Transcript September 12, 2000 - Information Today, Inc.

“The Economics of Portal Infusion”
Frank J. Bernhard, Ph.D.
Managing Principal
Supply Chain and Telecommunications Practice
OMNI Consulting Group, LLP
Market Models Remain Static to
Change with Knowledge Visibility
• Economic structures invite flexibility with a flow of
knowledge visibility; supply and demand components
react accordingly to information input
• Enterprise portals impact five primary functions of the
organization:
 Strategy
 Business Communications
 Business Ecosystems
 Process Integration
 Intellectual Property and Innovation
• Enabling the knowledge worker remains a diligent priority
for today’s CIO organization; portals offer a harmony of
information resources across the business unit strategy
September 12, 2000
“The Economics of Portal Infusion”
KMWorld 2000 Workshop Series
Basic Economic Rules Still Apply
to the Knowledge Economy
• Supply and demand characteristics matter most in achieving
successful deployment of knowledge resources
• Cost minimization and profit creation represent tangible
goals for leveraging knowledge assets
• Efficiency is a driving component of portal deployment; the
ability to increase productivity or revenue is a real venue for
corporate expansion
• Knowledge assets usher a new currency in valuing the
economic worth of information tools; organizational
capability to transform these inputs into productive outputs
is a measurable process
• Knowledge preferences are distinct and separate, thereby
allowing researchers to analyze the behavior and rationale
behind choice; elasticity aides an understanding of the
relationship between supply and the generation of value
September 12, 2000
“The Economics of Portal Infusion”
KMWorld 2000 Workshop Series
An Economic Perspective...
• Technical efficiency : the ability to
increase production or revenue as a
direct measurement of added technology
inputs
• Economic efficiency : the financial benefit
or reward associated with the improved
utilization of capital assets
• Operational efficiency : the optimal use
of capital and labor resources to achieve
production goals
September 12, 2000
“The Economics of Portal Infusion”
KMWorld 2000 Workshop Series
Aggregate Knowledge for
Deterministic Results
• Tacit knowledge converges with explicit direction to
enable strategic guidance
• Tailored user sessions create personalization; single
knowledge units synthesize to form the larger community
• Business ecosystems enable the dispersal of properly
codified and relevant knowledge resources; decisions and
innovation occur more frequently…and quickly
• Time to market and accuracy of market variables are
chieftain benefits of collaborative knowledge resources
• Portals provide the primary entrance to custom knowledge
economies; while often part of a larger community,
portals can adopt more intimate and personal
relationships with users
September 12, 2000
“The Economics of Portal Infusion”
KMWorld 2000 Workshop Series
Case Statistics: Horizontal
Market Producer
• Telecommunications Industry
–
–
–
–
Dominant global leader of broadband and data services across
$19B annual revenue
More than 85,000 corporate users
Portal project deployed in March 1998 to share technical
development interchange
• Productivity
– Reduced average project development cycle by 13.5 days
per technical employee
• Revenue or Cost Minimization
– $7.1M annual cost savings of intranet consolidation
• Quality
– Reduced software code defect rate by 7.8% as established
by pre-implementation and post-implementation standards
September 12, 2000
“The Economics of Portal Infusion”
KMWorld 2000 Workshop Series
The Rx of Portal Strategy
September 12, 2000
500,000
400,000
VOLUME
• Drive user
demand to
achieve feasible
supply
situations
• Recognize the
economic
boundaries
• Measure the
return on
economic value
300,000
Value
200,000
User Sessions
100,000
0
Q1
Q2
Q3
-100,000
TIME
“The Economics of Portal Infusion”
KMWorld 2000 Workshop Series
Q4
Business Collaboration
“Forget about B2B and B2C –
business collaboration, not e-commerce,
is the name of the Internet game.”
