CONVOYAGE

January ‘11

JAMNALAL BAJAJ Institute of Management Studies

ConVoyage
Issue – January 2011

consultingclub@jbims.edu

Page 1

.................CONVOYAGE January ‘11 CONTENTS: AN ARTICLE: POWER OF THE CLOUD IN THE WORLD OF BUSINESS ................................................ 7 PUTTING STRATEGIES TO THE TEST: MCKINSEY GLOBAL SURVEY RESULTS ..............edu Page 2 .. 3 CONSULTANT TALKS .......................... 7 HOW THE GROWTH OF EMERGING MARKETS WILL STRAIN GLOBAL FINANCE.......14 CONSULTING FUN ....................................... 9 INCREASED LABOUR MOBILITY TO MEET DEMANDS FOR ECONOMIC GROWTH .........15 consultingclub@jbims.................................................................... 12 CROSS WORD ...............................................................

power costs. You might have the best technology available.CONVOYAGE January ‘11 An Article: Power of the Cloud in the world of Business By this case the internet). So how does the User leverage this to his advantage? Well. operational and set up costs which can be enormous. Vineet Inamdar 1st Year MMS. or technology becoming outdated. To be in business. or technical issues which available with you. Cloud computing is a mere extension of Software as a Service (SaaS). Cloud Computing is a concept where the entire applications runs from a virtual cloud (In consultingclub@jbims. monitor and debug these applications. applications and computing power are all lodged at a remote location from the user. Welcome to the world of cloud computing. servers and technical people to run. you need to have so many resources in your hand: Business applications like SAP or other ERP software. What does it have in store for the various firms across the globe?? needlessly frustrate you. JBIMS and only pays for those applications which he wants. he simply logs in by providing a user name and a password. talented resources and might be highly successful. It is similar to a building where every office in a building uses the same infrastructure and basic facilities available but still has the capability to customize its own office space. Plus there are always problems with version upgrades. But are you doing enough? Are you doing it the right way? When you need to start a business. It can also be called as a Utility computing similar to utility services like Electricity and Water where you pay only for what you use. you need technology and to make the best use of the resources Think about the way you do business. data. you have to leverage your IT costs where Cloud Computing helps you out.edu Page 3 . By this.

What would decide whether you should move your application(s) over the cloud or not?? It depends on how fair is your usage of the data and the application.edu Page 4 management environment) because every frame of their movies takes eight hours to render today on a single processor. If the application has a fairly consistent load throughout the day. But for start-up. it then makes no sense to move it to the cloud. you pay the same amount of money when you move to the cloud and in fact enjoy the advantage of a higher processing power in the form of several shared multiple servers working on your embracing cheap but effective technology. The concept of cloud computing incorporates web infrastructure.0 and other emerging technologies. it is better to move the application since it will have better utilization. which runs its computer-animation rendering process on Windows Azure (A cloud computing or cloud services operating system for the development service hosting and service The advantages of Cloud Computing is that it gives the organization a very rapid start up. It works on the concept of multi – tenancy where in a single software runs on a server. scalable consultingclub@jbims. reduction in capital architecture. the only way to survive and make progress is by expenditure and operating costs. but the same is used by multiple clients (called tenants in this case). small and medium enterprise firms. Web 2. But in cases of applications with high variations in the traffic. How does cloud computing work? Cloud computing is Internet based system development in which large scalable computing resources are provided “as a service” over the Internet to users. application. software as a service (SaaS). Also. which .CONVOYAGE January ‘11 Traditionally bigger firms have deep pockets to buy the latest technology and use the traditional client server since the number of users can grow but everyone shares only one single instance of the software. since no time is wasted for resource allocation or for set up. A classic example in this case is of Pixar Animation Studios.

