Technology key to combating today`s primary business challenges

There are five primary drivers that challenge businesses today: economic, political, corporate governance, globalisation and mergers and acquisitions. Dale Thomas, vice-president, global services, PeopleSoft EMEA, outlines these and advises on how they can be combated.

Flexibility is the key to combating the challenges of the business world today, as is allowing companies to operate on a global basis, with real-time information, in a customer-centric manner.

One of the challenges facing business is the economy. During 2003 this was signalled by low growth, leading to uncertainty. There was also recession in some parts of the world. On the positive side, for 2004, the International Monetary Fund (IMF) predicts 2% growth for Europe and 2.9% growth for South Africa, an encouraging development.

Even though there has been economic growth in certain cases, unemployment is still high in some countries, including SA. This is partly due to increased productivity and efficiencies brought about by technological advances.

On the political front, the change in the South African environment has brought it wonderful acceptance from the international community, resulting in widespread opportunities.

In other parts of the world, the borders between the East and West are fading. On 1 May, for example, the Czech Republic became part of the European Union. This leads to further challenges because of the changing nature of the unified labour pool.

Corporate governance has become a major issue in business, brought about to counter widespread corruption in companies such as Enron. A new set of standards has been formulated for financial reporting and accounting, making the demands on publicly listed companies huge. Sarbanes-Oxley has put pressure on US listed groups to make more information available to the market. This also affects companies in countries outside the US that are multi-listed in the US and other markets.

Basel II is a challenge for the banking world and other financial institutions, which have to prove capital adequacy. While financial services institutions are already under pressure from government and new regulations, the market is becoming increasingly competitive and return on investment is a significant issue.

In the public sector, budgets are decreasing, while constituents` demands are increasing. The challenge is to provide services at low cost.

Manufacturers are also trying to drive down operational costs, while still reacting to customer needs and desires.

Telcos have invested heavily in new products, offering cheaper rates, better services and investing massively in 3G. They need to show a return.

In the retail market, there is a fight for a bigger share of decreasing consumer spend. These industries must reduce their supply chain costs. Mergers and acquisitions, another business driver, are more often than not unsuccessful. In the Novartis-Aventis merger, Novartis lost out. When DaimlerChrysler divested in Mitsubishi, it pulled away from its commitments, leading to the resignation of the Mitsubishi president.

PeopleSoft has also been the target of a particularly hostile bid by Oracle, which has been opposed by the US Department of Justice and the European Union.

In terms of globalisation, there has been real change in the past two to three years. In 50 years` time, it is predicted that China`s economy will be as big as the US`s. In the next five years, it is anticipated there will be more trained IT professionals in Europe than the entire population of the UK.

Markets are becoming increasingly liberalised, resulting in the deployment of resources in offshore activities. The challenge is for these markets to deliver quality services.

There is a need to deploy and leverage business assets for companies that do business in different manners in diverse parts of the world. They must standardise on global processes and leverage these where they can. Companies need to be able to see real-time information relating to stock, headcount and other key information in order to make rapid decisions around customer buying habits. For example, when a bank introduces new products, call centre staff need to be trained and incentivised so they can cope with up and cross-selling the new offerings into the existing database.

To achieve this they require detailed knowledge of their business so they know when to redirect staff from one area to another to meet customer demand.

Technology is the enabler to meet all these challenges.