ICT en de Kennismaatschappij
Paul Lagasse
Vakgroep Informatietechnologie
Vakgroep Informatietechnologie INTEC
Constataties van VOKA
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Vlaanderen verliest concurrentievermogen.
Vlaanderen verliest marktaandeel t.o.v. de mature
industrielanden.
Weinig nieuwe buitenlandse investeringen.
Weinig high-tech of medium-tech bedrijven.
Stijgende loonkosthandicap.
Welvaartniveau daalt relatief t.o.v. EU25
gemiddelde.
Radicale vernieuwing van onze economische
innovatiestrategie noodzakelijk
Bron: VOKA
ICT en de Kennismaatschappij 2007
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1. Overview
Vakgroep Informatietechnologie INTEC
The World is Flat
The globalised world in the 21st century
Thomas L. Friedman
April 2006
During bubble years massive investment in:
 Broadband connectivity around the world (fiber optic
communication)
 Cheaper computers dispersed over the world
 Software allowing cooperative remote work and
development
This created a platform where intellectual work and intellectual
capital could be disaggregated, delivered, distributed, produced,
and put back together again from anywhere to everywhere in the
world.
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Globalization before 2000
 1492 Columbus opening trade between continents
 Rise of multinational companies and the industrial
revolution
 Falling transportation costs due to steam engine and
railroads
 Falling communication costs due to telegraph,
telephone, radio, satellite.
Enough movement of goods and information from continent to
continent for there to be a global market with global arbitrage
in products and labor in countries with adequate politicoeconomical climate.
T. L. Friedman
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Globalization since 2000
Individuals and companies from every connected
corner of the world (in countries with adequate
politico-economical climate) are empowered and
enjoined to compete globally thanks to their
 PC
 Internet connectivity
 Access to digital information
 Email, teleconferencing, groupware,………..
Power for individuals and SME’s to collaborate and
compete globally in a levelled playing field, in a flat-world
platform.
T. L. Friedman
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Off-Shoring: example (1)
Accountancy work for any US state or federal government is
being outsourced to India:
 Data scanned into US computer and remains there
while accounting is done in India (OK with privacy
laws).
 In 2003 : 25,000 US tax returns done in India.
 In 2004 : 100,000 US tax returns done in India.
 In 2005 : 400,000 US tax returns done in India.
 In India 70,000 accountancy graduates work for $100 a
month.
T. L. Friedman
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Off-Shoring: examples (2)
 US radiologists outsource the reading and interpretation of
CAT scans to doctors in India.
 Investment analysts earning $16,000 in Bangalore replace
analysts earning $80,000 in New York or London for routine
tasks
 Call centers in India working for US (and UK) customers
employ 245,000 persons at a cost of $600 a month.
 A remote (in India) personal executive assistant for CEO’s
costs $1,500 to $2,000 a month for a university graduate.
 Indian teachers e-tutor US students in math, science or
English for about $15 to $ 20 an hour (compared to $40 to
$100 is US)
T. L. Friedman
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Off-Shoring: examples (3)
The port city of Dalian in northeastern China:
 Japanese companies outsource to Dalian data entry of
handwritten Japanese documents, software research and
development, call center operators (at $90 a month), etc.
 GE, Microsoft, SAP, HP, Sony have software R&D centers
in Dalian working for their Asian operations.
 In Dalian there are more than 200,000 students in 22
universities with more than half graduating in science or
engineering.
 Exports of software grow with 50% per year.
T. L. Friedman
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Off-Shoring
Any activity that can be digitised and decomposed
along the value chain, can be moved around the
world to the cheapest or smartest producer.
If somewhere has the richest human resources and
the cheapest labor, the enterprises and the
businesses will naturally go there.
On what should a company or professional focus
in a high-wage region to stay in business?
T. L. Friedman
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Questions
Where does I as an individual fit into this global
competition and opportunities of the day, and how can
I on my own collaborate and compete with others
globally?
Where does my company/organisation fit into this
global competition and opportunities of the day, and
how can my company/organisation collaborate and
compete with others globally?
We have grown addicted to our high salaries and
now we are really going to have to earn them.