and increasing the server utilization. Larry Ellision. it was possible for them to communicate with the company since services in the fields of finance. they migrated to Microsoft online services where the software and data were hosted online with real time support. there have been increasing criticisms on cloud computing. India. particularly with its sales employees to deliver information to them in real time. With Azure. Some industry examples where companies have actually cut down on their IT costs drastically and become more optimally competitive: KPIT Cummins: Headquartered in Pune. But now. CEO and co-founder of Oracle while quoting some companies which boasted of providing ERP systems on the cloud. they can get the job done as fast as they need. power usage and consumption. In order to fill up this messaging need and maintain contact with the employees. By reducing the number of servers from 120 to 20. In order to grow against heavy competition and a complex environment. KPIT Cummins is an emerging leader in providing consulting. accounts and manufacturing. effectively there was a need with to its communicate employees. solutions and Coca-Cola Enterprises is the world’s largest marketer.edu Page 5 . producer and distributor of Coca-Cola products. Negatives on Cloud Computing: While the entire concept of cloud computing has gathered steam in the past few months. software licenses. The result is huge spikes in Pixar‘s usage of Azure as they render on-demand. the company migrated to a virtual environment and optimized the server space utilization. Traditional way of communication was via email to which sales employees had limited access. the company managed to get newer applications deployed and there was ample support for the software through multiple devices like mobile phones and computers. said it was unclear on what could be hosted from the server. He said provision servers from several months to a few hours.CONVOYAGE January ‘11 means it would take them about 272 years to render an entire movie. To handle issues like the increasing cost of hardware. Coca Cola Enterprises: consultingclub@jbims.

Also. Software as a Service has co.edu Page 6 . cloud for computing small might be successful and medium enterprises. it is always economical to have your own server (private cloud) and host applications rather than migrating your application to some third party vendor. the biggest disadvantage is that of data security.microsoft. primarily of security to be handled. the logic still remains the same: Same set of services to offer from a host of services from which you need to select which service you require. only time will tell since there are too many constraints. everyone who uses it.CONVOYAGE January ‘11 that the entire issue of ‘cloud’ which is a new name for coined for the ‘hosting from the internet or over the network’ is in fact over blown and has always existed in the past.com Another disadvantage is that they would provide you the same set of service to consultingclub@jbims. It would not be possible for an organization to deploy its highly sensitive data over a remote server which houses data and provides services to different users.existed with traditional software vendors for several years. Whether cloud computing showers itself upon the world or not. It is true today that all organizations providing cloud computing services have to comply with several security standards but instances of data breach are not uncommon. References: www. Also. But for traditional large scale organizations. But it is definitely a new concept in the use of IT which gives a method to companies to be more cost effective in terms of the technology usage. So even though you could customize it.

based on years of work with clients and academic research. The results of a recent McKinsey survey suggest one reason: just 53 percent of executives characterize their companies’ strategies as emphasizing the creation of relative advantage over competitors. The first— whether the strategy will beat the market by creating competitive advantage—is comprehensive. Nearly two-thirds of respondents indicate that their companies pass three or fewer of the ten tests. some seem content just to play along. And only 2 percent of respondents say their companies pass nine or all ten tests. assessing how the strategy positions the company in the market. what level of insight the strategy rests on.CONVOYAGE January ‘11 CONSULTANT TALKS Putting strategies to the test: McKinsey Global Survey results Creating a winning strategy is a struggle for most companies. Competitive advantage is the essential ingredient of any strategy. The remaining nine tests disaggregate the picture of a market- consultingclub@jbims. In this survey. meaning that our description of the test closely describes a particular element of their strategies.edu Page 7 . described as matching industry best practices and delivering operational imperatives—in other words. make for a good strategy. the results underscore that companies can do much more to pressure-test their strategies. just playing along. While it’s certainly possible for a strategy to succeed at a company that fails all or even most of the tests. Yet for many companies. They may not be asking themselves the right questions. advantage is an elusive goal. the rest say their strategies are better beating strategy. The results also suggest some ways that companies can prioritize improvements in their approach to strategy based on the tests respondents say contribute most to financial performance and are most frequently used in their sectors. executives around the world answered a series of questions that allowed us to test how fully their companies’ business unit strategies pass ten tests that we believe. and what the implementation plan involves.

