Mr Michael Yap, Chief Executive, National Computer Board Speech - Launch of the Andersen Consulting Enterprise Business Solutions Centre
Mr Michael Yap, Chief Executive, National Computer Board
Speech - Launch of the Andersen Consulting Enterprise Business Solutions Centre
Singapore, 12 August 1999
Good afternoon, distinguished guests, ladies and gentlemen.
Change Is Revolutionary, Not Evolutionary
1. We are in the midst of another revolution that I would call a second incarnation of "Henry Ford's PC", a term used by T.G. Lewis in his book The Friction-Free Economy.
2. Henry Ford is one of the greatest industrialists of our time. Of course, the first Henry Ford's PC was not a personal computer, but a personal car. Ford did not invent the automobile, but something more profound-mass production.
3. What Ford did was to set the standard for a new idea in the industrial age; he built an entirely new industry. As a result, Ford grew rapidly to dominate the personal car market, by 1914 the Ford Motor Company had a 48 per cent market share for personal cars.
4. Today, we are experiencing another wave of revolution in business. This is the Digital Revolution or e-Revolution. The "Henry Ford's PC" which I am going to discuss is not Personal Computers (we all know that wave already), but Pervasive Communication. This, I believe, will be the main driving force of the e-Revolution.
Pervasive Communication and E-Business
5. On a global scale, the info-communications boom, caused by the rapid convergence of information technology, telecommunications and broadcasting, is fuelling the phenomenon of pervasive communication. It is estimated that there will be one billion hosts connected to the Internet by 2005 ("The Emerging Digital Economy", US Dept fo Commerce), and that 95% of the US population will have Internet access by 2004 (Merrill Lynch). In 2004, there will also be 400 million subscribers to wireless data services (CNet), while the number of worldwide cellular phone subscribers would have hit 615 million in 2002 (The Strategis Group).
6. These developments have two major implications to businesses. Firstly, the cost of distribution of information and digital services decreases rapidly. Secondly, consumers can now become as informed as, or more informed than, many businesses. These paradigm shifts are causing fundamental changes to the way businesses are conducted, giving rise to concepts such as e-commerce and supply-chain integration that we are all familiar with today.
7. As the cost of distribution of information decreases rapidly, so does the cost of searches and transactions. Consumers and manufacturers alike are able to source electronically on the global market for the best deals with minimum costs. Conventional physical networking has been replaced by the speed and connectivity of electronic networking. This has created whole new businesses on the Net - NECX and E-Bay are premier examples. NECX started off as a market for surplus and unwanted goods, but quickly rose to become a main trading market.
The Digital Value Chain
8. The digital revolution is affecting businesses fundamentally, impacting not a part of, but the entire, business cycle. This change will be thorough. It might not be sufficient to simply be the most efficient company. Businesses will have to constantly innovate to transform themselves. Traditionally, end-products have been competing against one another. However, in the digital revolution, the quality of end-products alone is not longer sufficient. The competitive advantage of a business is now determined by the total value proposition of the entire value chain. Each stage of the value chain must significantly value-add to give customers a total experience. For example, FedEx has turned its internal package tracking system outwards, allowing customers to track the delivery of their packages. FedEx has gone beyond competing in its end-product, which is delivery service, to providing customers with a total experience in every step of its value chain.
9. In another area, linkages across the various sectors making up the value chain have created new sources of value. Companies are starting to cut across traditional sectors on the value chain. For example, Microsoft, the software giant, has invested in other parts of the information value chain - from cable and satellites, to content such as MSM and Encarta, context such as Hotmail, and information appliances such as WebTV. To remain relevant, businesses must start to look across their entire digital value chain to places where they can increase the value-add of their services.
10. Just like Henry Ford's era, companies that are able to switch successfully to the new paradigm will prosper. Those that do not lose their competitiveness and face the threat of extinction. Businesses and the nation therefore need to respond quickly and decisively to the challenge of the digital revolution.
