaction. It appears that this would also tremendously increase productivity as you said by not keeping employees chained to their desks. As long as BYOD doesn’t allow intrusion of unwanted viruses or spyware and data security is not breached this movement will be, in my opinion, the norm in most businesses in the future
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Alex, I have only connected to the new secured Wi-FI network a few times but have been assured that no one can cause problems on the company’s intranet through the BYOD network. I have also always been very aware that connecting to a company’s network comes with the implicit agreement to be monitored and recorded. Although I am not too concerned that I could be monitored, I have made a conscious decision to limit how much I use the BYOD network just so it does not give the appearance that I am “slacking off”. In addition, I am lucky that my work space does not affect the data connection on my phone but I will jump on BYOD network to check Temple email and this site when I am in the bad spots.
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BYOD is supported at Temple Health System to an extent. That is, mobile devices can access the Citrix portal and also integrate MS Exchange into their mobile email/calendar/contact apps as long as they are an Apple iOS device. And they issue an iPhone to the physicians and anyone else who previously would have been carrying a pager, although you can opt out and use your own iPhone if you like.
So as a physician, not only can I sync my calendar and emails to my personal iPhone or iPad, but I can also view X-rays and CT scans if I get a call about a case when I am not at work or near a computer. All that said, if you are on Android, you are out of luck. So when I recently switched my personal phone to an Android, I learned that it would no longer “sync” or even access Temple through the Citrix app anymore. When I asked our CISO about this, he said that they are simply not happy with the level of security with the Android environment, so I now carry two phones almost all the time (the work iPhone and my personal Android). Here is an interesting interview with our CISO on this exact topic(!!):
6 must-haves for BYOD to work: A chief information security officer’s perspective
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Thanks for the story Saqib. Across large enterprises, Android is practically non-existent from both corporate owned and BYOD programs. A lot of IT departments will argue that Android is not as secure or less secure than other mobile OS. In my opinion you can achieve a sufficient amount of security using iOS< Windows, or Android. Rather, in my opinion, I feel that IT departments just do not want to deal with the extremely broad variance in Android devices – versions of operating system, manufacturers, customizations. Even in BYOD programs, IT will still want to ensure that their applications and systems are going to be supported on employee owned equipment. It's easier to restrict access to iOS and Windows because there a very high level of consistency – model to model – on the operating system.
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Thats another problem with these BYOD. Often times either you end up carrying two devices like Saqib mentioned or you end up not taking advantage of the BYOD benefit at all. IT in some companies do not want to implement or maintain different security systems on various BYOD devices. IT communism as the article suggests will dictate what you should be doing, as you have no choice but to wait until something brings about the change.
I agree as Kevin mentioned above, IT just picks something more familiar or more commonly used devices across the employee pool and have the system in place. They just do not want to guard too many doors which I understand is reasonable and is cost effective. So as an employee you are stuck with the device they suggest or end up switching from your favorite device just to comply with the IT and BYOD benefits.-
One of the reasons that BlackBerry is still around in some organizations as the only mobile device option is because of the huge investments IT departments made in server software, devices licenses, and support services. On the other side IT departments have needed to change, offering alternative options in order to attract younger generation talent that requires their tech to be supported for both work and personal use.
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I have the same issue with my Android phone. It is very difficult to carry two phones while working. Kevin, I agree, the existence of Blackberry is because of its security and I feel like they have changed their strategy to focusing more on their software and providing better security. I think Blackberry will make a comeback with all the latest cyber-security threats going on. I was wondering if anyone had any experience with the Samsung Knox? How is their security compared to Blackberry and Apple?
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Very true Kevin,
My company took forever to transition from Blackberry issue to consumer choice plans. Part of this was the infrastructure and employees we had invested in supporting all the company’s phones, as well as the perceived increase in risk associated with personal smartphones used for business. In the end the cost savings and employee happiness one out. Employees are now responsible for their own service issues, setup issues, traveling (international)…etc, this allowed us to reallocate an entire division to other needed IT initiatives.
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Vinay, I think BlackBerry has seen its best days – at least as a manufacturer of smartphones. Their enterprise mobility management (EMM) software is a leader in the industry, but there are dozens of competitors (Mobileiron, Airwatch, IBM MaaS 360, Microsoft to name a few). Samsung has launched KNOX as suite of enhanced security policies for their Android devices, to differentiate their devices from standard Android OS and other manufacturers. To enable KNOX capability, a company would need to leverage an MDM or EMM (see list above). Companies have replaced BlackBerry and its back end in favor of BYOD – only to find that using basic Exchange Active Sync does not offer enough end user functionality or security. Now enterprises and back to server software and licenses (although some offerings, like Airwatch, can be available in a cloud-based solution).
This morning I caught this article that highlights some of the concerns that IT departments have with opening up their networks to support Android: http://www.informationweek.com/mobile/8-android-security-concerns-that-should-scare-it/d/d-id/1319412.
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BYOD is generally not supported in my workplace, which is a pharmaceutical company. With over 40,000 employees worldwide, it appears that IT wants to ensure that everyone is using the same devices with only IT-approved software and that people are keeping personal use separate from work use. There are some exceptions for people that do not want to switch from Blackberry to IPhone, but for the most part everyone is using the same devices. While this has some advantages, particularly with respect to getting support from IT if a problem arises and protecting confidential information, there are certainly downsides. I think the main downside is that it is very difficult to add on software that could be useful to the productivity of the company without going through IT. If we try to download new software, for example, we are usually blocked from doing so. So, overall, IT has made it very difficult to use any device or software not provided internally. While I do not think this is a bad policy because we need to protect confidential information and ensure that we in the legal department know where all relevant information to the company is being stored and used, we should look into ways to support allowing employees to use things that would make the company more productive and efficient.
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Jonathan,
With cybersecurity becoming an omnipresent threat, I don’t mind some degree of restriction at my workplace if its truly a tradeoff for security. We are also not allowed to install applications on our work phones or desktops unless we get administrative permission. But if we use our personal devices, the only main restriction is that the device has to have a password lock on the device to work. If you disable the lock, the applications to access the MS Exchange or Citrix portal will not work.-
Saqib, I like that your work has come up with a solution to protect work information such as if the lock is disabled, you cannot access Citrix or work-related materials. Although we cannot really use our personal devices at my work because IT will not provide access, we do not really have too many BYOD complaints as people seem to be excited that they are given new technology at work every year or two. Instead, the complaint seems to go to having to carry more than one phone and if they could, I think people would actually want to use the work phone for personal use as opposed to the other way around. I think if we had some technological solutions to protect privacy or enhanced security features to separate personal from work use, we may be able to accommodate people who want to use their work phone for personal use as it sounds like other companies have been successful in allowing employees to use one device.
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BYOD was rolled out at TD Bank in the US during the past year and is widely encouraged as part of our “Smart Efficiency” initiatives. Back office employees with company issued Blackberry devices had to turn them in unless they were classified as “road warriors” or had another valid exception approved by senior management. There has been an overwhelming positive response by employees that opted for BYOD and I have seen increased individual productivity. For example, many leaders and managers did not travel with laptops or bring them to meetings, but many are now using their iPad during travel and in meetings, increasing their productivity. We have also seen cost savings from less printing usage (lower paper usage and printer related costs on toner, etc.) that contributes to our Green Program commitment. The organization also benefits from those individual productivity improvements and has been more efficient with demonstrable cost savings. The main pushback from those not adopting has been privacy and security related concerns but many continue to adopt as they see co-workers working effectively with their own devices without experiencing those issues.
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It’s great that the upside is the reduction in use of paper and costs involved in printing. I would have imagined especially in the banking industry the big push back as you said Paul was the security aspect. Does TD have to approve the device being used? Although it increases productivity on the bank side, it also encourages those to never ‘switch off’, often completing work tasks, answering emails late into the night. There was an interesting article recently that VW in Germany had now put in place settings which did not allow work related emails to make it to individuals phones/laptops after a certain time at night. They found that staff were getting burned out after working all day and continuing late into the evening and weekends because they had access via their smart devices. It’s certainly a more European thing to switch off/take vacations than here in the US. Is there software that TD provides to employees to ensure safety?
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Hi Elaine – yes TD does have to approve the device being used but it just has to be a device that works with any of BlackBerry OS 10.2, Apple iOS 6.01, Android 4.0 or a newer version of these operating systems.
I understand the concern about employee’s switching off but I think that can be influenced by the company’s culture and how they communicate expectations when providing access. It’s voluntary at TD and meant to make it easier for employees vs working longer hours. I have spent a fair amount of time in Germany when working for Siemens and we were having Bavarian breakfasts with beer in the office on Friday’s and enjoying the biegarten’s when the clock struck five during the week. I also think there were only 11 months in the year on their calendar because it was tough to find anyone in August – definitely not the rat race we have here:)
We use Good software for security – below is the link in case you or other fellow students are interested in learning more about it. Thanks.
https://www1.good.com/
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BYOD is supported in our organization. We have a policy in place that any employee choosing to bring and use their own devices for business purposes needs to review and sign. IT department also needs to certify that the device has adequate antivirus and provide login ID for the device, this ensures that they still have some control over the organization’s IT access. We also have a secure Wi-Fi access that employees need to log into to access any organization’s shared drives, programs or documents. We also have a guest Wi-Fi access that employee can use if they have their own devices that are not going to be used for work purpose. I believe the support for BYOD has improved productivity and efficiency as employees are able to use their devices of choice for work. This also reduced the cost of buying or updating devices especially for staff members who are out in the field who may require mobile devices.
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Unfortunately, BYOD is not really supported in my workplace. The company issues iPhones, laptops (w/VPN), iPads, etc. to most people on staff. If certain employees have their own iPhones, they are expected to get a company issued iPhone. The company likes to keep track of all hardware and software used for business purposes. I once requested that our Adobe Creative Suite programs be provided via Adobe’s Creative Cloud and purchased on our region’s credit card, instead of the expensive CDs ordered by IT that break, get scratched, are lost, etc. I was told that IT in our headquarters office prefers to purchase and send CDs to each office, but never received an explanation for this preference. The software used in this suite is needed to work on most marketing collateral and, since there also seems to be a somewhat lengthy approval process for new hardware and software, many folks go quite some time with getting no real work done while they wait around for the purchase of the CD to be approved, then ordered, and finally delivered to our office from headquarters. Purchasing the Creative Cloud ourselves and expecting to be reimbursed is not an option and using our own software on our own laptops is also frowned upon. The only instance I see where it’s okay to bring your own device is for those of us with Android mobile phones who use Microsoft Exchange for emails, calendar entries, scheduling our own meetings and calls, etc.
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I have had the opportunity in my 14 years at Verizon to interact with dozens of IT departments, CIOs, CTOs, VPs, directors, and managers. I have witnessed the consumerization of IT, fueled by the advancements in mobile computing and wireless network innovation, fundamentally change how IT departments operate. As described in the article, IT has traditionally been (and still is in many companies) the gatekeepers to technology – and sometimes those gates are very strong and rarely opened. Previously IT departments would hold back on implementation of anything other than BlackBerry and use the guise of ‘security’ as a reason to limit choice. With a wide variety of devices (iOS, Android, and Windows) and robust mobile device management tools, IT can allow for a wide variety of end user devices AND still enforce security of data. The leverage is shifting to the business units and employees. BYOD is providing an opportunity for IT to become a strategic partner within businesses – able to empower the business units and their employees with programs like BYOD and ‘any app, any device, any where’ to increase employee productivity, efficiency, and overall business growth.
Studies have shown that companies that allow for BYOD can obtain 2 to 3 additional work hours from employees every week with minimal costs. Many companies see the ability to get out of the ‘device business’ as a way to eliminate significant hardware costs from IT budgets (it’s not cheap when you have to buy 1,000 new iPhones for a business unit).
On the other side, BYOD has caused some IT department budgets to increase – rather than lower costs – because there is increased spend $$ on end user support (having to learn new operating systems, software versions, and devices in order to support the workforce). Some large enterprises I have worked with have rolled out corporate BYOD programs and then closed them down after a couple of years because the costs to maintain far outweighed the advantages. IT could get bogged down supporting BYOD and fall behind on other initiatives that were supposed to have been capable with the increase in time from having to manage corporate owned mobile devices.
At Verizon, though, we do practice BYOD – in a limited fashion. Everyone in corporate is provided a smartphone and tablet for work purposes. Enrolling a personal device for Exchange ActiveSync or MDM is not permitted. However, sales, marketing, and operations staff have the ability to utilize Citrix Receiver for virtual desktop access. I can use the Citrix app on practically any device or PC/Mac with a web browser to obtain secure access to a virtual corporate desktop. This is a great tool for enabling me the ability to use my personal Mac for access to work information – AND when I travel I can leave my massive company-issued Dell laptop at home. I can get what I need from my personal Mac w/ Citrix, tablet or smartphone.
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The company that I work for does not support the BYOD concept. I was not really sure why until I recently changed positions into a different business unit. Once I transferred, the IT department allowed me access to certain parts of our network I never knew existed. I was awarded additional access through my company issued laptop and IPhone. I am by no means an IT wizard, but I would think that would be tough to manage when utilizing a BYOD policy. Another issue is the IT management piece within a global organization that has high turnover/relocation rates. It would be very difficult to track who has what access and who is moving on to different business units and new roles. To me it seems that this would create a job in itself, especially if employees are changing or updating their personal phones and laptops. The tracking aspect would be very difficult and could result in security risks. I prefer the way we operate, and like to have different devices for my personal use that my company can not access remotely.
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Hi Stephen,
I understand your concern with managing user access especially in an organization that has a high turnover rate. In our organization’s case, everyone who chooses to use their own devices gets an access ID that they use to login to company information. More like the way we log into temple website. They still have the same restrictions when it come to what documents or information they access, same as if they were using a desktop in the office. There is also added security when it come to what document can be downloaded or printed. When an employee leaves the organization, our HR department coordinates deactivating all their access as part of employment termination process.