more executives select flexibility to make choices in the future than any other test. Conversely. to be partly related to whether they think it matters. Executives in the health care and hightech sectors. For example. And as Exhibit 2 shows. The results also suggest some ways that companies can prioritize improvements in their approach to strategy based on the tests respondents say contribute most to financial performance and are most frequently used in their sectors. for example. stress the importance of management having a strong belief in the strategy’s underlying assumptions. meanwhile. And indeed. novel insight is the test rated least important to financial performance and passed least frequently. the results underscore that companies can do much more to pressure-test their strategies. consultingclub@jbims. arise some among interesting differences industry sectors (Exhibit 4). this is the test the most companies pass. Executives in the energy industry. there is a rough correlation between passing a test and executives saying a test is instrumental to financial performance. when asked which three tests have the most positive effect on financial performance. Taking the tests to the bottom line Whether executives say their companies pass a given test is likely.edu Page 8 . with 46 percent saying so. of course. When executives assess the tests’ impact on financial performance. nearly half of them cite that test. are likelier than all others to say a focus on trends has a good effect on their financial performance.CONVOYAGE January ‘11 While it’s certainly possible for a strategy to succeed at a company that fails all or even most of the tests.

edu Page 9 . government policy makers. and an aging population seems unlikely to reverse that trend. household saving rates have generally declined in mature economies for nearly three decades. The McKinsey Global Institute’s (MGI) recent analysis finds that by 2030. Short-term doldrums aside. Indeed. capital flows between countries will likely change course. the world’s corporations would seem to be in a strong position to grow as the global economy recovers. and other kinds of public infrastructure—and the many companies building new plants and buying potentially act as a drag on growth. Yet all those new roads. crowd out some investment. as patterns of global saving and investment shift. its willingness to save—will fall short of its demand for requiring new channels of financial intermediation and policy intervention. the prognosis for companies that can tap into that growth over the next decade looks promising.5 percent. Moreover. machinery—may put unexpected strains on the global financial system. and financial institutions alike. with $3. could put upward pressure on interest rates and crowd out some investment. They enjoy healthy cash capital. The gap between the world’s supply of. with real long-term interest rates languishing near 1. and demand for. ports. the world’s supply of capital—that is. Indeed. and they have access to cheap capital. led by developing economies. and balances. or the desired level of investment needed to finance all those projects. These findings for have business important executives.CONVOYAGE January ‘11 How the growth of emerging markets will strain global finance Surging demand for capital. consultingclub@jbims. China’s efforts to rebalance its economy toward increased consumption will reduce global saving as well. implications investors.8 trillion in cash holdings at the end of 2009. capital to invest could put upward pressure on real interest rates. as developing economies continue to pick up the pace of urbanization. water and power systems.

and housing. We are now at the beginning of another investment boom. factories. factories. Considering the very low levels of physical-capital stock these economies have accumulated. transport systems. consultingclub@jbims. Across Africa. The increase from 2002 through 2008 resulted primarily from the very high investment rates in China and India but reflected higher rates in other emerging markets as well.7 percent in 2008 but then dipped again during the global recession of 2009. These eras include the industrial revolution and the post–World War II reconstruction of Europe and Japan.edu Page 10 .8 percent of GDP in 2002 to 23. water systems. schools.CONVOYAGE January ‘11 Surging demand for capital Several economic periods in history have required massive investment in physical assets such as infrastructure. this time fueled by rapid growth in emerging markets. the demand for new homes. Asia. our analysis suggests that high investment rates could continue for decades. hospitals. and Latin America. and shopping centres has already caused investment to jump. The global investment rate increased from a recent low of 20. offices.

we project that global investment demand could exceed 25 percent of GDP by 2030.CONVOYAGE January ‘11 In several scenarios of economic growth. followed by power and water systems. global investment will amount to $24 trillion in 2030. When we examine alternative growth demand of about $4 trillion in infrastructure and $5 trillion in residential real estate in 2030. we find that investment will still increase from current levels. roads. The mix of global investment will shift as emerging-market economies grow. We project global investment consultingclub@jbims. To support growth in line with the forecasters’ consensus. scenarios. The gap exists in all categories of infrastructure but is particularly large in transportation (for instance. and people make home improvements.7 percent of GDP versus 2. But the coming investment boom will involve relatively more investment in infrastructure and residential real estate. if the global economy grows in line with the consensus of forecasters. airports. respectively. they are largely upgrading their capital stock: factories replace old machinery with more efficient equipment.edu Page 11 . though less so in the event of slower global GDP growth.8 percent. and railways). in 2008). compared with about $11 trillion in 2008. When mature economies invest. Consider the fact that emerging economies already invest in infrastructure at a rate more than two times higher than that of mature economies (5.