T. L. Friedman
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10 forces that flattened the world
1. 11/9/89 The new age of creativity: when the
walls came down and the Windows went up
2. The new age of connectivity: when the Web
went around and Netscape went public
3. Work flow software
4. Uploading: harnessing the power of
communities
5. Outsourcing: Y2K
T. L. Friedman
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10 forces that flattened the world
6. Off-shoring: running with the gazelles and
eating with the lions.
7. Supply chaining: eating sushi in Arkansas.
8. Insourcing: what the guys in funny brown
shorts are really doing.
9. In-forming: Google, Yahoo, MSM Web
search
10. The steroids: digital, mobile personal and
virtual
T. L. Friedman
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3. Triple Convergence, the Great
Sorting Out and Free Trade
Vakgroep Informatietechnologie INTEC
4. The individual, the Company
and the Region
Vakgroep Informatietechnologie INTEC
5. Innovation
“Seeing What’s Next”
Vakgroep Informatietechnologie INTEC
Innovation
“Seeing What’s Next”
C.M. Christensen et al
 How will this innovation change an industry, and what
impact does it have on the firms I care about?
 Which are real opportunities and which are transient?
 What would signal that the game is changing, meaning
what was successful in the past would no longer
guarantee success in the future?
 What implication would that change have on the
industry’s value chain?
Seeing What’s Next shows how to use the theories of
innovation developed in The Innovator’s Dilemma and The
Innovator’s Solution – and introduces some new ones as well
– to answer these sort of questions
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The Disruptive Innovation Theory
Simple, cheap, revolutionary
 Existing companies have a high probability of
beating entrant attackers when the contest is
about sustaining innovations, which move
companies along established improvement
trajectories.
 Established companies almost always lose to
attackers armed with disruptive innovations,
which introduce a new value proposition creating
new markets or reshaping existing markets.
C. M. Christensen
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The Resources, Processes, and Values Theory
The building blocks of capabilities
 Resources, processes, and values collectively
define an organisation’s strengths as well as its
weaknesses and blind spots.
 Organisations successfully tackle opportunities
when they have resources to succeed, when their
processes facilitate what needs to get done, and
when their values allow them to give adequate
priority to that particular opportunity in the face of
all other demands that compete for the company’s
resources.
C. M. Christensen
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The Value Chain Evolution Theory
Integrating to improve what is not good enough
 Organisations ought to control any activity or
combination of activities within the value chain
that drive performance along dimensions that
matter most to customers.
 Organisations ought to outsource activities that
don’t influence the characteristics of a product or
service that customers deem (or will deem) most
critical.
 Integrate what is “not good enough” and
outsource what is “more than good enough”.
C. M. Christensen
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Process to predict industry change
Signals of change
Are there signs that someone
is capitalising on
opportunities for change?
Competitive battles
Strategic choices
What is the likely result of
head-to-head battles between
industry combattants?
Are firms making decisions
that increase or decrease their
ultimate chances of success?
Applied to telecommunications industry
C. M. Christensen
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6. Innovation and value creation
Vakgroep Informatietechnologie INTEC
7.
Vakgroep Informatietechnologie INTEC
2. The ten Forces that
Flattened the World
Vakgroep Informatietechnologie INTEC
#1: The New age of creativity (I)
When the Walls came down and the Windows went up
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Fall of the Berlin wall on 9/11/1989 unleashed the free
market economy on Eastern Europe and enhanced
the free movement of best practices.
In 1991 M. Singh, finance minister of India, abolished
trade controls.
1977 : release of the Apple II home computer by
Steve Jobs and Steve Wozniak.
1981 : first IBM PC
T. L. Friedman
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#1: The New age of creativity (II)
When the Walls came down and the Windows went up
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1985 : first version of Windows operating system.
Apple, Windows PC and its digital format enabled
millions of individuals for the first time ever to
author, amass, manipulate and diffuse information
and content.
“Standard” PC, dial up modem and global telephone
system created basic platform that allowed global
exchange of digital information.
T. L. Friedman
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#2: The New Age of Connectivity (I)
When the Web went around and Netscape went public
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Early 90s : emergence of the Internet as a tool for low
cost global connectivity.
Early 90s : emergence of the World Wide Web as a
seemingly magical virtual realm where individuals
and organisations could post their digital content for
everyone else to access.
The spread of the commercial Web browser which
could retrieve documents or Web pages stored in
websites and display them on any computer screen.
T. L. Friedman
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#2: The New Age of Connectivity (II)
When the Web went around and Netscape went public
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Vint Cerf and Bob Kahn invent Internet as packet
network of networks.