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I work for a biotech and our company has embraced BYOD few years ago. Initially they started with iPhones, Blackberries, lately with tablets. But the options are limited due to security and network concerns, employees could only access outlook, calendars etc. But accessing any applications related to real work has not happened yet on any of these smartphones or tablets.
Our company provides laptops to most employees and desktops to others depending on requirement of the job, we also have an option to connect NT servers via VPN or citrix
and work remotely anywhere nationally and internationally(with special permissions). Our ability to download any applications, software, files, etc on a company provided laptops/desktops are slim to none and is strictly controlled by the administrator and are secured with various firewalls. The storage for individuals are also limited on the shared drive as well as on company provided laptops.Having BYOD may have helped employees to catch up on the communication piece of their day to today jobs, it has helped folks who are travelling or always on the go to keep up with other colleagues/groups, tasks, meetings, etc but when it comes to actual productivity using these devices to do the actual work has not happened yet and I don’t see it happening any time soon. We do not have the ability to access our servers or applications relevant to real work and is not available yet. Cloud computing is not something we have implemented yet either and I don’t see anytime soon due to nature of our business and the data.
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BYOD is supported in a limited sense at my company. The company allows us to download the software to access the internal outlook application using our personal smart phone devices. However, we can only use personal computers provided by the company to access the internal data base. The BYOD methodology could be effective as long as there is data to support the productivity of individuals before and after the change. In addition, if there are reasons that prevent an individual from being increasingly efficient and productive, then maybe considerations should be considered to make a standard changed rather than individually based.
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I am old school when it comes to the issue of supplying your own electronic devices for work. I think a lot would depend on the type of work your company does due to data security issues. It seems like there would be many companies that need to safe guard their information. I completely understand why companies don’t want employees downloading various things on company equipment and risking a security breach.
I would prefer to use my company issued computer and software for personal use rather than use a personally paid for computer and software for work. I do not think it is a good idea to promote people mixing up their work and personal lives any more than they already do.
Regarding the article, I think the comparison to communism was a stretch but it forced me to look up the definition of Glasnost!
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Hi Kristin – I can relate to where you are coming from when it comes to wanting to segregate personal devices from work. At TD, we subsidize the cost of the services for employees on their personal device (since they also use for work) and that has helped drive increased adoption. I like your point on the family/work balance – can be tough to manage whether on your own device or the company’s. Just ask my wife about how my Blackberry ended up in the Pacific Ocean on one vacation:)!
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Kristin – Embrace the dark side. It’s coming and you can’t hide from it! (Just kidding…) You bring up some good points about the lines between personal and corporate use. To an extent, these worlds are colliding and there isn’t much we can do about it. Devices are viewed as a way to increase productivity, or a way to organize your life, or a way to stay connected. Pick your marketing line, the fact is that devices are weaving their way into many aspects of our lives and that is not necessarily a good thing. I could easily argue that devices make us less resourceful, more dependent and less social. Furthermore, I could argue that devices only make us more productive because they allow us to work more. The bottom line is that I see devices are a catalyst for the collision between work and personal lives. It is clear to me that the balance is already disrupted. Only time will tell the real longer term effects of this disruption.
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Thanks for the encouragement Joel! I am coming around to embracing IT. Excel and online shopping are wonderful things.
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BYOD is pervasive at Microsoft. With a global and highly mobile workforce, safe and efficient access to internal resources is key to productivity. The overall strategy is enabled by layers of security that apply to different systems based on the type of information contained on the system. Microsoft also segments public/private networks and enforces different rules based on the network type. If you want to sync your mailbox using a mobile device, that device must accept a security policy which enforces a PIN and lockout time. It also enables the phone to be wiped by internal support representatives. If you want to sync your mailbox to your tablet, a similar policy is enabled. If your device doesn’t support the policies, then you are out of luck, but you can still access the web version of your mailbox on Office 365.
Access to corporate systems is different. Some systems are available over the internet and require your corporate credentials. Other systems require a connection on Microsoft’s network or a secure remote network connection established by two-factor authentication. Regardless of the process, the bottom line is that Microsoft wants to get the most out of their people and they aggressively remove impediments to productivity; however, that does not mean that they compromise on security. BYOD can be viewed as a productivity enhancer as long as you don’t compromise on security. If you ignore security in BYOD, you will lose as much time fighting problems/attacks as you gain from your workforce.
I have worked with many companies on BYOD strategies and security. Many companies seem to view the security challenges as insurmountable. Apple and Google while popular devices have a history of compromising on security which traditionally has made organizations reticent to take on the risk. With that said, their market share is so high and their security has gotten to the point where it is “good enough”, so many past barriers to BYOD are crumbling or have already fallen. -
As I am affiliated with a global e-commerce company all devices are BYOD, however the company does provide secure web-based apps. With so many options for people on the go from smartphones, to ipads to laptops. The decision was personal as to which device we used, as I said because its web-based if we needed to we can use laptops, Macs for larger projects we could. BYOD in an office space would concern me regarding security features such as personal details being leaked or as we read in a previous case study how they were hacked and held for ransom. With so many stories about security issues, does a BYOD increase this and by what percentage? With the preference being to smartphones, do companies make significant savings if they are not providing additional devices.? I have known some companies to only provided outdated laptops and frustration often sets in and personal laptops are then converted to use. I would organizational efficiency would exist if all the devices were the same with the same software installed. But how efficient can an IT department be if all the devices are different and to provide support to these users would mean that they would need to know every detail about every device to be efficient. We’ve ran into this in previous classes, yes BYOD, but the program could only run on Windows so the Mac people were well… out of luck. I would think that a BYOD environment would cut down on lost/broken devices with each person responsible for their own device and the cost savings their could be significant. Personally we typically keep up with new devices being released where companies tend to be on the slower side for no other reason at times than the cost factor. As far as individual productivity like I said on Paul’s comment, when you have your own device and can use it for work, its very difficult when to know when to switch off. Yes your productivity increases but at what cost to your personal/family life.
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Elaine, the security concern with BYOD in the workplace is a valid an important thing to consider for any company so due diligence is imperative. For example, my company uses Good Enterprise app to allow employees to access the company’s email on their personal smartphone. This app works on all phones but the key thing is that the company can do a remote wipe of this application whenever an employee report that their phone is lost or stolen. I am not exactly sure of all the mechanics but our email administrator are able to wipe just that application’s data off the phone. My company waited until the technology and security caught up with our policies before enabling us to access our email on personal devices.
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My company does not support BYOD. There a couple reasons for this and both are, in many ways, a poor reflection of the asset management capabilities we possess. We are a small, privately held organization and that brings with it a level of ownership control that limits open mindedness and trust. There are likely past instances that have brought this thought process about, but in an age where BYOD would allow for greater capability, this policy has proved to be a detriment. This, coupled with the fact that employees are charged $15 per month if they want to add the data plan to the company issued cell phone, causes the sales force to be, in large part, away from email when in the field. With high sales turnover, phones typically are not returned timely and many times new devices have been issued to new hires when devices that could be re-purposed sit in field offices or are not returned at all. From an employee standpoint, if you do not turn in the phone, you are charged $50 so I think, though do not know for sure, that many feel as though that is a small price to pay for an Android so they simply pay it. We also track our field technicians location via cell GPS to make sure they stay focused on the tasks and calls they are assigned. As for me, I forward calls to my personal phone and have enough knowledge in our email process to be able to set up email to that phone. So I guess I am in violation of our company policy, but carrying two devices is a burden to me and being out of touch during the business day if I am not email capable is a burden to my customers
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Mike,
What a hassle. It sounds like your IT issues are not so much the hardware but rather a lack of service options. Would I be correct to state that if the phones had data or e-mail capability many of the issues would go away? You would think their should be some way to make the case for an ROI of paying for the data plans. I find it very interesting they charge employees for an option that is needed to perform work in a timely manner. It appears to be an over charge as well. In your case I guess sometimes breaking the rules is a good thing.
Bruce-
Bruce, we have those options, but with us it is more a lack of trust on behalf of ownership, and a means of cost control as well. There is a clear ROI, but despite the fact we provide Managed Technology Services to our clients, and our NOC personnel could handle the support, our owner does not see the benefit of investing in his own people in the same way. It is the case of the cobblers kids always having the worst shoes.
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Just call me jealous of any one that has BYOD in their workplace. As a government contract working for the DOD in a secure office I don’t get to many choices for hardware. In fact my office does not even allow for cell phones. The IT department is very limiting for the Navy. We are limited by the contract awarded for the Navy and Marine Corps Intranet (NMCI). NMCI provides computers (PC), with basic Microsoft OS, basic Office suite, and Network support. The support is very difficult to navigate and expensive to make any changes to the hardware. Any changes that are made requires more money, these changes include moving a computer location across the room. Each computer is assigned to a specific port and can not be moved. This leads to offices with cords strung across the ceiling, walls, and floors. This lack of BYOD does make our IT lives difficult but does assist in security. Due to the office area being a location where sensitive information is discussed it is paramount to have secure hardware.
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Bruce,
I agree with the government’s strictness for BYOD. I once worked at the VA and they wouldn’t even let us connect anything to the computers(including USB drives). So when we had to make presentations, we had to email ahead of time to a certain person and then they would load the presentation up to the computers. It was very strict, but I guess well worth it if it makes it harder for someone to hack onto the computers.-
Vinay,
The USB issue is well known through out government. Removable media has become such an issue that only one person in our office is allowed to even burn a CD. Their worry about security has made our job very similar to the 100 meter hurtle you see in the Olympics. I would imagine that some of the rules are solely in place due to laziness or product licensing, not because of security. It would make us much more productive if they were to work with us and allow BYOD within certain parameters or with certain restrictions. I am sure we can work something out if given the chance.
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Bruce, understanding that the contract price wins in dealing with the Government, do you think security has more to do with the decision than the resistance to BYOD? I have been in bids involving removable hard drives in copiers in the late 90’s up to highest security data erase on imaging systems recently and many of the specs I see are focused on security more and capability less.
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Bruce,
In your field, I can totally understand why you aren’t allowed to BYOD. Security, specifically with regards to your anonymity, is incredibly important. I have several friends in the military and none of them every were allowed their cell phones while on duty. While personal devices offer you a lot of leisure and comfort, it is not worth the result should someone hack your systems. Sounds like it’s very difficult for your to operate as efficiently as you like.
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BYOD is not supported in my workplace (hospital). We are given a device (Iphone) which is limited in function. They have blocked off access to the app store and we are unable to download anything without the consent of the hospital. When I first started, there was an app that we all used to help us prescribe medications. Our hospital initially wouldn’t allow us to use this on our work devices, so many of us downloaded it to our personal phones. It slowed us down because we kept having to bring two devices to help us do our work. I kept having to switch phones everytime and I had to make sure that I brought my personal phone everyday. Now, they allow us to download the app which makes it easier on us. We don’t need to bring two devices anymore.
Depending on the line of work, productivity or organizational efficiency can be important. In the case of a hospitalist, organizational efficiency is paramount as it enables us to become more productive. An example is when lab work and imaging is done in a timely manner, I am able to make decisions about patients much quicker and discharge them home faster. My productivity is based on the organizational efficiency.-
Vinay,
I concur about the importance of being able to access resources seamlessly and quickly at a hospital. Having Lexicomp on my phone is lifesaver and so convenient! Your comment about having a timely turnaround time for results in order to make clinical decisions is an important point.
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We use BOYD for all mobile phones and tablets, but still manage laptops. We do allow people to use bring their own computer if they prefer, many Mac users do this, but not all of our apps crossover yet. Being in the office design business we talk a lot about the Consumerization of IT and its impact on designing workplaces. Most of our employees do not have assigned seating and can choose where they want to work depending on what tasks they have that day. This means that our “Flex Stations” must be able to handle a variety of different devices. We have docking stations for Macs/ PC’s, tablet holders for all models, and conference/team rooms equipped to display on large flat screens from HDMI, Component, Dongle (Mac)…etc. The goal is to remove disruption (e.g. trying to find a dongle to present from your Mac) in the workplace to allow collaboration and work to flow more freely.
We believe that if you provide choice and variety to your employees, they will be empowered to choose the work environment (public area, private desk, benching, lounge…etc) and technology that helps them work most efficiently. Gone are the days of trying to force people to conform to one type of tech, or workspace (e.g. cubicle). Technology has enabled this by freeing us from the need to be physically connected. Work used to be somewhere you went. We had a desk, files, typewriter/desktop computer, phone…etc. Work today is something you do. Your phone comes with you, your computer portable, your files digital. Business now must make offices a desirable place to be in order to compete with your home, co-working spaces, or the local coffee house.
In my opinion, something is lost when people choose not to come to the office. The happenstance conversations, collaboration, and problem solving that can occur simply by being in the same room with someone cannot be effectively replicated, yet.
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Love that last comment Ron!! Yahoo took up an initiative last year to bring its people back to the corporate office (eliminating work from home), citing enhanced collaboration as the key benefit. And this mantra is also a hallmark of other Silicon Valley companies, especially Facebook. Leaders of high tech businesses do believe that the best ideas are cultivated when people are working in close proximity to each other.
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My law firm semi-, or at least unofficially embraces BYOD. The partners all have iPhones and iPads bought for them from the company coughers, and then certain employees who need devices are given them from the same funds. I don’t know how much of this has to do with security, or the lawyers just wanting to have the latest gadget and not directly pay for it themselves. There are several employees though, who have linked their work email addresses to their own devices, which hasn’t necessarily been frowned upon. Other employees who do not have company issued phones but still justifiably prove they use their phones for company business have a certain amount of their bill covered by the firm. It all seems pretty ad hoc and not fleshed out policy-wise.
