:: MIS Insights ::

Businesses have always had to deal with system upgrade decisions - whether it be in the realm of hardware or software. In the world of constantly evolving information systems, developments proceed in a yin and yang process. At one side, power-hungry and information-crunching software creates the demand for monster hardware. On the other side, overqualified hardware with its abundant computing power allows the improvement of complex software.

Upgrading is a balancing act between cost and risk. As Michael Hillenbrand puts it, managers want to know how much will it cost if I upgrade (cost) and what can happen if I don’t upgrade (risk)?

Many decision-makers (read: managers and accountants) are put off by the cost involved with upgrades:

• Licensing Costs (per machine, per account, per head, per processor, etc.)
• Training (new way of doing things might mean re-training existing users)
• Interruption to Business (installation of hardware and software might cause some downtime during deployment)
• Actual Costs (Planning, Implementation, Support for new system and process)

However, for some, upgrading can address several business concerns too:

• Support (When is the End-of-Life product support of the software? Is the hardware still available? Some legacy software are machine-dependent)
• Compliance (Is our software compliant with our third party supporting software? Will our existing systems pass security and functionality audits?)
• Competitive advantage (Actual benefits that we get from using the new software or hardware [less effort or time needed to provide same or better quality of work] )

With the high impact of software and hardware that we use in our work, knowing the reasons why and why not to upgrade is essential in keeping your business profitable.

Google recently acquired YouTube for 1.65 billion US Dollars! What an effect 12 days without internet (and counting) can do to a person! Usually, I’d hear about such things from Slashdot, BusinessWeek, CNN, etc at the early rumor stages of such deals. However, when I watched CNN today, the ticker said that it’s already a done deal!

While the $10 increase in Google stock has gotten investors happy, this deal has sparked a lot of nay-sayers from the online community. In summary, there’s the camp telling Google now becoming more vulnerable to copyright infringement lawsuits and there’s the YouTube camp saying that it will lose its audience because of moderated content.

However, I don’t think Google got into this expensive deal only to get their company Toilet-Papered by opportunistic lawyers out there. Nor do I think will YouTube have drastic changes with its user exeperience.

If I guess right, Google will only use YouTube to gather more internet usage behavior and to increase the exposure of people to their services. The more that people are exposed to their services, the more chances of profitable advertising. Just like what they did with News Searching a few weeks ago.

HP’s recent boardroom fiasco has gotten me thinking about how society works. After several rounds of investigation regarding the boardroom leakage, human resource casualties have sprung left and right within the ranks of HP. Most notable of which, was the resignation of Patricia Dunn as chairman.

Clearly, I don’t understand why society likes chopping heads off of trouble-ridden organizations. While I do realize the the urgency of replacing non-functioning and malfunctioning parts in a machine, I find pre-emptive measures better than re-active measures. Why solve the problem when you can avoid it? Why surround yourself with people who will freely screw you?

Re-interpreted, Why surround yourself with humans that have free will? Why not just surround yourself with robots or automatons? Won’t it be fun to be surrounded by Yes-People? However, that’s asking too much and the wrong thing. HP’s current problem is not about human greed or free will. I think everyone will always want something for themselves - something that is always beyond their means. That is a non-controllable and non-factor variable in this situation.

However, I think that HP’s current problem is because of dishonesty. Strategic plans hidden from competitors might be one thing, but the lack of transparency within an organization is another. It’s alright for people’s dreams and desires to conflict and clash, but it’s never alright to be dishonest to others. It might sound like an over-simplification of a complex political setup in an organization - guess what? It is.

Of all the clients I’ve dealt with, it is not startups, the uninformed or the financially-challenged clients that give me a hard time, it’s the liars. Those who do not wish to come clean with all the essential details and those who do not want to hear the truth of the matter in the situation.

In any undertaking, I might not be able to control my clients or partners ambitions, but I always demand total honesty. If we can harness human free will to produce honesty, it will be easier to fix, guide and pre-empt a relationship that will screw you.

When you’re building a team, it is always a good idea to aim for diversity. In this way, a team can avoid groupthink (when everybody thinks the same, little value is added in being part of a team). It also allows a team to have more perspectives and skill sets at their disposal.

In my experience, I’ve found it useful to surround myself with different people once in a while. Not only does it make things a lot interesting, but such environment has also taught me more than I could have ever learned alone or with the same group over and over.

Some might argue that this setup doesn’t always work. Having all the right skills (competent teammates) and enough resources (assets and budgets) can sometime prove insufficient. This is where a team leader comes in handy. A team leader can share in the work but he must of prioritize two things: lead (set a goal or direction for the team) and manage (maintain movement towards the set goal).

This seems to be the direction for automotive company Ford: Diversity and Leadership. Bill Ford recently stepped down as CEO and got replaced by Alan Mulally, the man responsible for turning Boeing around and making it a profitable company again.

That’s why many people have been asking, what’s an airline dude like Mulally going to do with an automobile business? Can Mulally bring the diversity needed for Ford to make a comeback? Will this usher in a new breed of flying cars like what we saw in the Jetsons?

I’m keeping my fingers crossed.

According to a popular economic theory, Consumer Spending, consumers can dictate what happens to the economy because they have the money and spending power. In my opinion, consumers who don’t have money or spending power can also dictate what happens in the economy. Let’s take a look at Wal-Mart’s recent global performance to find out.