“Collaboration will transform the economy”
“Reengineering was just a warm-up act for
the collaborative economy”
Dr. Michael Hammer
Founder of the Reengineering Movement
September 12, 2000
“The Economics of Portal Infusion”
KMWorld 2000 Workshop Series
Corporate Portals
are Extending their Reach to
Business Collaboration Communities
Providing New Real and
Measurable Efficiencies
September 12, 2000
“The Economics of Portal Infusion”
KMWorld 2000 Workshop Series
Visibility + Execution = Efficiency
• Information visibility enables
collaborative planning
• Collaborative execution shapes the
performance of markets and the
efficiency of transactions
• Efficiency is measured by technology,
economic and operational productivity
September 12, 2000
“The Economics of Portal Infusion”
KMWorld 2000 Workshop Series
Logistics Market Summary
• Transportation and Warehousing
– $3 Trillion Global Logistics Market
– $921 Billion U.S. Business Logistics System Cost*
• $449 Billion - Transportation Portion of Logistics*
• $364 Billion - Trucking Portion of Transportation*
– Its all about Relationships
• 70% Under Annual Contract
(Morgan Stanley Dean Witter, April 2000)
– Market is Highly Fragmented
• 1,000 of Shippers and 10,000 of Carriers
Number 1 Issue is Lack of Capacity
*R.V. Delaney, Cass Information Systems, 11th Annual “State of Logistics Report”
September 12, 2000
“The Economics of Portal Infusion”
KMWorld 2000 Workshop Series
The Logistics Paradox
While Lack of Capacity is the #1 Issue,
Every Shipment Creates Excess Capacity
A Shipper Buys Capacity One Direction
If Carrier Can’t Fill the “Backhaul”, The Truck Returns Empty
Result: The Shipper Pays More, The Carrier Makes Less
September 12, 2000
“The Economics of Portal Infusion”
KMWorld 2000 Workshop Series
Volume Shipping Creates
Volume Excess Capacity
Each Shipper Plans Headhauls with Only a Handful of Carriers
Each Carrier Plans Backhauls with Only a Handful of Shippers
Result: 18.9% of Capacity Moves Empty
September 12, 2000
“The Economics of Portal Infusion”
KMWorld 2000 Workshop Series
OMNI, January 2000
Collaborative Logistics
Visibility and Execution
Shipper A needs to move freight on Tuesday, Arriving Wednesday
Shipper B needs to move freight on Wednesday, Arriving Thursday
Shippers Collaborate to Fill Excess Capacity
Collaborative Logistics
The Ultimate Knowledge Solution
Many Trusted Partners Collaborate to Fill Excess Capacity
•
Jointly Manage Complex Contracts
•
Optimally Exchange Capacity with Partners
•
Jointly Execute Each Step of the Logistics Process
Information Visibility
and Business Collaboration
Translates to Real Economic Benefits
Efficiency gains add up
to a dramatic impact on
the improvement of
logistics optimization
Source: Efficiency measures
produced by Omni Consulting Group
LLP in part by the research study,
“Collaborative Logistics Networks:
An Economic Appraisal and Trend
Validation”. Copyright 2000.
September 12, 2000
Technical Efficiency - due to
automation of process
3%
Economic Efficiency - created by
smoothing demand and price
4%
Operational Efficiency - marginal
output and productivity
5%
Overall Network Efficiency Gain total
12.3
%
“The Economics of Portal Infusion”
KMWorld 2000 Workshop Series
Case Summary
• The Internet is Creating a Collaborative Economy
• Corporate Portals are Extending to Collaborative Business
Communities
• Information Visibility and Collaboration Creates Measurable
Efficiencies
• Omni Study Demonstrates a 12.3% Efficiency Opportunity in
Logistics
– 3% Technical, 4% Economic and 5% Operational
• Nistevo Collaborative Logistics Network is a Functioning
Example
September 12, 2000
“The Economics of Portal Infusion”
KMWorld 2000 Workshop Series
Preparing the Business
Architecture for Portals
• Assess your knowledge supply in terms of quantitative
expression; adopt a systematic approach to measuring
knowledge inventory, production, and value that adheres to
a rubric for evaluation
• Design the portal blueprint to match the broad goals of the
internal and external elements of the organization; consider
the implications of productivity, revenue, and quality inside
your vision of knowledge delivery
• Forecast demand for the portal infusion by analyzing the
economic cost and velocity of the user interface; use
scenario planning tools to predict utilization and financial
return of the knowledge asset
• Use sample populations and test conditions to simulate the
behavior of user interaction; does the portal implementation
deliver upon the intended business capability?
September 12, 2000
“The Economics of Portal Infusion”
KMWorld 2000 Workshop Series
Feasible Solutions Yield
Positive Business Results
• Knowledge assets must produce economic benefit in order
to survive the long-run curves of business cycles
• Portal deployment should scale alongside the growth of
an organization and the users served by the technology
• Commerce rules apply to portal deployment; value
creation must be regarded carefully to obtain a high level
of user satisfaction
• Knowledge transactions are similar to purchasing
transactions; value must be exchanged for the tangible
asset or service
• Stay ahead of your knowledge economy by identifying
trends or service opportunities that appear consistent with
user growth
September 12, 2000
“The Economics of Portal Infusion”
KMWorld 2000 Workshop Series
Q&A Forum
Frank J. Bernhard, Ph.D.
[email protected]
530.750.5199
OMNI Consulting Group, LLP
3532 Koso Street
Davis, CA 95616-6041
September 12, 2000
“The Economics of Portal Infusion”
KMWorld 2000 Workshop Series