I tend to disagree with the author of the article regarding the merits of BYOD, and find his Communism analogy onerous. What he fails to grasp, I believe, is that a company isn’t free, democratic entity. Owners have responsibilities to shareholders. By and large, for a company to run profitably, they need to control certain things like costs, access to networks, security, etc. I would compare it to running a family. I’m a red-blooded American through and through, but I’m not going to run my household in a democratic fashion. In a job setting, employees agree to work according to the terms of that company by accepting the position. If they don’t like it, they are welcome to leave. Now, I can see advantages to BYOD, but if a company doesn’t wish to offer it, to compare them to Stalin seems unfair. I think there is definitely a tradeoff between individual productivity and organizational efficiency with BYOD. By letting employees BT(?)OD, the firm has less control over everything associated with that device and must account for it beyond their standard procedures. Standard issue equipment allows the company to control everything involved with that equipment directly, which I think leads to more accountability.
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The company I work for has not embraced BYOD and this does cause problems with productivity. As is sometimes the case, it becomes necessary to complete some work from home, but there is only one available laptop that can connect to the company network. If more than one person needs it on a given evening or weekend, it creates a problem that a round of “paper, rock, scissors” does not adequately solve. Whereas, if we could connect from our own devices, this and other productivity issues would be alleviated.
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Bring-your-own-device is discouraged in my workplace. For information security reasons, using hospital provided devices is preferred. I think that using a work device actually increases individualized productivity and is efficient from an organizational and privacy standpoint. I do not feel that it hinders my workflow. In a different environment, I can appreciate how the convenience of BYOD is appealing and allows for flexibility. If work has to be brought home or one travels, I understand how it would be convenient to have all of applications consolidated on one device.
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Right now my company partially supports BYOD. They have provided us all laptops that we are able to travel with that connects to their networks through supported applications. A few people have been provided phones (mostly iPhones) that have very limited access-no app store, are unable to perform routine updates without IT reviewing, etc. We are however able to access some email services through our personal smartphones. My calendar is synced through the email services to which I have access so I am able to keep track of my appointments. Currently our company is in the midst of some I.T. transition to align more with our corporate policies. From what I understand, they are very supportive of the BYOD initiative. Corporate is much more advance with regards to technology and security measures so I am certain they are able to directly and indirectly control how people are accessing their networks through their personal devices.
I think BYOD is important because it helps with a person’s work productivity and gives them a sense of individuality. It is much easier to navigate things through your personal device that you feel comfortable using. One could also argue that it could be detrimental to an individual’s productivity as it allows them free reign to access sites that would be otherwise secured by a network device (social media, shopping sites, etc). An organizational efficiency is that they are not wasting resources on maintaining or purchasing the device however, the company’s network becomes more vulnerable to malicious things. I feel like a company could waste a lot of time, which is just as valuable as some tangible items they would distribute, on working to help individuals maintain their personal devices to be compatible with the work network. After speaking with one of our IT reps, he said the reason they issue standard laptops and phones is so they can have control over the network services in order to avoid corruption of any kind. We work in a business that deals with highly privileged information so it is important that we take every precaution necessary to protect our customers.
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Steven L. Johnson wrote a new post on the site Discussion for Last Name Starting H-M 9 years, 7 months ago
This question is inspired by this reading: BYOD Drives Communism Out of IT.
To what extent is BYOD (bring-your-own-device) supported in your workplace? Do you see any tradeoffs between individual productivity and […]
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BYOD was recently embraced in my organization when it comes to smart phones. It made a lot of sense. Before this change, the company issued Blackberries to all the staff who needed them. However, as Android devices and iPhones eclipsed the market for Blackberry, the company faced a decision. It could have continued to force us to use outdated technology, and also support that technology with help desk queries and hardware techs. Or, it could adopt a BYOD policy, which it did. The catch is this: the company will not offer any technical support for your own device. The company has enabled devices full access to e-mail and other network resources. I think it works perfectly. Employees are happier because they get a modest stipend for the device, and can use what they feel best helps them do their jobs. The company is happy because it’s a piece of technology that it no longer has responsibility to manage or inventory.
At this point, I do not see any trade-offs. In fact, I see the opposite. Since work and personal lives are entwined in the same device, employees are never separated from it. Therefore, I find that I am more apt to respond quickly to incoming e-mails during off-hours, for example. If I still had a company-issued BlackBerry, I would likely leave it in the car or in my work bag during off hours. The last thing I want to do is carry around multiple devices in my spare time. So when push comes to shove, the company-issued device gets left behind.
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Thanks for the post Chris. I was wondering if you are able to simply get all of your email and network resources, or if you have to secure your phone in some way. The reason I ask this is I really work for two companies in one as the company that pays me is a contract company and I work inside of another company to fulfill our contract to them. So, essentially, I have two work emails. One for the contract company and one for the other, which is a hospital. For the contract company I don’t need any extra security for the basic email function, but I cant access anything beyond that. For the hospital, because of HIPAA law, and the fact that I have access to patient information, I must have an app that allows the IT department to wipe my phone if it is ever lost and I must have a password or pin on my phone to use it. I was wondering how your company and other’s companies handle security when it comes to BYOD.
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Hi, Brandon: I need to have a password on my phone to unlock it. I do believe my company also has the ability to remotely wipe the device if I lose it, but I’m honestly not sure about that. Otherwise, I can access all email resources. I cannot access our intranet, however.
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Chris,
You brought up a really good point and I have a follow up question based off of that. At the end you mentioned how your work and personal life are intertwined because of the mobile devices used. Do you see this as a problem because you find yourself involved with work a little more often than you would like or does that align with the culture of your organization?
One of the Partners of our firm actually can’t stand receiving email on his phone. When he goes out to lunch he leaves his work phone in the office so that he isn’t bothered and really hates it when other people at lunch answer work emails. He is a big believer in having the proper balance between work and personal life.
I’m more like you though. I would rather be in the know all the time. Just wanted to know some of your thoughts.
Thanks,
Will-
Hi, Will: I do tend to skew towards separation between work and personal lives. But I feel I can make that choice without carrying around multiple devices. There are times I really do need to be connected to e-mail. However, I make a conscious decision whether to “work” at that moment or not. I guess for me I like knowing what’s going on, but I have the discipline to ignore what can wait.
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Hi Chris/Will – my company has an app that we can access via our own smartphones to get to our work email account (Good app). Many people use it but I do not, simply because I don’t want to be checking work email all the time. And, whether a possibility or not, I don’t want work to have access to my device. It’s my personal computer, basically, and I don’t want to worry that I may get lazy, type something inappropriate, and get fired because of it. Do either of you have similar concerns or am I being paranoid?
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Hello Chris, Good post.
Although, I agree with your statement about the convenience of not carrying around multiple devices and outdated technology, along with the company’s relief from managing inventory; This would not work with certain agencies, including the one that I work for. Personal mobile devices are less secured and could pose a security risk, especially if working in the healthcare industry (i.e. client’s sensitive information -HIPPA law on privacy). A company could be looked at as being intrusive if they were able to monitor, manage or control their employee’s personal devices. When a company allows it’s workers personal mobile device to have access to email, file servers and databases, in combination to their own personal data and applications, it increases the chance of them being hacked. People are less likely to read through the information relating to the app their installing on their mobile device, could pose a security risk.
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BYOD is not a concept that I believe would be accepted in our company. The IT department in our company is keen on securing the information we have and it goes through extreme measures to do so. With a company issued laptop some people, depending on your department, have the option to have a PC or MAC. Our IT department has a limited selection of software that you can get on your laptop and the really good software must be approved by a manager because you must obtain a license to have the software. I think it would be so much nicer if everyone had the opportunity to work on a device of their choice with the software of their choice. Productivity would definitely increase if you had all the software you needed to complete your tasks at work without having to go through an approval process to obtain it. Also, you would be more comfortable using the device you are familiar with thus increasing the amount of work you could do.
One of the biggest reasons our IT department wouldn’t allow us to use an unsanctioned device is that it is not considered secure. Your own personal device may not have malware and the device may not be password protected which could lead to theft of information. Furthermore, employees could have corporate sensitive information on the same device that they allow their family and friends to use. The security breach is the biggest concern with a BYOD environment.
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Hi Celia,
I just read your post after responding to Chris’ and it fit right in what I posted. I agree security is hard when it comes to IT, but I wonder if limiting the use of your own device is truly making your network more secure. Anybody can leave a laptop open or open an attachment on an email from a company computer, just as easy as they could from their own phone. In fact, I would say people probably pay attention more to their own phone security than there work technology. I am actually on two sides of this coin, as you can tell from my post above. One company gives me a laptop that I have to use to access our VPN, but allows me to have email on my phone unsecured. The hospital, though, gives me a desktop at work where I can access their network and allows me some free range using BYOD, but uses an app called MobileIron to make sure that I have a pin or password on it (If I don’t, I can’t access email, it locks me out). I could see the worry from family and friends using your device getting information, but why would they want the information, and with this type of app, you would of had to give them access in the first place. If you were willing to give them access and are that lose with your phone usage, you are just as likely to tell them in a casual information. Just some thoughts. Thanks
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I think the contract company and the hospital I work under do a good job at walking a line between allowing individual productivity and organizational efficiency. They each have provided some type of computer, a laptop for one and a desktop computer for the other, that I have to use to get access to their network. A VPN is used for the contract company and I have to use my laptop to get access to it and thus our portal system which has all of our documents and applications on it. The Hospital just has its local intranet, but they have many applications that we use to document patient data and that can only be used on their network. The only thing I can access from my own device is the email fro both. I think this helps to keep both companies’ sensitive information the most secure while allowing the flexibility of email on our own devices, which I like because it allows us to respond to situations the most efficiently on a device that we are the most familiar with. Instead of fumbling through another device or carrying a second phone just to find out what someone needs is great. The only issue I have found so far is that the hospital email sends out secure messages when it goes to someone outside the hospital system, so if someone from the hospital sends an email to my company email instead of my hospital email (which they tend t do because they know I am at my company laptop most of the time because it allows me the flexibility to move around) I have to jump through hoops just to open it and opening it on my phone is out of the question. I think it’s s small trade-off though to have the flexibility of using my own device.
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My firm would never embrace the idea of Bring Your Own Device (BYOD). Working as a healthcare consulting firm that handles protected health information we can’t afford to have any breaches. The Partners of our firm take security very seriously and would never compromise it for anything. We have become so strict that we are forbidden to USB flash drives. The Partners and our IT department have assured that by disabling the USB port from accepting anything except a mouse. Most people in our firm would never save information this way, but it’s in place just to make sure no one saves patient information to a flash drive and then loses it. My firm is also strict when it comes to cell phones as it will only allow you to setup your work email on your phone.
It would be nice if people had the option to bring in devices they wanted, but to be honest we have the software and hardware in place to get the job done correctly and securely. If I felt that I really needed additional software or hardware I could present my idea and it would likely be approved. Due to potential security risks I would rather my firm operate as a communist state.
When considering other organizations and industries I like the concept of BYOD. If employees feel like they can do a better job with some other hardware or software I would say to myself, “Why stop them?” There is no need to limit productivity or creativity unless it compromises your organization’s security.-
Will – While Bring Your Own Device (BYOD) has been a catalyst for a new IT revolution, the challenge in healthcare is how to reap the benefits of BYOD while making sure that compliance (from the enterprise’s standpoint) and security (of corporate data) are maintained. In order for BYOD to be introduced in a HIPAA-compliant environment, there need to be ongoing audits of mobile device and network security. This of course would be very risky and expensive, so I understand your company scrapping the idea altogether. However, regardless of the business environment or the compliance programs used, BYOD education is imperative to teach employees about BYOD security to ensure that any corporate interactions they make using their personal devices avoid the risk of exposing sensitive corporate data.
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Rosemarie,
You bring up a really good point that security should be a major concern for all businesses. I think I just had the blinders on and was thinking too much of my own situation. This education may lead to more employees to embrace the BYOD concept, which could ultimately lead to a more productive work environment.
Thanks for the reply and helping me think of security on a broader scale.
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Will – I understnad the need for privacy in Healthcare and am familiar with HIPPA but I have to say I had never heard of someone going as far as to diable the USB for anything but a mouse. Part of me says that is over the top and where is the trust but the other half appluads your firm’s policy. If others followed suit with measures similar to yours, there would likely be a lot less agravation due to breachs and information gettting in the wrong hands. What is the reason behind only allowing work email on your phone? Similar concern? worry about a security breach via your personal email?
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John,
It is over the top, but the Partners are just fearful of any breaches ever occurring, which is the same reason why they don’t allow personal email boxes setup on your work phone. They are also adamant about people sending work emails via personal email. If someone did that there would be serious ramifications.
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Will,
I work in product development of medical devices, and my company also disables the flash drives. I thought they were a bit nuts, but realized after a while that, as you point out, it is about the patient safety and privacy. Our networks had information on human studies with years of patient follow-up. Granted these files were in a secure location, but if for some reason a terminal were left open with that data displayed (not likely since IT also set a 3-minute automatic password lock on all systems), nobody would be able to copy files. I believe there was also concern over disgruntled employees taking confidential design information with them.
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Will, I also work in healthcare and I too noticed a USB issue. However the way Jefferson manages it is different. Rather than forbidding USB drives entirely – which would be a nightmare to enforce – Jefferson installs encryption software on all computers. When you insert a USB device to a new computer, you are permitted to transfer data from the drive to the computer, but you cannot take anything off the computer without first encrypting the drive. In my opinion this is a smart way to handle the potential security and HIPAA issues involved when working with PHI. Sometimes data needs to be retrieved from the system, sometimes you need a radiographic image or a chart note or what have you, and forbidding copying this information would not only be a headache for residents and physicians but it could potentially affect patient care. However I too recognize the necessity of protecting PHI and complying with HIPAA regulations and I completely understand how USB drives and other BYOD units can be an issue.
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To what extent is BYOD (bring-your-own-device) supported in your workplace? Do you see any tradeoffs between individual productivity and organizational efficiency related to BYOD?
I would argue that it depends on the type of business. My current job requires us to constantly stay connected with clients as well as the BMW Genius system which enables us to readily answer questions or look into new technology. As far as personal information goes, we really only need names and numbers to stay connected with clients. Besides the terminals we have at our stations, we can utilize our cellphones and tablets as we roam the dealership.