In Canada. Improved consultingclub@jbims. and the United States. Professionals will be in BCG’s president and chief executive officer. (Labor-demand growth rates are compounded annually. technicians. • Employees without critical knowledge and technical skills will be left behind. expected immigration and birth rates will not offset the workforce losses caused by aging populations. “Human capital has replaced financial capital as the engine of economic prosperity. the United particularly high demand in the trade.edu Page 12 . talent scarcity will become a threat to sustained growth.CONVOYAGE January ‘11 Increased Labour Mobility to Meet Demands for Economic Growth Industries and countries worldwide will require major increases of highly educated people in their workforces to sustain economic growth If left unaddressed. where retirement of the baby boomers will result in an unprecedented talent deficit. The roots of the global talent risk include the widely uneven quality of educational systems.” said Hans-Paul Bürkner. transportation.) • Health care research and development alone will generate enormous demand for skilled labor worldwide. Germany. Kingdom. particularly in knowledge-based economies. exceeding 4 percent across all countries sampled. foreign-born workers with university degrees or equivalent qualifications make up just 2 percent of the European labor market. erratic employability of the workers in the Southern Hemisphere.5 percent in the United States and nearly 10 percent in Canada. compared with 4. and demographic changes in the Northern Hemisphere. and communications industries in developing nations. • In the next two decades. and managers. • Demand will be biggest for highly educated professionals. Today. demand for professionals in manufacturing will peak at more than 10 percent in developing countries.

and practitioners. Cumberlege. Montreal. senior director. head of partnership. Davos-Klosters. The report proposes seven core responses to global talent risk: • Introduce strategic workforce planning to address imbalances between labor supply and demand.” said Piers A. technological literacy and cross-cultural learning skills. The scale of the predicted talent gap requires concerted action.edu Page 13 . • Foster “brain circulation” to mitigate brain drain. older professionals. and New York in 2009 and 2010. Members of the Global Agenda Council on Skills and Talent Mobility. • Develop a talent “trellis” by focusing on horizontal and vertical career and education paths. • Increase employability by advancing hand with increased labor migration. result-driven action focused on effective sharing of good practices. Dubai. • Ease migration to attract the right talent globally. New Delhi. World Economic Forum. Doha. starting with—and going well beyond—removing barriers to the mobility of talent.CONVOYAGE January ‘11 education and training must go hand in “The global problem is no longer a mere talent mismatch. immigrants. • Extend the pool by tapping women. The World Economic Forum Annual Meeting 2011 in Davos-Klosters will seek to catalyze a pragmatic. as well as more than 100 high-level contributed experts to and the the disadvantaged. consultingclub@jbims. • Encourage temporary and virtual mobility to access required skills easily. recommendations in the report and to the talent mobility dialogue hosted by the World Economic Forum online and at meetings in Brussels.

where shares are bought and sold 9. proof of payment 3. neither cheque nor credit card 15. money lent 11.CONVOYAGE January ‘11 CROSS WORD Business and Finance Across 1. part of the capital of a company 8.edu. money paid for a loan 10. put money into a company or business 5. amalgamation of two companies 14. money returned (Note: Solve the crossword and mail the solution to consultingclub@jbims. wealth of person or business 12. ask the bank to advance money 6.edu Page 14 . share of profits paid to shareholders Down 2. legal agreement 16. Names of the early three winners will be published in the next month edition of ConVoyage) consultingclub@jbims. money paid to owner of copyright or patent 7. total sales of a company 17. amount of money spent 14. promise to repair or replace 13. rate and efficiency of work 4.

CONVOYAGE January ‘11 CONSULTING FUN consultingclub@jbims.edu Page 15 .

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