Berners-Lee created the World Wide Web based on
adressing scheme (URL), Hyper Text Transfer
Protocol (HTTP) and use of HTML.
The easy-to-install and easy-to-use Mosaic browser
designed by Andreesen made Web sites viewable by
any idiot, scientist, student or grandma.
Netescape’s first commercial browser released in
December 94 helped make the Internet truly
interoperable
T. L. Friedman
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#2: The New Age of Connectivity (III)
When the Web went around and Netscape went public
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WWW started the digitisation revolution.
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IPO of Netscape started the Dotcom bubble.
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Booms and bubbles drive innovation faster and
the overcapacity that they spur can have
unintended positive consequenses.
Overinvestment in fibre optic cable led to a fall in
long distance telecommunication rates : the
Death of Distance.
T. L. Friedman
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#2: The New Age of Connectivity (IV)
When the Web went around and Netscape went public
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The telecom industry invested itself out of business.
Long distance phone rates fell from $2 per minute to
$0.1 per minute.
Global Crossing founded in 1997 went bankrupt in
2002 with $12 billion debt.
Fibre infrastructure is permanent, even after
bankruptcy.
Transmission capacity per fibre doubles every year.
T. L. Friedman
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#3: Work Flow Software (I)
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Information exchange between computers made
possible by XML (Extensible Mark-up Language) and
SOAP (Simple Object Access Protocol).
Machines are talking to other machines over the
Internet without human involvement using
standardised protocols.
This creates a global platform for a global workforce
of people and computers.
T. L. Friedman
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#3: Work Flow Software (II)
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Emergence of variety of standards: JPEG, MPEG,
Paypal, etc.
Emergence of Internet based service companies: for
a fee you get access to a library of web based
applications, Often based on AJAX ( Asynchronous
Javascript and XML).
Example : Salesforce.com : $65/month (or
$17/month) to “rent” on line library of business
process application tools.
New Internet based companies are showing how
services will replace software for both consumers
and corporations.
T. L. Friedman
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#3: Work Flow Software (III)
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Companies large and small can assemble an
interoperable system of systems on their own just
by going to the Business Web and renting or
assembling whatever discrete programs they would
like.
These workflow software platforms enable you to
create virtual global offices.
However you will still need your own distinctive
competitive advantage that will be embodied in in
some proprietary algorithm or manufacturing
process or software application or business model.
T. L. Friedman
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#4: Uploading (I)
Harnessing the power of communities
Communities of geeks collaborate on the Net to:
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Design software (Apache, Linux, Gimp, ….)
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Offer news and opinion pieces (blogging)
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Writing encyclopedia entries (Wikipedia)
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Music and video (podcasting)
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Bookreviews (on Amazon.com)
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Virtual commercial community (eBay)
T. L. Friedman
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#4: Uploading (II)
Harnessing the power of communities
Collaboration of communities on the net is
fundamentally reshaping the flow of creativity,
innovation, political mobilisation, and
information gathering and dissiminination
making it globally side to side instead of top
down.
T. L. Friedman
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#4: Uploading (III) : Open Source
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Open source : community developed software.
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Open source is peer reviewed science (reward is reputation).
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Commercial software companies have to operate further up the
software stack to differentiate themselves.
The open source community is basically focusing on
infrastructure
Apache: webserver software; Websphere from IBM built on top
Linux distributed under general public license: if you combine
new code with Linux and redistribute it you are obligated to
make the modified work available for free.
T. L. Friedman
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#4: Uploading (IV)
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A new blog (weblog) is created every 7 second or 70,000/day.
London underground bombings : public uploaded to the BBC
20,000 texts, 1000 photos and 20 videos.
Wikipedia encyclopedia is an ad hoc open source, open
editing movement started in 2001.
End 2005 Wikipedia had 2.5 billion page views per month,
contained 850,000 articles.
Editorial policy of maintaining neutral point of view does not
guaranree autocorrection: danger for character assasination.
T. L. Friedman
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#4: Uploading (V)
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“Architecture of participation” : systems that are designed for
users to produce, not just consume.
Appeal to users by encouraging participation.
“Second Life” virtual online world created by Linden Lab
(California) encourages creativity and participation more than
MMORPGs such as “Worlds of Warcraft” (7Million users).