I don’t see any tradeoffs in this type of business. It actually promotes efficiency and establishes a better connection with clients. We are constantly dealing with clients, whether on the phone or in person, and having access to identifiable information on the spot is important. Again, it really depends on the business. I wouldn’t recommend the BYOD in a government facility or a bank. That kind of information can be abused in the wrong hands. -
Ryann,
Your line of work is definitely something I would not want leaking out. I highlighted in my post that it really depends on the business for BYOD. I wouldn’t advise it government, healthcare or financial institutions unless IT installs the necessary provisions to block intruders or leaks. Some people like using their own devices because they are comfortable with it, which in your case is having a personal MAC but use a PC terminal for work.
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Mobile technology is transforming business environments everywhere. At HPIX, our workforce uses a variety of mobile devices such as smartphones and tablets to conduct business and engage customers anywhere and anytime. However this Bring Your Own Device (BYOD) trend presents both opportunities and challenges. On one hand, there is a boost in our employees’ productivity and convenience. On the other hand, there is a need to ensure that our IT infrastructure can accommodate the influx of mobile devices and continue to deliver predictable, high quality user experiences, as well as secure and reliable services. Particularly because, it becomes a hindrance if data loss and unauthorized access to data occurs from mobile devices therefore, smartphones and mobile devices are regulated by the existing company security parameters. While it is not always possible to monitor individual output when using these devices, allowing our workers to use personal smartphones and tablets for business, enhance productivity. To be fully productive, our mobile workers (especially our sales and marketing teams) must have convenient and reliable access to all enterprise applications and services, at all times. For example, we use a Mobile Workflow Builder to create a workflow for sales teams that allows them to edit an application for insurance, have the client sign the application digitally, and then provide the client with a digital copy. Additionally, there are some cost benefits attached to BYOD. By using their individual devices, our marketing department have more access to tools and programs that allows them to do more at very little cost to the company. These tools and programs would be more expensive if we applied for a corporate license.
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Because I’m transitioning from a rigid, structured work environment (government agency) to a small business environment, I have seen both sides of the “BYOD” coin. At my government job, we have assigned computers and phones that are issued to us with a base install, and we cannot tweak our apps or programs at all. At the family business I’m preparing to join, the company provides a work computer, but the computer type can be chosen by the employee. Our estimator has a touchscreen all-in-one desktop that works well for his purposes, while our office manager uses a generic laptop. I recently decided that I hate switching computers for work and personal use, so I’ll be buying my own MacBook to use as both a work and personal computer.
I think there are certainly trade offs between corporate efficiency and personal productivity when it comes to BYOD policies. When I was a teenager I worked in an IT department at a non-profit and would help with the base software installs that would go on all computers. This certainly enabled all employees to have access to the same core programs while making it easier for us to troubleshoot issues. So, there is certainly a corporate efficiency advantage that is traded away when BYOD is supported by the company. That being said, I think it makes sense to allow BYOD, especially for smaller companies like our family business. Each person can maximize productivity potential using his/her preferred computer or tablet. One additional concern that needs to be noted is security – if your firm is working on a cutting edge technology or some other high-stakes project involving intellectual property, it might be prudent for the company to ban BYOD simply as a security precaution.
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Andrew – I think if I could identify a single place where I would never want the flexibility of BYOD that would be the military. I want those secrets safe without any ability for them to be leaked by faulty software or naive employees installing malware on their machines. This is exactly why companies are having trouble with allowing BYOD though it’s not because the equipment it’s because how employees will feel free to install applications that contain trojans or viruses that expose the corporate network.
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Within the last 3 years i’ve worked at 3 different companies that all had drastically different perspectives on BYOD. The first company was a fortune 500 financial services where that concept had no ability in the workplace. Cloud was a new concept to them and putting their data on your personal device was a completely foreign and never going to happen concept. However they did allow for you to get a pick of a mobile device such as specific iphone, android or blackberry models that they tested within the environment. They were also heavily restricted to only allow certain applications including not even using the device email client and you had to use Good for Messaging to access company contacts or emails.
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Company two was a small consulting firm 1200 people where it was 100% BYOD where it was your personal device, you used it how, when you wanted and they gave you a monthly stipend for it. This allowed us creative use when it came to what software to use as well as what device we wanted to use. For me this was fantastic I loved to keep my company notes on google docs, so of course an android tablet was also used by me to keep notes while on client sites. It was much more productive to pull out a small tablet instead of a laptop. I was able to do 99% of all my work on the tablet and this made sure I was comfortable with the way I worked, sped up my productivity and made me happy as an employee so that I felt empowered to work the way I felt was appropriate.
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Company three a large consulting firm with 200k employees and where I am currently is sort of between the two extremes. They offer you the ability to bring your own device, but they take over the contract and own the plans you are on. While we use gmail for our corporate mail system as well as lotus notes we can only access them using mobileiron. We have some limitations to the software we can put on the device as well as it strictly controls usage of the device from a security standpoint. Sometime this summer they are expecting to roll out use of google hangouts, gmail client and google docs within the device but at the present time it’s limited. This severely limits my abilities on my mobile and often leaves me having to lug my laptop around wherever I go.
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I believe there is a right balance and it’s somewhere between keeping your company information safe and being able to work as you are best able. I believe incorporating security standards on devices and forbiding things such jail broken equipment helps to prevent against hacking and intrusion and regardless of whose device should always be used.-
Mike – interesting post and cool that you were able to provide three different examples from your career. What was your favorite setup in regard to BYOD?
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Personally I loved the extreme BYOD option, I was able to work in a more enhanced capacity. Sadly I’m not sure my lack of encryption and passwords on my personal device really kept my clients data secure if I ever misplaced or lost a tablet, computer or phone.
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During 17 years at my current Orthopaedic practice, we have evolved from communism and “central planning” as described in the article to a “laissez-faire capitalism” with respect to devices and services. Until 10 years ago, there was little concern or worry about what device a Doc was using for their email and academic work (powerpoint talks and scientific papers) since they did not interface with any of the practice or University’s systems. It all changed once we developed our first integrated EHR. Our IT department would only put the apps for accessing the records on specific devices issued by the practice, and the IT department refused to design “workarounds” to enable Docs to access their even their slide talk and scientific paper files while out of town. That IT group was subsequently fired, and a new group arrived promising more freedoms (synchronization of files to any device and accessing of emails and some EHR data). HIPPA concerns still hamstrung the department, but in the IT group’s latest iteration (over the past three years) we have finally been allowed to link via a “virtual desktop” application to ALL of our electronic data regardless of what specific devices we use and where we are using them.
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Like Will, my company also does not embrace BYOD as a feasible option. I’m in financial services, but I work on the trading floor so there are all sorts of compliance reasons why we are not allowed to use our personal computers to access trading systems. Security is also a concern, as our competitors could see the trades we’re making and follow suit, quashing our competitve advantage. They have made some inroads as far as allowing easier access to our personal devices, providing WiFi in the buildings for us to use and allowing us to bring our own iPads to access employee email via the Good app or take notes, but as stated earlier, I don’t use them. I will log on to my work email from my personal computer occassionally, via token access and Citrix, but only when I’ve been out of the office, to avoid coming back to 600 emails. The bulk of our work is done during trading hours, so there isn’t much of a need for outside access. From an organizational efficiency standpoint, it would be nice to have technology on demand as far as getting our IT projects churned out faster, but security is paramount and trumps all else. However, I can see how this BYOD culture would benefit companies with less stringent regulations. Work could be done anytime, anywhere. Others have brought up the work/life balance conundrum though, and the question of whether this is actually a good thing. Americans work longer hours than any other culture. Is BYOD really just another avenue for us to work more?
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Nicole,
The thought of Americans working even more definitely raises concerns for me when discussing BYOD. I like to put in time, and I always strive to be the best I can at whatever I’m doing, but there comes a point where I just have to walk away and create time for myself and family. It would be interesting to see if employees that work for BYOD companies find themselves working more after hours and what kind of additional stresses or burdens that places on their personal life. Or maybe they are able to space out work by getting things done at night so that that they can have some free time during the day to take care of family. Anyway, just something that you got me thinking more about.
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I work at Temple Hospital in grants management and need to access Banner – the hospitals financial and accounting system. For convenience and easy accessibility to Banner, IT loads it as a separate tab into employee TU Portal accounts. There is also a research tab which grants access into bill and payment histories with options to run additional financial reports. Having these features in TU Portal makes it easier to work from home when deadlines are imminent. I like this convenience and I’m sure IT is comfortable providing this service since logging into Portal goes straight to Temple’s servers. I would say being able to utilize my own smartphone, tablet, or laptop to work outside the office does make me a more productive employee.
In the function of my job, I don’t have to access patient information but for those that do – doctors, nurses, EPIC IT support – I’m sure a BYOD can’t be used. HIPAA regulations stipulate strict adherence to dedicated servers and backup systems. And of course in the event of a hacker attack or virus, IT has the capabilities to track, take the system offline, and control their response. This would be harder to do if BYOD was allowed.
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At Temple University, BYOD is supported very well. They pride themselves at being at the forefront of technology and allow the employees the freedom to embrace a smorgasbord of options. For cell phones, you have the option of Apple or Android and for laptop you can have a Mac or PC. There are also numerous options for the tablet as well. They are able to service pretty much anything you throw at them and are known on campus as having excellent customer service. Personally, since I am always connected, I tend to work more than required to. I use the devices for personal issues and find myself answering emails and doing work off hours more than ever before.
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Hey John, are you in the hospital? I’ve noticed a serious disconnect between the hospital and university. The university is seriously tech equipped, but the hospital is the exact opposite. I’d like to know more about your experiences. In the hospital, all phones, laptops, and tablets that access the electronic medical record have to be encrypted and restricted by the hospital IT. At least that’s been my experience!
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My organization does not support BYOD and I don’t believe they ever will. At my job I deal will a lot of private medical records, and due to HIPPA laws there are strict guidelines against using your own device. We all have company issued laptops that allow us to work remotely. Only through these laptops can we access the company network. I like the idea of BYOD, but don’t think it is feasible in professions such as mine where private information such as medical records and social security numbers are frequently stored. If it weren’t for the inherent security issues I think BYOD would be a viable option for our employees. I also don’t think BYOD would require trade offs between individual productivity and organizational efficiency. Allowing employees to use their own devices would actually increase both. Not only would the individuals be more comfortable with the technology they’re using, it would also allow both personal and business tasks to be completed on one device. When working from home, I often have to bounce between my personal laptop and my work one, which decreases my productivity should something personal arise that requires immediate attention.
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I strongly disagree Chase. I think its purely institutionally dependent. Top tier health systems, such as Emory and Mt. Sinai, advocate for and support BYOD. This is because they have adequately and competently staffed IT departments that are confident in their abilities My institution, Temple, also does not allow BYOD – but this is largely due to operational issues. Healthcare, despite how much we would like to protest – is not that much different from any other business. We have serious restraints and rules on data management. But, honestly, if you think HIPAA is challenging, imagine the complex IT mandates required by hedge funds, which are dealing with proprietary information in a highly competitive world. I’ve read stories about hedge funds that employs strategies that secure data via means far beyond those employed in medicine, and yet BYOD options are still available to employees.
It all comes down to comfort. Just like with surgery. If you are an expert at something, and are confident in your abilities, then you welcome challenge and live for the game.
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Hi Nicholas,
Thanks for commenting. You make a good point about hedge funds and
healthcare institutions both handling sensitive information. However, the
main difference between the two is the regulatory penalties faced if a
breach were to occur. Do you know if there are any regulatory penalties
that the hedge fund would face if there was a breach? And are they of the
same magnitude as HIPPA penalties? HIPPA penalties range from $100 to
$50,000 per violation (per record) with a maximum of 1.5 million per year
depending on the degree of negligence by the offender. It appears that the
risks are greater for healthcare institutions than hedge funds in that
regard. Additionally, you stated that hedge funds use strategies far
superior to healthcare organizations to secure their data. Is the use of
these strategies due to the fact that employees are using their own devices
and they need additional security, or would these strategies have been
employed regardless of the device used? You also made a point about Emory
and Mt. Sinai supporting BYOD because they are confident in their IT
department and their competencies. With that said, aren’t all institutions
confident in their abilities until a breach occurs? It appears that the
decision by a healthcare organization to support or not support BYOD comes
down to the amount of risk they’re willing to tolerate. While I understand
breaches can occur on company issued devices, I can certainly see why some
organizations would not want to augment that risk by allowing the use of
multiple devices on multiple platforms. I actually agree with you that
healthcare organizations could employ BYOD, but only if they are accepting
of the added risk.
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BYOD is not supported in the Temple health system. In fact, it is strongly opposed. I think this is a serious problem that will plague Temple and stymie progress. When I was an away student at Emory University, the health system there strongly encouraged and advocated for BYOD. The system was truly amazing – being able to see patients while using my mac laptop was extremely beneficial to patients and myself. I found I was more comfortable with the EMR, additionally, patient’s could sense my ease.
I think the benefits are obvious – increased comfort for both myself and patients.
The cons are debatable. Temple would argue that we are more protected. Since both systems utilize Citrix to regulate access to the EMR, I would argue that they are equally protected. At either institution, loss or theft of the laptop would have zero effect on compromising patient EMR.
I think the dichotomy is obvious and apparent – health systems can either adopt an approach that is so extreme, they are inhibitory and stymie innovation and increased utilization – all under the guise of “risk management and HIPAA compliance.”
On the other side of the spectrum, you have the Emory’s of healthcare (aka, the top tier institutions) where they are so comfortable with their security and risk management, that they are able to pursue highly innovative strategies that embrace and support creativity and innovation.