Almost a month ago, Wal-Mart pulled out of Germany because of its lackluster performance. The main reason can be attributed to how they forgot to account for the preferences of their customers.

German Wal-Marts adopted the U.S. custom of bagging groceries, which many German consumers find distasteful because they tend not to like strangers handling their food.

This pull-out from Germany happened barely a quarter of a year after Wal-Mart also also got out of South Korea.

The Importance of Culture
In both situations, Wal-Mart failed to take into account the cultures of the repsective countries. Sometimes, these cultures are close to being sacred that they can make or break a business. Business-culture relationships can be influenced by:

• Geography (try selling ice cream at the arctics versus Ice Cream at the beaches)
• Religion (Muslims consider pork as dirty [not sacred] and will not eat it)
• Tradition (Germans wanting to take care of their own food)

Of course this is nothing but common sense available from your local hardware store. Didn’t the analysts and advisers of Wal-Mart think about this? Actually, if there’s a reason why there isn’t a Wal-Mart in the Philippines, it’s because the analysts have done their job.

Pinoy Wal-Mart
In the Philippines, several reasons prohibit wholesale businesses like Wal-Mart from prospering.

• No Money. Filipinos simply can’t afford wholesale purchase of goods. It might be cheaper and more cost-effective, but when getting cheap items mean expensive bulk orders, it no longer looks cheap in the eyes of a budget-conscious person.
• Buying Pattern. Filipinos aren’t used to buying wholesale. We only get what we need at a time - such trait can be traced from our ancestors. In the olden days, everything was a property of the community. Everybody shared everything. This meant that there was no concept of property and no need for hoarding.
• Convenient Competition. There are simply too many supermarkets out there. This saturates the market with enough sources of competition. This availability makes it convenient for people not to hoard. Why hoard? I can always get another bar of soap outside.

On another note, retails stores in the Philippines (i.e. SM or Robinson’s Supermarket) pose a big barrier to entry for wholesale groceries like Wal-Mart. They have a customer-centric ethos which the economies of scale of Wal-Mart cannot bully around. The locals have done their homework and have customized their establishments to fit the needs of the market in terms of pricing and availability, whether they’re servicing those with purchasing power (shops available everywhere so that it becomes convenient for the people to spend) or those without (affordable prices for everyone). Where quality isn’t really much of an issue, economic victors are determined by the price wars.

With it’s recent battery recall and appalling customer support, Dell seems to be in quite a fix right now - devaluating stocks and all. It seems that no company is really invulnerable to the brutality of the global economy, even one of the biggest names in computer hardware can have its bad days.

Practices can be copied

Much of its woes can be attributed to its focus on cost-cutting leadership. While definitely a big advantage over any type of economy, they bet so much on their 1990s-then-state-of-the-art assembly line. With such tactic subject to imitation and improvement from others, there is simply no long-lasting benefit or advantage for the company. For example, with the maturity of the internet, component suppliers are able to collaborate with Dell’s competitors for tighter Just-in-time inventory schedules that reduce costs. Dell should look for other ways to reach out for the market. Acquiring Alienware was a good move, but I have yet to see Dell’s economies of scale work for Alienware.

Outsourced Opportunities or Problems?

With Dell outsourcing their tech support to the Philippines, I’m quite curious how much Filipinos contributed to Dell’s current situation - whether we were partly responsible or we were actually the lesser of Asian evils. It makes me wonder, “Is Dell in the Philippines for the quality (show me a bunch of 100 random Filipinos who don’t think they’re good in English), price (show me how much an American Call Center Agent earns in an hour and I’ll show you how much a Filipino Agent earns in a day) or the price for quality ratio (the best bang for the buck amongst Asian nations for the moment)?

If it’s about quality, then I believe we only have a decade at most worth of advantage as compared to our fellow Asian neighbors. Remember that these are contract-based projects. It’s not unusual for foreigners to close outsourced factories and relocate to more favorable countries. The quality of education has gone down while distractions have increased in numbers. It’s funny that more malls are being inaugurated in the Philippines every year than hospitals and schools are - combined. I’m not saying malls are bad, mmmkay? I’m saying that there are other things that Filipinos could be doing with their spare time and money.

The Big Picture

What’s gotten shares plunging are caused by analysts whose predictions weren’t met. In my opinion, I think these analysts failed to see that computers have gotten way more powerful than they were before. The word processing, spreadsheet crunching and web browsing needs of the Average Juan de La Cruz hasn’t stimulated any need for greater computing horsepower over the past few years. Everything just works. Why fix something that isn’t broke? Moreover, everyone’s hurting because of delayed sales caused by MS Vista. Everyone wants to see Vista first before getting their Vista-capable machines.

Lastly, the battery recall is something that shouldn’t really get as much negative reaction that it does. For a company as big as Dell, there is no fast and easy way to switch battery suppliers. An environment with a more critical quality assurance and testing might have helped, but how can you test a battery for its problems? The best form of user testing is when the user actually uses the product. Even Apple has announced for a battery recall recently.

Let us not forget though that Dell does not only transact with the masses. They also have Server offerings for supramundane computing needs. Their recent changes to use Opteron and increased Linux are signs of entrance to a possibly bigger market base.

However sad that the picture might seem for Dell, they’re still ending the year with a profit of more than US$3 Billion. How Dell-icious is that?