January ‘11

JAMNALAL BAJAJ Institute of Management Studies

Issue – January 2011

Page 1

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

edu Page 3 . JBIMS and only pays for those applications which he wants. or technical issues which available with you.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. Vineet Inamdar 1st Year MMS. Cloud computing is a mere extension of Software as a Service (SaaS). Welcome to the world of cloud computing. power costs. Cloud Computing is a concept where the entire applications runs from a virtual cloud (In consultingclub@jbims. servers and technical people to run. applications and computing power are all lodged at a remote location from the user. 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. or technology becoming outdated. But are you doing enough? Are you doing it the right way? When you need to start a business. You might have the best technology available. Plus there are always problems with version upgrades. data. To be in business. What does it have in store for the various firms across the globe?? needlessly frustrate you. you need to have so many resources in your hand: Business applications like SAP or other ERP software. operational and set up costs which can be enormous. By this. talented resources and might be highly successful. 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. you have to leverage your IT costs where Cloud Computing helps you out. he simply logs in by providing a user name and a password. monitor and debug these applications.

But in cases of applications with high variations in the traffic. small and medium enterprise firms. the only way to survive and make progress is by expenditure and operating costs.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. software as a service (SaaS). But for start-up. Web 2. 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. but the same is used by multiple clients (called tenants in this case). It works on the concept of multi – tenancy where in a single software runs on a server. A classic example in this case is of Pixar Animation Studios. scalable consultingclub@jbims. The concept of cloud computing incorporates web infrastructure. 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. it then makes no sense to move it to the cloud. reduction in capital architecture. which . 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.0 and other emerging technologies. since no time is wasted for resource allocation or for set up. If the application has a fairly consistent load throughout the Page 4 management environment) because every frame of their movies takes eight hours to render today on a single processor. 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. it is better to move the application since it will have better utilization. Also.

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

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. everyone who uses it. cloud for computing small might be successful and medium Another disadvantage is that they would provide you the same set of service to consultingclub@jbims. it is always economical to have your own server (private cloud) and host applications rather than migrating your application to some third party vendor. 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. Whether cloud computing showers itself upon the world or not.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 Page 6 . References: www. the biggest disadvantage is that of data security.existed with traditional software vendors for several years. primarily of security to be handled. Software as a Service has co. only time will tell since there are too many constraints. Also. Also. But for traditional large scale organizations. 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. 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

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. In this survey. advantage is an elusive goal. They may not be asking themselves the right questions. the results underscore that companies can do much more to pressure-test their strategies. Nearly two-thirds of respondents indicate that their companies pass three or fewer of the ten tests. and what the implementation plan involves. assessing how the strategy positions the company in the market. make for a good strategy. based on years of work with clients and academic research. what level of insight the strategy rests on. While it’s certainly possible for a strategy to succeed at a company that fails all or even most of the tests. 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. Competitive advantage is the essential ingredient of any strategy. described as matching industry best practices and delivering operational imperatives—in other words. 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 only 2 percent of respondents say their companies pass nine or all ten tests. just playing along. The remaining nine tests disaggregate the picture of a market- consultingclub@jbims. meaning that our description of the test closely describes a particular element of their strategies.CONVOYAGE January ‘11 CONSULTANT TALKS Putting strategies to the test: McKinsey Global Survey results Creating a winning strategy is a struggle for most companies. The first— whether the strategy will beat the market by creating competitive advantage—is comprehensive. Yet for many companies. some seem content just to play Page 7 .

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

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

factories. the demand for new homes.CONVOYAGE January ‘11 Surging demand for capital Several economic periods in history have required massive investment in physical assets such as infrastructure. 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. These eras include the industrial revolution and the post–World War II reconstruction of Europe and Japan. Considering the very low levels of physical-capital stock these economies have accumulated. factories. this time fueled by rapid growth in emerging Page 10 . Asia. offices. and housing.7 percent in 2008 but then dipped again during the global recession of 2009.8 percent of GDP in 2002 to 23. Across Africa. The global investment rate increased from a recent low of 20. water systems. schools. transport systems. hospitals. our analysis suggests that high investment rates could continue for decades. We are now at the beginning of another investment boom. and Latin America. and shopping centres has already caused investment to jump. consultingclub@jbims.

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

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

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

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


CONVOYAGE January ‘11 The Consulting Club -Enhancing Quality… Contact Ekinath Khedekar Junior MembersMayank Goel Cell .edu Senior Pramod Kanojia Cell .+919769220527 Email id .+919819539767 Email id-saurabhsonparote11@jbims.+919867393620 Email id .edu Saurabh Sonparote Kush Tandon Cell .+919819292862 Email id . Rahul Salvi Page 16 Parinita Jatkar Cell .+919821708412 Email id .ekinathkhedekar11@jbims.mayankgoel12@jbims.prasadgholve11@jbims.consultingclub@jbims.+919920018159 Email id .+919867798948 Email id .edu Prasad Gholve Cell.+919987442845 Email id – kushtandon12@jbims.