Second Life has currently 750,000 residents, growing by 20%
per month.
Users own IPR of their creations and can sell them generating
a $60 million turnover per year.
Toyota sells cars in Second Life for marketing and brand
building.
T. L. Friedman
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#5: Outsourcing
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From 1951 to 2001 25% of the graduates from the Indian
Institutes of Technology went to the US greatly enriching
America’s knowlledge pool thanks to their education, which
was subsidized by Indian taxpayers.
Overinvestment in railroads benefited US economy;
overinvestment in fiber optic (undersea) cables, paid by US
shareholders, benefited India.
Offshoring and outsourcing to India started by TI and GE
(using satellite links) took off with fiber optic links and
software Y2K problems.
Cost cutting after Dot Com bust led to more outsourcing to
India.
T. L. Friedman
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#6: Offshoring (I)
Running with gazelles, eating with lions
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Offshoring: move whole factory offshore to produce with
cheaper labor, lower taxes, subsidized energy, and lower
health care costs.
In 1977 Deng Xiaoping put China on the road to capitalism: “to
get rich is glorious”
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December 2001: China joins WTO
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China has 160 cities with a population of more than 1 million.
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In China 350,000 new engineers graduate each year.
T. L. Friedman
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#6: Offshoring (I)
Running with gazelles, eating with lions
The Economist
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#6: Offshoring (II)
Running with gazelles, eating with lions
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China Price : low floor for low wages, lax labor laws and
workplace standards.
In the private sector of the Chinese industry the productivity
increased 17% per year between 1995 and 2002.
Shifting from low grade to high grade, high tech products.
In 30 years will evolve from “made in China” to “designed in
China” to “dreamed up in China”.
In 2005 US produces 75% of what it consumes, down from
90% in 1995.
T. L. Friedman
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#7: Supply-Chaining (I)
Wall Mart supply chain
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In 2004 Wal Mart purchased $260 billion worth of merchandise
and ran it through a supply chain consisting of 108
distribution centers around the US, servicing 3000 Wal Mart
stores in America.
Wal Mart moves 2.3 billion general merchandise cartons per
year through its supply chain.
HP sells 400,000 PC through 4000 Wal Mart stores in 1 day
during the Chistmass season.
Wal Mart buys $18 billion from 5000 Chinese suppliers.
Quote from the CEO of Wal Mart : “One of my concerns, is that
with manufacturing out of this country, we will all be selling
hamburgers to each other”.
T. L. Friedman
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#7: Supply-Chaining (II)
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Supply chain is complex problem : the most reliable low cost
delivery system that coordinates a disruption prone supply
with a hard to predict demand.
Solution : an advanced information technology platform to
know where products are at any time as they move through
the supply chain.
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Zara : 30 days from design to store shelves.
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Dell : can never get stuck with unsold PCs.
T. L. Friedman
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#8: Insourcing
UPS
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UPS ships 13.5 million packages per day.
“Synchronised commerce solutions” : servicing any supply
chain from one corner of the earth to the other.
UPS oversees the whole journey from factory to warehouse to
customer to repair, including payment collection.
On any day 2% of world GDP can be found in UPS trucks.
“End of runway services” : customise products at the last
minute.
UPS receives 12 million Internet tracking requests on a peak
day.
T. L. Friedman
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#9: In-forming
Google, Yahoo, MSM Web Search
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Never in history have so many people – on their own – had the
ability to find so much information about so many things and
about so many people.
In-forming is searching for knowledge and the ability to build
and deploy your personal supply chain of information,
knowledge and entertainment.
Google processes 1 billion searches per day in more than 100
languages.
Searching for information is about self empowerment.
Providing a virtual home for groups interested in sharing,
organising and communicating information which is valuable
to cultivate vibrant on-line communities.
T. L. Friedman
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#10: The Steroids
Digital, mobile, Personal and Virtual
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Voice over IP (VOIP) and Services over IP (SOIP).
Voice becomes free : how do you create value around voice
communication?
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Computer graphics : Gui’s based on gaming technology.
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Wireless communication : “Mobile Me”.
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Enhances outsourcing and supply chaining : Rolls Royce jet
engines are linked by satellite to RR for online in-flight
monitoring of condition and performance.
T. L. Friedman
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#10: The Steroids
Voice becomes free : how do you create value
around voice communication?
The Economist
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