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Nicholas,
I appreciate your perspective. I can see how your comfort level with the equipment you are using could easily be observable by your patients and therefore transpire into increasing their comfort level. You are right that the dichotomy is obvious, I am not all that familiar with the Health industry but it seems to me that Emory’s approach (which you noted as top tier) is more unique and more liberating for employees. Just based on your post, I am left wondering why Emory is so comfortable with their security and risk management, what are they doing differently in that regard than Temple? Thanks for sharing your insight.
-John
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Nicholas,
I think some organizations have super sensitivity to risk and compliance issues with BYOD in general, as you stated its an old mindset of working which limits this type of innovation. It is surprising to hear that Temple Health does not support this as being a teaching facility they are always looking for innovation and reducing costs further. I know Penn Health now supports a BYOD policy only recently so I know many other healthcare institutions are slowly change their approach. I think some of the regulatory changes coming with the Affordable Care Act will hopefully change mindsets as it simplifies some of the regulatory framework for HIPAA and also forces healthcare systems to further reduce costs.
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BYOD is not supported in my work place due and I think rightfully so. We have access to sensitive information and military owned information that must be protected. While IT security is everyone’s responsibility, it is the organization that is ultimately liable. Therefore the organization must have regulations in place to control information communicated through IT systems. In my industry, I honestly don’t see any trade-offs. I have a company issued phone, ipad and lap top that do not hinder me in any way but only enhance my ability to do my job. Sure I would rather have a macbook then my dell, a iphone over my blackberry but I don’t think I should be obligated to those things, let alone demand them. Instead, I make the best of what I have, which is more than adequate and I accept the status quo because it works and I understand the reasoning behind it.
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John I think in a military/govt context it makes sense not to have BYOD. I think the Edward Snowden incident has shown us its hard enough to maintain secrets within secure computer networks, with the introduction of BYOD that would make the challenge even harder. I know traditionally military and govert agencies have always had rigorous security policies with control of everything from the device to the operating system to the applications to the usage of these. I doubt we will see BYOD in your space anytime soon like you said.
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I agree. Now to be sure, there are times over the last 20 years in the military that I’ve wanted to go stand on the Comm Squadron’s head and yell something to the effect of “We’re so secure I can’t even do my job!” Still, I can’t imagine this BYOD paradigm gaining any foothold in the military or at the VA. I remember a couple of assignments ago, we had a group commander who was enamored with Apple, and so tried to get his staff to set up a bunch of iPads that he, his Deputy, and his Director of Operations were going to use to review correspondence and get work done on the road. The compatibility issues alone were insurmountable, and the security issues never ended. In the end, it cost his staff countless hours of work, and in many cases, manually running files from our Windows-based systems to load up the leaders’ iPads before a trip, only to find out that they couldn’t get the required security add-ons to work and thus couldn’t access anything anyway – a complete nightmare.
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BYOD is fairly well supported in my workplace. Desktop computers are available and are used by the vast majority of employees. However the virtual desktop app Citrix also allows users to access their data on a laptop or from home if they so choose. The guy that sits next to me for instance regularly brings his laptop to work because he prefers Mac; he ends up switching between his desktop and laptop throughout the day.
One main trade-off involved is decreased security. With a work computer, the organization can regulate what software comes pre-installed as well as what software is added with administrator passwords. With a user’s computer, there’s no telling what programs are installed or what viruses might exist from their use at home. Another trade-off is speed and compatibility; with a work device the business can ensure all machines are up-to-date to run the required software. When users bring their own devices, there’s no way to enforce compatibility requirements. If employee X has an out of date laptop that can’t run the required software efficiently, productivity suffers. Should he or she be forced by the organization to upgrade, at personal expense? Or should the company step in and buy him or her a new device? One advantage to BYOD however is increased flexibility because users can continue working from home or on the go, especially if the organization also supports cloud computing. -
BYOD is supported in my workplace however some restrictions are placed on the devices to ensure corporate data is not leaked, hacked or released into the public space. Our corporation uses tools like MobileIron which allows the corporation to secure the contents of the data which is downloaded to these personal BYOD devices. In the event of the device being lost or compromised the tools like Mobileiron allow the corporation to remotely wipe the data from the device to prevent the data from being release. With the consumerization of the devices in the market places many high end mobile, tablet and laptop devices which may have been strictly built for corporations are now available to the consumer. This paradigm shift encourages the use of personal devices in the corporation. For example the Apple IPhone is marketed towards consumers and business so there is a device which now straddles both market segments. Mobile devices of the past like the blackberry were only marketed towards businesses with few consumers leveraging the devices. One could argue there are tradeoffs in this model as you have issues with viruses, security and other compliance issues however there are tools available on the marketplace to address these type of issues. Helpdesk support and scquisition costs of the devices also decreases as you have users who often procure the devices on their expense and support themselves. Productivity in most cases is increased as now you have employees checking emails and doing work on their personal devices whereas in the past they may have had to carry two devices one for work and one for personal. In this model employees would be more inclined to leave their corporate laptops and phones at the office or at home when going out. As a whole organizational efficiency should increase with a well implemented BYOD policy as its foster more collaboration and simplification of the IT landscape in most companies
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BYOD is not supported in any way at my workplace. Given that we are one of the largest federal agencies in the country and routinely deal with private personal and healthcare-related information, this probably comes as no surprise. In all, I’m not really sure the article did the idea of BYOD justice, or at least, I didn’t find that it made a compelling case for allowing people to use their own devices at work. I’m not sure what this is supposed to bring to productivity, and I’m not sure that the additional burden that it would place upon firms’ IT personnel in additional security and compatibility issues alone could ever be worth the supposed advantage that it would provide. From the standpoint of my agency, I’m not sure that people using their own devices while doing VA business would bring any discernable advantage to how we do what we do, and I’d imagine that trying to wrangle all that technology would be an IT staff’s nightmare. Personally, I don’t know that I’d want to have agency material on my personal devices, either. There’s a line of separation there that I’d not be comfortable crossing, and I’d prefer not to be expected to do so.
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Steven L. Johnson wrote a new post on the site Discussion for Last Name Starting A-G 9 years, 7 months ago
This question is inspired by this reading: BYOD Drives Communism Out of IT.
To what extent is BYOD (bring-your-own-device) supported in your workplace? Do you see any tradeoffs between individual productivity […]
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I work in a government owned facility which is not tolerant of BYOD. I personally feel that my productivity is inhibited by the government provided devices. Usually the government owned equipment is older and slower because procurement is slow and security measures are taxing on computer memory. Additionally, the government is almost exclusively using PC and blackberry so as a Mac user I find the operating systems cumbersome. Whenever I work from home on my own devices I am much more productive because they are set up for my style of work instead of the one size fit all option in the office.
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I can relate to you Amanda on the productivity aspect. I work for a tax technology and all of our information is very sensitive. In my case, our policy is less strict which is amazing if you really think about it. However (as outlined in my post below) I have used my own devices to streamline work and it is much more productive. Unfortunately not every manager in my organization is as open to the idea which can lead to inconsistency and frustration.
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Eric,
Sounds like a lot of your managers need to take a MIS class 🙂
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Amanda I work in government where they provide the devices. They don’t accept the BYOD. I don’t personally have one of the devices because I don’t want to be connected all the time but a good friend of mine use to have a state owned Blackberry but now has an iPhone because the state has upgraded most of the devices to iPhones and newer phones.
But yeah, you’re right, there are still many inefficiencies in technology in government. Part of my job includes web design and the PC provided with software doesn’t do the trick so I’ve had to bring in my Mac in order to do my job more efficiently.
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Amanda,
You made excellent point. I agree with you. I have worked with government agency before, their computers are so out of date and slow, it drove users crazy. For security reasons, they never ever allow employee to use their own devices or allow them to access it remotely from home computers, which is a standard operation for majority working places. I am wondering whether they could not utilize advanced security techniques to add one more layer of information protection and increase productivity through new technology, not simply just block own device uses.
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Amanda –
If you computers are “historic” to say the least, do they have a policy on restoring and retiring devices? Within our company, when we have new hires we decide whether to purchase them a new or refurbished laptop. In many cases, manages will order a new laptop for the hire and take the newer devices and give them there’s as a “hand me down”.
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Joyce, I have seen quite a few managers do the same thing in my day. The irony is that in most cases it is the more junior resource that needs the more powerful pc. This is particularly true in fiance; the junior analyst is running reports and analyzing data while the manager is more likely to be reviewing finished products or sending email.
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Amanda – I can relate to your situation. I work in a heavily regulated industry where ‘BYOD’ is discouraged — especially for frontline employees interacting with clients. In light of your comments, I find it shocking that a well known politician (won’t name names) was able to use a personal email account that circumvented government oversight and archival procedures. That is grounds for immediate termination at my company – all communications with the public must go through approved channels. Even sharing, liking, retweeting, etc. content about my company, our products, and our events on social media is strictly off limits (unless you are on the ‘official’ PR team who manages those accounts for the company).
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Amanda,
Well said and I agree 100%. As a Soldier, I constantly feel limited by the devices provided to me as well as the software installed on those devices. There is just as much pressure from military leaders – as compared to their civilian counterparts – to make full use of technology and provide quality products. I am not a Mac user but I agree that the government’s reliance on Windows OS’s greatly contributes to loss of productivity because of security protocols that are not lightweight and nimble. I cannot tell you how many times that I have had to go home to work on a project/presentation because of the inability to BYOD.
I particularly like Corey’s comment regarding a certain politician’s (Hilary Clinton) email scandal. I can’t even imagine who approved that course of action for such a high level official. I understand that nothing was “classified” but hackers can glean tons of informed from unclassified sources. Her accounts were undoubtedly subjected to numerous outside attempts to gain access to information. The worst part is that the State Department was just the victim of the “worst ever cyberattack intrusion” (http://www.cnn.com/2015/03/10/politics/state-department-hack-worst-ever/). Thanks for you thought-provoking post!
Bill
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As a physician I use an EMR system. Initially the practice I work for had a PC only system. Over time as the physicians have requested Apple product integration the company has moved towards systems that are viable on both PCs and Apple products. The vast majority of physicians in the group have iPhones and use these in order to dictate and download patient charts. The practice is in the process of converting to a newer and more user friendly EMR which will seamlessly allow for use on Apple or PC devices including iPhones and iPads. This has been pushed for by the physicians who did not want to have multiple devices for their daily use and for dictation and Chart viewing. I do believe that there may be a trade-off in regards to individual productivity and organizational efficiency with BYOD in the corporate world but in healthcare the vast majority of EMR systems are moving towards and open source system that allows for usage on all types of devices thereby maintaining individual productivity and organizational efficiency.
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Hi,
I think Mariya indicated in a post she wrote last week, that in the medical field, beyond BYOD, software platforms need to talk to each other as well, in order for the delivery of medicine to get to the next level. Perhaps apps associated with the various EMR systems /platforms will help get that off the ground. It is really needed if we are going to move towards a health system where primary care providers truly act as gate keepers.-
I do believe that the BYOD situation has significantly benefitted the practice. Now when a patient or a physician calls when we aren’t in the office I can look up the information on my iPhone and don’t need to be at a work computer. This significantly improves the overall care for patients because the old situation necessitated the physician or patient wait for us to review the chart in the office and now we can immediately look at the patient information required before making decisions.
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I am also in the healthcare field and a lot of our physicians are advocating for Apple products. IT and the IT security team appear to be on board so I think it is only a matter of time. A lot of our physicians cover inpatients as well as outpatient offices so having an easy way of going into an EMR and putting in orders through a device like the iPad or iPhone is key. None of them want to be stuck with having to use a desktop PC anymore. Another reason they want these products is because they can have access to the various medical apps that they like using during the day.
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Concerned about security at my practice, when I first enabled internet access on my work stations I installed a fairly robust parental control type product that limited which employees could access the internet and when and where they could go online. Though I still believe I need to control their internet access, I found that very strict controls really limited my staff’s productivity. It stifled creative problem solving since many ways staff wanted to research issues was by turning to the web. A radiology consultant I use enlightened me to just making sure my staff was getting the job done that they were supposed to do and not sweat whether they were occasionally checking personal email or checking in with Facebook. All that matters is that the work is getting done on time. Fast forward to today, when all of my staff brings their cell phones to work. In the early days (up until last year!) staff members were not allowed to have their cell phones on them while they were working. I think BYOD applies to this situation, since by having their own access to the web and to mobile technology, it actually increases productivity. Just yesterday, one of our associates had to stay home because of the weather and we needed to adjust our appointment schedule and alert another associate about the change. In order to quickly reach the associate one of my staff whipped out her phone and in seconds the needed communication was accomplished. In addition, there are some great reference mobile apps that staff like to use – like drug dosage formularies that live on their phones. Bringing their own device I think, is a good idea, as long as your staff doesn’t abuse the privilege by spending time texting friends or shopping rather than getting the job done. I’m all for embracing employee choice. This article was just published in a recent veterinary periodical that I think gets this point across way better than I can! http://www.veterinaryteambrief.com/article/be-smart-about-using-smartphones-practice?utm_medium=email&utm_source=Veterinary+Team+Brief+eNewsletter&utm_campaign=VTB+ENL+FEB+24+2015
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The support for BYOD is inconsistent throughout my organization. An example is I have a director who will allow me to bring my own devices to complete a project if it performs better than the ones available to me in the office. Conversely, I have a manager who refuses me to allow me to use any device outside of the office to complete a project, regardless of whether it improves productivity. I either have to use what is available or go through a business case request for something new. It is a fast and loose policy to say the least.
I do think that there is a tradeoff in that it may be more difficult to share data or documents within the organization if everyone is working on their own device. Theoretically everyone should still be able to get onto the same network, but there could be instances where people do not and thus aren’t making all data available.
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Hi Eric,
At staff meetings have you ever addressed this issue? Any idea why employees sometimes have limited access to software products? Most software has security capabilities to lock users out of functions that might not be appropriate. Just wondering.-
Hi Diane,
You assume we have staff meetings…just kidding. I think it all comes down to the managers. We don’t have an official policy here regarding this issue, thus managers are allowed to dictate as they fit, which is unfortunate in some cases.