ICT 21- Laying the Building Blocks for E-Businesses
11. Singapore has been very successful in supporting traditional brick and mortar types of businesses. Our strengths as a premier transportation, logistics and financial hub have been well recognised. We now need to know how to support a new breed of business in the digital world. I call these e-businesses. We can broadly group e-businesses into two forms: traditional businesses that make use of info-communications technologies, or ICT, to automate their value chains and reach global markets on the Net; and whole new digital businesses made possible by new ICT technologies. The government is paying attention to both forms of e-businesses.
12. We need to have a comprehensive and holistic roadmap to take Singapore towards the digital future, addressing every aspect - the physical infrastructure, the policy and regulatory environment, technology, talents, innovation, and culture. This roadmap is being mapped out under the ICT 21 masterplan.
13. The ICT 21 masterplan will facilitate the development of ICT in Singapore over the next 10 years into a new era of an electronic world or e-world. Our vision is to transform Singapore into a dynamic and vibrant global ICT Capital with a thriving and prosperous Net Economy by the year 2010. The main thrusts of the ICT 21 masterplan are to (i) use ICT to transform Singapore into a knowledge-based economy, (ii) build the ICT industry as a major growth sector for the economy, and (iii) develop an info-society of ICT-savvy population.
14. Correspondingly, the masterplan will help every sector of the economy exploit ICT, and create a whole environment in Singapore to support e-business, e-commerce and e-trade, e-learning and talent exchange, and e-services-on-demand. E-businesses will evolve in a few major ways, driven by key underlying paradigm shifts, such as the following examples.
15. From physical goods to digital goods: More and more services will be delivered on line. We are seeing a shift from physical CDs to online music, video tapes to video-on-demand and software packages to online applications. In the near future, the local and global info-communications infrastructure will be significantly enhanced to deliver services anywhere, anytime, and at a more affordable cost. We shall see more e-businesses delivering knowledge-based products and services online, be it books, music, video, applications, etc., to a larger and more mobile audience worldwide.
16. From human intervention to automated value chains: Cheap and pervasive sensors will populate factories and the general surroundings. We are already seeing photocopiers that will alert the service agents when servicing is due, and smart fridges that keep track of contents within and can reorder automatically when certain stock runs low. In the near future, e-businesses will start to integrate their operations with those of their suppliers and customers into tightly-woven digital value chains. Science fiction may soon become a reality in the smart environment scenario for your car to detect that it has broken down and automatically call the tow-truck, the car rental company for a replacement car and reschedule your appointments.
17. From physical organizations to virtual organizations: Instead of having your in-house accounts, legal, human resource, purchasing functions, future organizations may be created virtually, tapping on the services of the best-of-breed specialty accounting, legal firms, etc., linked together by a pervasive and secured info-communications infrastructure. Task forces can be created dynamically, roping in the most appropriate domain experts through the Net, and dismantled when the job is completed.
18. From mass production to just-in-time customized manufacturing: Instead of manufacturing and stocking a product, future e-business value chains will be activated only upon the receipt of a customer order. The entire value chain will be able to manufacture, just-in-time, individual products tailored to individual customer's preferences. This is made possible through tightly-integrated information systems between suppliers and customers.
The Andersen Consulting Enterprise Business Solutions Centre (EBSC)
19. Under the ICT 21 vision, it is essential to create the buzz, vibrancy and excitement in the industry, if Singapore is to become a global centre for ICT activities. We have to be at the forefront of thought leadership, constantly seeking best practices in methodologies, technologies and strategies for business re-engineering. I am happy to launch the Andersen Consulting Singapore Enterprise Business Solutions Centre today. The Enterprise Business Solutions Centres are Andersen Consulting facilities where permanent teams of Andersen Consulting professionals develop specialized, reusable and proven business solutions for multiple clients across all industries. This is in line with the government's desire to help businesses in Singapore transform to meet the challenges of the digital economy, and I am very happy to see that Andersen Consulting has invested towards this goal.
20. The Enterprise Business Solutions Centre in Singapore, which supports the Asia region, is the latest in the network of Andersen Consulting Enterprise Business Solutions Centres worldwide. It will allow businesses in Singapore and the Asia region to be plugged into the activities of other hub Solutions Centre locations, including Chicago, Dallas, Cincinnati, Houston, London, Tokyo and Seoul.
21. It is my pleasure now to declare the Centre open.