Thanks
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Reading the BYOD article really put together for me why Mircosoft would give away their office package. I have always worked for companies that provide the standard issue PC. The logic has always been that people needed the PC with common software so version integrity was controlled and security maintained. It was maddening on the occasion that someone had a new version and saved a common document in the newer version. It was, still is, not simple to get into the company network remotely. The article made me think that giving away the office suite allows everyone to be current. Now a company has less need to provide a PC to employees. A company can send out the minimum standard and people can update as needed. In addition, it seems the past policies designed to provide security and virus protection are becoming obsolete anyway. The entire cloud structure of storage would have at one time been a serious policy violation. As companies move to the cloud and software is available why would a company take on the expense of providing all the hardware?
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Generally, companies view technologies as a one size fit all. However, in recent years, employees are pushing for a BYOD supported workplace. This allows employees to access company-wide resources and do their work on the devices they choose rather than the hardware approved by IT. However, accommodating BYOD is not necessarily feasible for all companies and/or industries. In example, the company I work for does not support BYOD. Our IT department, however, tries to customize our computers to meet our ‘out of work’ needs. This allows the employees to use the company issued laptops for both work and personal use. This is essential because in my line of work, we view and handle regulatory confidential information; therefore, we must use a secure network at all times for sending and receiving information. In my opinion, I don’t see a direct correlation between individual productivity and organizational efficiency related to BYOD. For me, I am not concerned what method of technology I use as long as it is all inclusive of the software and systems I need for my everyday life (both personally and work).
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Mori,
You bring up a great point. When employers allow employees option and customization for their work supplied devices I think they will be more likely to use them and be efficient. The idea of tech as “one size fits all” seems to be prevalent in company purchasing for their employees however it’s the opposite o what they want to offer customers. In today’s modern society the appeal is individual customization, so it’s very interesting companies haven’t done this more when offering technology to their staff.-
Amanda,
So interesting that companies seem to now get it and recognize that today one size fit all is not likely to be a good customer strategy, but don’t follow that with understanding that a one size fits all approach should not apply to their employees either. Your response got me thinking about the variety of devices I own, and how I switch between devices depending on what I want to accomplish. I’d find it very difficult to get what I need done in both my personal and professional life in a timely manner if I was limited to one device or one platform.-
So true! I never thought I’d have so many devices and the more companies try to make a device to do it all the more devices I end up with. I feel like we’re almost to the point of too many options.
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Mori, I agree with your view and follow the same practice when it comes with the use of a company issued device. Some of my colleagues choose to carry their own mobile devices which I find cumbersome and unnecessary. Even though my employer enforces restrictions due to patient data it doesn’t restrict us from accessing most sites and information for personal use. In the event I choose to use my personal device to access work related files I must follow the IS security protocol with the facilitated path- through the firewall and additional safety measures. in my opinion that is more cumbersome and restrictive. I sometimes work as part of a team and anyone can access my computer and would know exactly how to use it since the harware and software is uniform for all of us, rather than someone bringing their own which others may not be familiar with. In the end, I don’t see any productivity related issues tied not being able to BYOD at all.
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At my workplace a new starter gets a laptop and a cell phone (an iPhone). As we are a logistics company and most of the people that I work with are meeting planners, they typically bring some sort of tablet (which would be BYOD) with them when they go on-site. We are also getting more and more requests for iPads and Surface Pro’s. People are complaining that when they are meeting with a client, rather than carrying a heavy laptop with them they would prefer to carry some sort of tablet as it appears that we are more technology advanced and a sleeker look. We do have tablets that can be loaned out but I can see in the future that some people will end up getting Surface Pro’s rather than laptops.
As far a productivity, I do think when traveling it is easier to carry a tablet on a plane rather than pulling out a laptop. More employees would be willing to do work on a tablet on a plane rather than a laptop due to the limited space.-
Hi Kristen,
You bring up a great point. Since you company is a logaistics company, they should be more IT saavy, as that is what’s expected of them from their customer base. Do you believe that the level productivity is higher when people BYOD or when they utilize the company issues products? Also, does your company customize the BYOD to ensure customer confidentiality etc? Do you use your company issued devices for personal use or would you if they customized it to fit your personal needs? In my case, we are not allowed to use any other device other than the company issued blackberry (yes, i said blackberry) and laptops. This is to ensure information security as majority of the information we view are strictly confidential. I am just curious to see what other companies do and the mentally when it come to information technology. -
Kristen,
I love my Surface Pro3, and it is super convenient! The new one is bigger than the original, but love that it is a tablet and a fully capable computer. If I was requisitioning equipment for staff on the go, I’d get them a large 27” monitor they could connect the Surface Pro to when they are stationary, and my guess is productivity would soar.-
Mori as you work for the government I am no surprised that you cannot BYOD due to security reasons and just in case you ever left you may have top secret information. My company is pretty cheap we are happy with people BYOD but no we do not support or customize it to fit business purposes. Although we sure do promote it, if an employee wants to work more on their 3 hour flight and can on their tablet, we are all for it.
Diane – I have heard a lot of people like the Surface Pro, wish they would order me one but in the meantime I have to keep dragging around my 20 lb computer. -
It’s definitely a lot more convenient to take a smaller device like an iPad or other tablet for meetings and presentations now that tablets are alot better, like the Surface. Whenever possible I will take my iPad with me to a conference and leave my computer behind.
Diane, the Surfaces are very nice and really can replace a computer/laptop. I did that for about 3 weeks while transitioning to a new computer. I used a Windows tablet with Windows 8 OS built in and I didn’t miss a beat on my productivity with the full functionality of Windows wherever I wanted to go. Attaching an external monitor to the Surface Pro would definitely be the way to go.
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BYOD is not supported in our workplace, due to securing communications. But yet the state can save money by not having to pay for devices and phone plans if they allowed people to BYOD. Concerned about security, there are apps available that can secure communications like email and text messaging.
In our office, our staff travels a lot and at times uses their phones to make calls or send emails back to our office. Accessing our emails on our phones can be done but takes a couple additional steps and is not efficient. So being able to provide them the necessary software to allow them to more quickly access their emails and communicate with the office would increase their productivity while being more efficient.
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Jon,
Great suggestion. By supporting BYOD, companies are able to save money and utilize these savings in other areas. This will also allow employees to better utilize their time and be more efficient.
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I mentioned in some of my other discussion board posts that my office culture is very “old school”, stubborn and hands-on. BYOD is only supported at the executive and sales person level. I think if I asked my IT supervisors, they would say it causes more harm than good. These individuals (executives and sales people) tend to grab after the newest and most glamorous gizmos. They then must learn how to use them. To support their use, members of the IT department need to familiarize themselves with the technology. This cycle never ends and could be avoided by letting our IT department, with their vast knowledge of the subject; decide which pieces of hardware suit which employees best.
To help explain this disconnection, I will provide an example of a common interaction with my boss. I report directly to the President of my company, who travels frequently. When he travels, he prefers to take his iPad rather than his laptop, which, I am quite certain, never leaves his office. He ordered his iPad in the first few months they became popular and has never learned how to use it for anything other than surfing the internet and checking email. He confidently proclaims his disinterest in email, so it serves no purpose other than to look cool when he enters a meeting room. On the occasions he needs to communicate via email, he finds quickly and repeatedly that he has not added Microsoft Office to his iPad and cannot open Excel worksheets or Word documents. He then requests that all attachments be resent in a usable format (.pdf or other). The process frustrates his subordinates in two ways. First, subordinates lose the usefulness and functionality of their spreadsheet. Second, subordinates are forced to revisit a finished deliverable for an unnecessary and ineffective update. I would not be surprised if other organizations that offer BYOD experience similar scenarios that interfere with workplace efficiency.
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So Jordan, what you’re saying is the President requires people to work around his inabilities but he looks cool, right? That is awesome! :O
The company I work for does have a BYOD policy but puts restrictions on using the web if they use the Wi-Fi. To monitory web usage on our PCs as well as the BYOD, IT uses Websense, a software application that prevents employees from spending more than 45 minutes a day on the web and blocks naughty sites. This does not prevent someone from bringing their devices and using their data plan as they can go anywhere they like for as long as they like.
For the first 3 years I was with the company, they misclassified my position and didn’t apply Websense to my account. After an audit, one of the IT security guys asked why I needed unmonitored web access and I (truthfully, yet painfully) said I didn’t. Within a few minutes of that conversation, my beautiful Sirus station was killed by Websense since it prevents data streaming. It was a sad day indeed.
One thing I have noticed in the last couple of years is that employees frequently have their devices out and when they see me walking by their office, quickly bolt it down like I’m clueless to know what they’re doing. I recently made it a policy that the temps/interns cannot have a device on while working as they aren’t salaried employees. I announced this policy during a staff meeting to convey the message to the salaried employees that the devices can be distracting, but at the end of the day, your projects need to be finished regardless of how many times you update your status on Facebook.
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March,
Thanks for the excellent reply! I believe my company restricts Wi-Fi web usage as well. Partially for the capacity strain (they do not want people streaming videos, etc) and partially to eliminate temptation. I totally agree with you, Sirus (or any music/radio streaming) is more motivation than distraction. I don’t see the difference between streaming music via the internet and having a TV on in an office all day, which our executives also enjoy. Anyway, maybe BYOD is the future and will be regulated by internal systems access. I just cannot help but pity the IT departments that must support and troubleshoot non-company-prescribed hardware and software.I completely agree with you about the level of distraction our devices can cause. I find this, at times, is a personal battle. I have shut off my phone entirely on days where it seems to be irregularly active or I need utmost focus. Like you, I think what matters most is that the job gets done on time and well. There is an obvious trade-off: time spent distracted equals time spent working beyond a normal process’s required length.
I really appreciated your feedback on BYOD in your workplace! Thanks again!
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My current workplace supports BYOD (bring your own device) to a certain extent. I currently work at a regional medical center where all desktop PCs and laptops are purchased through IT and overseen and monitored by AIT security. When hospital administrators travel, we are encouraged to use the hospital laptops that we have been provided with. However in recent years, telemedicine has been a big transition for my workplace which has allowed physicians to “beam in” through robots remotely from their own homes and from around the country. Our teleneurologists come in from various U.S. states and can assess the patients via the robot from their control station which is now set up through their own Apple iPad. We facilitated this service in addition to setting up our one neuro intensivist with a control station to assess neuro ICU patients from remote locations. When we first made the request, AIT was hesitant and stated that they had to run security scans on every iPad prior to going live. After initial security scans by the hospital AIT security team and the telemedicine robot vendor, the physicians were set up and ready to go. More and more physicians are continuing to use their own Apple products as an alternative to the standard hospital PCs with approval from AIT security. Overall, I find that this increases individual productivity and organizational efficiency for the hospital. It allows for quick, accessible use that is simple thus allowing the physician to provide adequate patient care. Since we implemented this type of telemedicine service that incorporates iPad use, we have received positive physician feedback and decreases in patient care delays.
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Temple Hospital is far behind when it comes to BYOD support in our workplace. Interestingly enough, individual productivity is only a small piece of the the puzzle and organization efficiency is hurt by the BYOD concept in our organization because the IT department lacks the ability to service personal devices and the organization mentality is to discourage their use mostly for reasons that HIPAA information shouldn’t be displayed on devices not operated or controlled by within the IT department. The use of iPads, though, amongst some clinicians have nevertheless gained quite a bit of traction for rapid order entry when a hospital-provided device is out of reach and bedside display for providing an additional service to patients definitely improves satisfaction. Both of these are truly necessary implementations with increasingly pressured schedules clinicians operate within and the rising expectation of our society with regards to expeditious care and service oriented delivery. In this regard, BYOD is allowed and currently supported but not serviced by internal IT.
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I haven’t found that having my own device on the network has allowed me to increase my productivity much, apart from being able to remotely access applications via Citrix. BYOD requires an IT department that can service your needs and quickly. Temple Univ Hospital isn’t there yet.
Maybe with the panacea of Epic? 😉
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BOYD is a very interesting topic. I have worked in healthcare industry and HIPAA always comes first. In my current working places, I always have to carry three phones, my personal phone, my personal working phone and a unit phone. It is such a hassle that I frequently thought it would be better if they allow me to use my personal phone instead of me to carry three phones all time if I have to work. We do have big IT department, but all the programs are so uneasy to use, even I have remote access to all programs that associated with my routine work at my home computer, but they would not allow me to attach any document that I have made for my work from my home computer. I just feel my home computer became access device to hospital network, and there is no special use of my home computer, even it is much newer and fast machine. If I use hospital computer, I just could not even upload any files from my USB drive to the hospital computer. Don’t you think I could write better at home or I could write better when 4 or 5 people were asking me questions when I was writing? I totally agree with everyone that BOYD is a way and trend for working places, but how to comply with HIPAA might hinder its use in healthcare industry.
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Charlene, great points. I agree, HIPAA makes it tough. This is the tension between ease of use vs security. Allowing people to add their own devices to the mix only makes that more complicated.
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BYOD is used at my company for both phones (IPhone or Android) and IPad devices. While the concept is meant to ensure a marriage between personal and professional communications, what I have observed in the last few years is that many of my colleagues still carry 2 phones. At KPMG, the policy is generous as to how much the firm contributes towards the purchase of a phone and the ability to use personal email accounts and other non-work related applications on the phone. The primary detractor is the limitation of usage of certain apps which may create a security breach. An example is using the MS Office Suite on the IOS platform. Due to concerns over security, I cannot open an excel file received in an email in Office 365. This takes away from the usefulness and convenience of having the ability to utilize the MS Office Suite on mobile platform. We also have the ability to access emails over the internet on any PC, but are restricted with this functionality to access any files which may be attached to the email. KPMG also screens our outgoing emails to ensure that no breeches of security are taking place where client materials are sent to personal email addresses.
From a productivity perspective, I don’t think that the BYOD program has an impact either favorable or unfavorable. From an organizational efficiency point of view, I do believe that the BYOD program adds a level of complexity to the organization as several devices and platforms need to be supported. Additionally, there is a need to provide support to the end users and ensure that all patches across multiple operating systems are applied. The firm can detect whether patches have been applied and if they are not applied access to firm email can be removed. While adding a burden to the IT group, employees appreciate the flexibility that the BYOD program brings.
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Scott, from your description it sounds that KPMG is trying hard to blend the two options. I do not see the BYOD model replacing completely the classic IT department but, do you think that by finding the perfect balance BYOD might introduce cost saving that will be more and more attractive for corporations?
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Aldo, Thanks for your response, and yes KPMG is trying to blend the best of both worlds. While on one hand we are allowing employees to choose the device they are most comfortable with we are also requiring that employees adhere to the policies of the firm on that device. The result is that many of my colleagues have a personal and corporate (BYOD) phone. I think that finding the right balance is key. The reality is that this particular issue is as much of an HR concern as an IT concern. The ultimate goal is to provide communications to employees in an effective manner that will not have a negative impact on morale.
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I work in the financial services industry where it is costly if employees steal client data from the firm. Although employees cane sign up for ‘virtual office’ capabilities and access thei ocntents of their ‘work desktop’ remotely, usage is heavily monitored. Due to industry regulations, almost 99% of sales meetings are conducted at the local office, so company laptops are rarely issued to retail branch employees. Even the laptop in the seminar room is technically supposed to be bolted down. Call center employees definitely do not have a business need for virtual access; however all corporate functions can enable ‘work from home’ access on their computers. The user agreement is very intimidating, so I chose not to configure this for my personal computer. I only travel to San Francisco corporate office once every quarter, which is not enough to justify the business need for a company issued laptop or phone. I conveniently live across the street from my office, so if I am too sick to walk, then I shouldn’t be working anyway. For people with kids, work from home is a valuable per, which I never truly understood until yesterday. . Due to a family emergency that occurred, I now regret my decision to opt out. My parents are in Denver for a ski vacation and my mom broke her hip. She’s currently in surgery, but I need to be in the office today — waiting for a time sensitive file to review/test/approve, before it can get published to a marketing website. However, even if I did have virtual access, it would be very challenging to complete this task with only one computer screen — since I need to do a side by side ‘ before & after’ comparison of a PDF and the web page. The content will be filed with FINRA, so I need to ensure 100% accuracy, my company & CEO could be fined. So from a productivity standpoint, it would require significantly more time and effort to complete the same task on my personal laptop, versus my office computer with dual monitors. lUltimately there are pros and cons, but I would gladly trade the additional oversight of my personal computer (I.e. Privacy) for the flexibility of being able to be with my mom at the hospital. Luckily, my dad is staying with her.
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Hi Corey,
Thank you for sharing information about the environment you work in. In some ways it is comforting to know that financial services industries have tight security controls.I hope your mom recovers quickly and that you get a chance to get out to be with her after you review the file.
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Diane – yes, I agree, although there are some companies who are definitely more lax. Here are a few articles about recent security breach at Morgan Stanley. An employee who was very new to the company downloaded confidential client data to his personal computer. Then he was either hacked, or purposely tried to poach the data online. Regardless of which version you believe, it is crazy that he had access to more than 350k client records. He worked out of an office in NYC, but was able to query the entire company database. Also, thanks for your support. My mom’s surgery went well and the Drs are optimistic about her recovery.
http://www.wsj.com/articles/puzzle-forms-in-morgan-stanley-data-breach-1420590326
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BYOD is not well supported in my workplace. The best that can happen is that an employee can choose to keep a personal mobile phone. For any other personal devices, such as laptops, tablets, et. IT is not authorized to do any work. I remember, when I joined TJUH it was even worse: in fact, it was only two years ago when I was allowed to pick the laptop of my preference; whereas from 2003 to 2012 that option was not there. I, personally, enjoyed the reading related to this blog and I found the analogy with the communist party brilliant to the point that I am upset I did not come up with such a correlation earlier in my life. It is true that in a non-well IT oriented/contemporary organization, such as the one where I work, IT and marketing are controlling people with some analogies to what the communist party used to do in east Europe. I also believe that there are advantages and disadvantages in the BYOD model. The main disadvantage is that IT will partially lose control, with potential consequences to the whole organization. As an example, think about the possibility of an easier spreading of viruses from infected devices. The advantage is that such a system can foster creativity and money saving. I see the BYOD model progressively taking over and actually helping organization to achieve significant saving. I, also, believe the BYOD model is easier to implement in smaller organizations.
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Quite insightful post Aldo. I always see may of my friends and family in medical field always carrying multiple phone device one from work and another personal. This notion is weird to see post the blackberry era. With many advances in technology, I am surprised that many organizations are still requiring employees to push to draw a clear line between work and personal life. But it seems like your organization is slowly coming around to relax one rule at a time when it comes to IT. However, as you explain, the big challenge with introducing the external device is the integrity of the network. As we covered in first week’s readings a small company computer can easily introduce a malware in the company’s security system enabling hackers to undertake control over the systems. It is certainly a difficult balance that today’s IT group of the organization seek to balance between the employee freedom vs data security.
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At my firm there is a choice provided with respect to cellular device. You can choose to have an iPad and Iphone provided to you at the companies expense or you can use your own and expense the cost. This does provided some level of choice, but the corporate VPN security app must be downloaded on any device used for business purposes. I do not believe we have a choice to use laptops other than corporate issued, although I have not tested that option. With respect to development, my educated guess is that our IT group would not allow or be supportive of our developers renting out space on servers or leveraging external cloud providers without approval. My firm appears to control our applications and development tools very tightly. The article brings up some interesting points with respect to consumerization and dematerialization of IT. I certainly aim to find out to what extent these trends are impacting those in my firm who are closer to the IT side of the house.
There is certainly a tradeoff between individual productivity and organizational efficiency with respect to BYOD. The article sums this point up well, ” The truth is the IT guys can consume external services and provide them to their internal users with policies and controls and then get out of the way,” There is a balance that can be struck, which ensures the productivity we are seeking while aptly protecting the company’s interests. It would appear that a rigid strategy prohibiting BYOD would have certain negative effects; whereas a completely unregulated approach could have opposing, but equally undesirable impacts. The key is determining how the various options align with enterprise goals, while continually seeking feedback from those using the technology.
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I work for a government agency that prohibits using personal devices on the company network. Personal devices are allowed in certain areas of the office, but cannot be connected to the work computers (such as thumb drives or connecting a mobile device) or server. The main reason the company prohibits BYOD is because of the sensitive material such as classified and confidential documents. The personal reason employees wouldn’t want to BYOD is because any work material can be subpoena as evidence in a trial. If the work documents are on a personal computer or mobile device the employee would have to surrender the entire device to the court to be reviewed if subpoenaed. I do think there is a tradeoff between individual productivity and organizational efficiency, but in this case due to the sensitive information it is necessary.
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Clint, this makes sense. Does this agency also behave in the same way when it procures software? Do the security concerns push this agency to put software on premise to achieve increased internal control or is their a Cloud strategy in place? I can see the hesitation on BYOD, but curious how that plays out across the organization and IT group. Thanks.
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Mike, thanks for the response. Yes, software procurement is highly regulated. It is a private cloud or probably better described as a community cloud. All agencies provided access are working towards the same goal. The lead agency that overseas the private cloud has it located in their own data center and manage it with their own IT staff.
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One thing the author ignores in his comparison of communism’s Glasnost to corporate IT’s philosophy is that the latter is not a democratic institution. In this setting, strict controls are in order. Standardization is key when it comes to product maintenance, service, software upgrades and overall uniformity.
Imagine having the in-house Help Desk Department having to deal with employees’ various makes and models of computers, tablets, smartphones running on various version of operating systems. All this just so that the staff is not inconvenienced?
Au contraire mes amis… It adds a level of unnecessary complexity. However, I am in support of using a personal device without expecting my employer to troubleshoot it in case of malfunction. I would rather have company issued hardware and the service that comes with it since it is the company which is paying to perform the tasks. -
I must admit I’m pretty thankful that my company is as accommodating as they are when it comes to devices. Our department replaced all of our PCs with laptops not only to increase efficiency, but allow flexibility within the workplace so we can access our share drive while traveling (because we don’t have a BYOD policy). In the past year, many of our sales coordinators have asked to go from PC to MAC because of all the creative tasks they have with sales deck presentations, video recaps, etc. However, as a compromise, we bought a MAC that they can use for specific projects (since their entire job isn’t creative based).
I also found a similar article relating to this discussion question which presents seven tips/steps for anyone who wants to implemnt a BYOD policy within their company: http://www.cio.com/article/2395944/consumer-technology/7-tips-for-establishing-a-successful-byod-policy.html
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My organization allows you to access certain software from your personal computer or bring your own device, however they will not provide IT support if a functionality issue occurs. The organization allows employees to access their emails on another device using a security encryption code to log on. However as a Sales representative, I was told to only access Salesforce.com using my company laptop in order to protect confidential information. IT said they couldn’t ensure high level of security when personal computers or tablets are being used from an outside source. There is definitely a trade off between individual productivity and efficiency. An employee may have a higher comfort level and familiarity with using a personal device over the company assigned device. Or their personal device may serve a better need for their working environment. This could potentially affect an employee’s productivity if they are having issues becoming acclimated to their device. For example, I travel for business at least 50% of the time; my organization provided me with at 15.5-inch screen laptop that is literally as heavy as a brick. I have to constantly go through airport security, take it out and place it in a bin. There have been several times that my laptop was damaged and as a result of the constant wear and tear. I had to send it back for repair, which affected both my productivity and efficiency. I was out of a laptop at least 2-3 days when it was being repaired. I lacked efficiency for those couple of days and did not feel that I was very productive. If our policy allowed me to use my MacBook Air, which weighs half the weight of my Dell Latitude, I would be able to move through security in a more efficient manner. The MacBook Air is more durable and has fewer parts that have the potential to become damaged; therefore I would not have to send it back for repair. My organization could have a service plan through Apple. If there is a problem Apple retail stores could repair on site, minimizing the repair time. This would improve my productivity and increase efficiency, since the time for repair would significantly be reduced.
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I don’t believe BYOD would be supported at my workplace. I work for a very conservative group of engineers. Over the past few years it has been suggested by our IT consultants that it would be more practical to use cloud based applications. The owners of the business want the server to reside in our offices so we have ‘control’ of the information. They do not want to discuss cloud based applications. They also do not want employees using personal devices at the office and especially not for work. Many of us must carry two mobile phones because they want our work email on company owned phones. With the current makeup of the ownership I do not foresee them changing their views which ultimately will hurt the overall business.
I think there may be a trade off with organization efficiency only because employees would have different equipment that may not be compatible or as up-to-date as the company’s. Also who would be responsible if a device is not working properly? This would affect an employee’s productivity if their device is now working properly and they cannot do their work.-
Interesting post, Angela!
Your organization does sound conservative indeed. But you never know, one of your leaders might take an Information Management such as this one someday, have a change of perspective, and consequently influence the others to embrace a change.
I agree with you regarding the compatibility of devices. It tends to be a common issue. Most of the computers at my job run on MS Office 2010. I use Office 2013 at home. There have been instances where I had difficulty merging files originally created on my home computer with the job’s files due to variance in Office versions. Compatibility issues as minor as this one can seriously hinder workplace productivity.
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I work in a hospital with numerous departments, some of which I believe BOYD may apply to. However, in my own department, personal devices are utilized mostly among our IT team whose job functions are partly remote. For the rest of the department, most of the tasks are performed via highly customized software that are only available on the organization network due to confidential reasons. For the office suite-based projects (Excel, Access, etc.) that I manage, I am allowed to use personal devices at home and later transfer the files to the organization’s share drive.
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As may have explained about their workplace, my workplace is similar to most where mobile devices and laptops have different policies. At J&J all employees are conformed to the IT issued computers (and operating system image) that are tightly guarded by IT softwares. However, the employees have freedom to BOYD when it comes to the mobile device. The IT had developed a strict policy that is enforced on each of the mobile device to ensure the security measures are taken. For my personal smartphone, i am required to enroll it to the J&J IT program to access emails over the phone. Further the enrollment program monitors activity on the phone to ensure the phone always is locked and require a complex passcode to unlock. Such program also ensures if there is a issue reported or identified with my mobile device to remove all the work related activities (mainly email, calendar, tasks and notes) from my device. This enables utmost IT security to prevent any risk to the network. For utmost productivity and company security, I think the division between personal and work devices always needs to occur until otherwise whole business runs on the cloud. With growth of cloud technology, the company may be able to go 100% BYOD if the business ran on web application accessed through browser. This would minimized the risk to IT and confidential information of the company.
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My hospital allows you to bring your own device, but locks it down with regard to apps you can install and with security software that slows it down. I’ve decided to segregate my work and personal life. In part due to security and the “Big Brother” feeling of having my employer potentially watching the games my kid is playing on my phone or iPad. While I’m probably paranoid, it’s just not that hard to maintain a separate device for work if necessary.
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Abundance is clearly more disruptive than scarcity because it is unpredictable in its final outcomes. If a scarce resource becomes suddenly available, say the ability to access and view for free any Journal article in a peer review Journal that once cost 50 dollars an issue. That becomes wonderful for the reader but how does the publisher survive. The quality of life of the readers clients who they service such as legal clients or patients will improve but the publisher of the information will perish if it continues with the older business model. The business model will need to change. No longer can the publisher rely on the consumer as the source of revenue. The consumer of free information must now become the product and the publisher must learn to monetize the flow of new consumers or readers and capitalize on that. Unless a way to make money is created the old world of peer review journals will disappear which isn’t in anyone’s best interests. This is the challenge that abundance brings to the table
Alex, great post using the world of peer review journals as an example. I do agree that abundance can be more disruptive than scarcity in most cases but not all cases. One example that I can think of that counters this thought process though is the automobile. When Ford Model T rolled off the line, it was a disruptive innovation that allowed the masses to gain access to the steel horseless carriage at an affordable price. According to this Economist report in 2012 ( http://www.economist.com/node/21563280 ), the number of cars on earth has reached over a billion yet it still not generally affordable for the majority of people around the world. Obviously, the automobile is an extreme example, and it is used just for debate. Has the automotive market really been disrupted with more and more car manufacturing jumping into game to battle Ford?
Duke, you bring up a great example of where the abundance of automobiles is not disruptive as opposed to scarcity. However, many automakers use scarcity in their approach when manufacturing some of their high end vehicles such as: Corvette, Mustang (Boss & Shelby Cobra), and Bentley. This approach allows the value of these vehicles to remain higher than those that are readily assessable. Another example of scarcity that has a proven track record is that of “Air Jordan’s”. Each new model that is released is quickly consumed due to the controlled and limited manufacturing of each model. The scarcity approach by Nike is disruptive in society as there have been a number of cases where the shoes were the catalyst for violent behavior. http://www.nydailynews.com/sports/basketball/score-airness-stop-violence-article-1.1560400
Kerry, your two examples of purposely using scarcity in a market of abundance to drive market demands are great. I absolutely agree that the approach Nike has take with the limited release of their shoes including the Air Jordans has been extremely disruptive to the market and society.
Abundance can be more disruptive than scarcity in most cases but not all cases. In my response back to Alex, I argued that the automobile is an extreme example that counters this thought process. However, a great example of this is found within our smartphone every time we use it. May I ask you to think something that someone out there has not written an app to do already? The disruptions from the abundance of smartphone apps can be felt in our professional, educational, and personal lives. When have we had so many tools within the palm of our hands to be more productive, smarter, funnier, or less lost? And if you can think you have found something someone has not written app for yet, look again…I think there is an app for that too.
I agree Duke! Your post made me laugh, thanks.
Duke,
You are so right. An IT friend of mine has wanted to develop an app for the past 3 years. He gathered a team of friends each with individual skill sets (me for marketing, another friend for log design, etc.) and by the time we’d all discussed the app he was planning to develop, a new one with the same function would pop up. I believe he’s given up on that idea and is looking to start another business. He doubted his ability to make a profit in such a saturated market. I wonder if other app developers also go through this? Great example!
LeRena, thanks for sharing your story. It is one that many developers including myself share. The turnaround time from ideas to development to pushing to market fir smartphone apps is so short that many of us are just not able to adjust. However, I do think that the next great app is really just an idea away so I hope your friend does not get discouraged!
When there is scarcity both supply and demand tend to go into survival mode and more energy is spent on how to conserve the resource than how to come up with other uses for that particular resource. Abundance, however, creates a surplus which allows for more positive or negative disruption to society compared to scarcity. The negative side of abundance is the negative shift in value of any product/service or resource that is readily available in the market. No one will be ready to pay more for a service/product or resource that is not scarce. The positive disruption of abundance is that availability of surplus which creates room for creativity and new innovations. People start asking what else can they do with the surplus, how can they maximize their return and these questions lead to new innovations that disrupt the market by introducing new ideas that disrupt society as we know it.
Both abundance and scarcity are disruptive to society in different ways. Scarcity obviously disrupts because there is a demand for something that is not readily available. Abundance disrupts society by flooding the market and lower the value of the item. I don’t think that one disrupts more than the other because the consequence of each is different. It also depends which side you are one with regard to what is better. It is great to sell something that is scarce and in high demand, but it is not so great to be on the other side. Conversely, it is great to be the purchaser of something that the market is flooded with, but not so great to be the company who has too much inventory, I don’t look at is as “abundance breaks more things than scarcity” as stated above. Both abundance and scarcity require some part of society to adapt.
Kristin, thank you for the post and stating such a reasonable argument. Although I still think that abundance is more disruptive, I absolutely agree that both abundance and scarcity require society to adapt to each situation.
Kristin,
I agree that society must adapt to both abundance and scarcity. In addition, I think that both approaches are needed to provide products and services for all income levels of consumers and variations in the preference of consumers. Both approaches creates a price point that is suitable for the end user.
When I first read this article my first response was for some reason to think about food and the unbalance there is in the world. Stories in the US talk about obesity, calorie counting, the latest diet, poor food choices and health related problems such as diabetes and heart conditions. When in other parts of the world there are those who are literally starving. They have no choice in where to eat, and at times just how much to eat. So in this case I feel abundance can be disruptive to society. I’m sure any of the doctors in the group could give a ballpark figure as to how much poor diet can cost a person in healthcare. Many times this is people who do not have the means to pay for the problems that are associated with ‘abundance’ of food choices. In keeping with this class I think the example I would have to use is digital media, as in newspapers. When news was only available in print and usually one town with a limited amount of pages and obviously limited amount of information. Now we have access to worldwide events and news, can have it streamed live through various outlets such as Twitter. Even then although we like the access and the ability to find out what is happening at the other side of the world at this very minute, it can be overload at times. I found this article which funny enough talks about Brian Williams and media abundance. http://www.pakman.com/2015/02/06/brian-williams-and-abundance-vs-scarcity-in-media/
I think in these examples the abundance is disruptive to society
Interesting point about food abundance/scarcity Elaine. When you think about it’s a bit scary, and not just in developing countries. Every night dozens of restaurants in your community throw massive trash cans of perfectly good food away at the same time as hundreds/thousands of people in the community are starving. Systemic issues and policy prevent the proper sharing of these resources so despite massive abundance we still see hunger. From a social perspective it’s like the adoption dilemma. There are all these orphanages stocked full of kids that need good homes, and all of these would-be parents who want to adopt. Yet, somehow the process is incredibly complex and expensive.
Ron,
I see it all the time. I do know that a local Panera Bread actually donates its end of day leftovers to a local old people community/home. Iv’e seen them load up boxes of cakes. bread and bagels to a volunteer rather than throw the food out. Ive also actually had a party with catered food and so much is leftover but nowhere to donate to. I know in the UK there are rules about donating the food, cant be precooked elsewhere and has to be packaged etc., which seems a shame when you have to throw masses of food out, when there are people hungry. I have friends who have adopted from Russia because it was actually easier, but again was so expensive that people who could provide a loving stable home, but don’t have the resources to pay large amounts of money, are never able to move ahead with adoption.
I believe abundance breaks more things than scarcity but not always. Supply and demand are interdependent in every situation. If there is scarcity of supply then demand is higher for any innovations.
If we think of third world countries, where there is scarcity for everything, the society or citizens of that nations work hard to just get by, they struggle for food, shelter and clothing etc. But when there is abundance in developed nations, that’s where disruptions occur most They have abundance of everything. Hence you see so many innovative products that come to life. When those innovative products flood the market, then they tend to lose its value over time, hence the society changes. The cycle begins. Printing the magazine in advance where demand creates the supply model, gone are those days, as there is abundance to availability of sources to get the same information or product. So demand might not hold long. So abundance can be more disruptive.
I believe abundance drives innovation. Once an abundant product has been launched and replicated by competitors for years the allure certainly dies off. However, this triggers an innovative thought process to develop a new market for abundance. I believe that’s what drives markets today. I think scarcity very rarely is disruptive due to the fact that everyone acknowledges its scarcity, and in today’s society it is most likely scarce for a reason or else it would have been replicated and made into an abundance. I hope this makes sense, but as I read this all I thought about our American culture and the ideas that drive “the next best thing.” We are certainly not a society that is fine with the abundance of status quo products or services.
Stephen, I agree with you that abundance drives innovation as the need for a new market arises. Like I mentioned in my post, I believe people start looking at what else can be done with the excess available or what is the new big thing. I also agree that anything that is scarce is in that status because the market has not found a way to replicate it otherwise there would be an abundance of it.
Abundance certainly drives innovation Stephen. Going back to our conversation earlier in class about cloud computing – without an abundance of cheap, shared computing resources we would not have the hundreds of thousands of mobile app developers with the tools to produce innovations that have disrupted almost every industry. The abundance of high-speed wireless data networks have given way to real-time, spur of the second, instant information (Twitter, for example). This is now turning into streaming video, which (if you are reading about the latest developments at SXSW conference) is turning into first-person, video sharing capabilities. The demand for bigger, better, newer services is driving the innovation to provide the supply of services.
I think abundance certainly drives innovation. But if you think of scarcity right, imagine going back to the primitive era where there was not a single smart phone that existed, then there was a scarcity. So Scarcity in turn made people think, come up with a idea, collaborate and then bring those ideas to reality, isnt it? I think its a cycle. I am not sure if you have heard this saying, necessity is the mother of invention. If you need something so desparately , thats when you strive to do better. Once you have accomplished or reached your goal, now you dont stop. This is the abundant phase now, you still strive to make it better. We see this has happened with smart phones, TV”s are a good example too. I remember when my parents got our first TV, it was bulky, CRT TV, black and white. at the time, there was no color TV nor flat screens or no smart apps on it or not even 3D, so there was scarcity of these innovative products. That’s when the cycle began, so many innovative products came to life eventually, once you had the product. So now we have LED TVs, 3Ds, and also 4k. Did we stop here, No, now they are OLED, 8K resolution, then curved TV. It goes on. Sky is the limit !
Stephen, great post. I agree that abundance certainly drives innovation. This is analogous to what I see in the pharmaceutical industry. When a brand product is protected by patent and marketing exclusivities, there is value in being able to be the sole distributor of it and to build your business around it based on its scarcity. But one day those exclusivities could expire and generics could flood the market. To prepare for this potential overabundance that would completely disrupt a business, brand companies need to innovate and develop next generation products. Often, you see these new products being launched about a year before generic competition (overabundance). So, without the risk of the disruption associated with overabundance, we may not see as much innovation and the development of new products. I think similarly this applies to other industries.
I do believe that abundance is more disruptive. In the retail business, standard practice historically has been to limit the amount of SKU’s you offer consumers because too many choices can create decision paralysis. While technology is certainly challenging this notion as mass customization begins to take off, I still believe too much of anything is worse.
I’ll use digital photography as an example of abundance being, arguably, worse for society. I started my career in the US Navy as a combat photographer/military photojournalist. In fact, I was part of the very last class to be trained in photography using 35mm film before transitioning to digital photography. During that time you had to be very thoughtful about what photos you took because you only got 24 shots. We actually noticed a significant drop off in quality photographers during the 4 years after the military began using digital photography only. A large part of this was attributed to the abundance of photos new photographers could take. Instead of 24 shots to get it right, new photographers had hundreds with no additional cost or time spent. This hurt their ability to ‘see’ a photo, expose properly, control the background, and tell a story when compared to service members accustomed to telling a story with only 24 frames. Today, it’s easier than ever for virtually anyone to take a photo but ask yourself, what’s the value of these photos? How many ever end up in a photo album or a wall, how many tell a story or say anything of meaning? Most simply die on a phone or stored on a hard drive, never to be looked at again. A few can likely be found on facebook or Instagram bring entertainment for a few seconds before fading away. Reading this even I think I sound like an old man complaining about how things used to be. That said whether it be retail options, food, or photography, I’ll take mine in moderation please.
Ron,
You make a great point about photography and looking at hard copies of pictures as opposed to them stored on your Instagram or FB page. I am guilty of taking a picture posting it on FB and thinking I really should get that printed, but of course it gets put to the bottom of the ‘to do’ list. Some of the best times are when you find a box of old pictures and go through them. My mom passed away 4 years ago and my sisters have the task of sorting through the pictures. They live in Scotland and the laughs and tears we have had looking back have been great, because we had the 24 pictures developed rather than the flicking through FB. I have a friend who is a professional wedding photographer and she says the exact same thing, that so many new photographers really don’t take the time to set the picture up, instead the take 50 shots and pick the best from there… Definitely a dying art where abundance is helping to kill it.
I agree with Kristen’s comments earlier that both abundance and scarcity can both cause disruption and it depends on how you look at it. Abundance can cause disruption as having too many products doing the same thing dilutes the product and so having a creative new innovation can cause a significant disruption. Scarcity on the other hand may not cause complete disruptive innovation, but can definitely cause sustaining innovation. When products are scarce, the goal is to try to make them run more efficiently or save them. An example in a few years will be oil. While there are still abundant supplies, there is worry that sources of oil are diminishing at a quicker rate because of cars and jets. Now, with this worry in mind, cars and jets are becoming more fuel efficient, and other alternatives are being looked at to try and improve cars such as electric cars. Instead of drilling for oil, companies are looking for other innovative ways to increase oil output such as fracking which has been on the news a lot lately.
Vinay that is a great point about oil. The vast innovations that have come about in not only the auto industry but manufacturing and sustainable energy have blown up in the past 20 years. Innovation is not without controversy when you reference fracking, but it is innovation non the less.
An interesting example to consider is the whiskey space in liquor. Recently a lot of different varieties have sprung up, particularly from small and craft distilleries, and all kinds of varieties as well. Clearly, all of these options take money away from the major producers. Heck, good ol’ Jack and Jim started producing all kinds of new flavors and blends due to the increasing competition they faced from smaller companies. So here we see abundance breaking the traditional production strategy for some of the bigger guys. Recently, however, there were fears of a whiskey shortage. Reports on this may have been overblown, but looking at it hypothetically, what do you think would happen then? In the case of something like whiskey, I would imagine that scarcity would build the classic brands and blends (or single malts) back up as the lower the quantity available, the more consumers would seek out quality. Just an interesting thought I had…
Any extreme is disruptive to society. How often has scarcity driven entire nations into chaos, yet it is abundance and extravagance that have led many civilizations to fall. In the end, I think scarcity has a bigger impact on society, because abundance often comes down to scarcity. Newspapers make an excellent example. The world is flooded with news that is fast and free. Therefore newspapers must adapt, but it is not the abundance of free news that is driving the newspaper companies to innovate, but rather the scarcity of revenue. The same goes for Alex’s example of the journals. Where ever one finds abundance, someone else is dealing with scarcity due to that abundance, and that is what drives change and disrupts society.