Business

3rd February 2002

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Using Internet to drive SL economy

The Internet is accepted today as the key driving force for large, small, integrated and isolated nations, industrial sectors or any economic segment. The proliferation of labels such as e-commerce, e-business and e-services, attests to the increasing importance of the Internet as it offers a wealth of opportunities, yet more exciting developments on the way. Often it is the thinking in leadership or policy makers that holds back, as they may not be open to conceptualise the real power that can be realised via the Internet.

As an example, the Automobile Association in the US is enthusiastically considering using the Internet to provide a more proactive service to its members. Engine management information could be relayed across the net from a moving vehicle to a control centre where it is analysed. Diagnostic software could identify any fault and an engineer could be dispatched to meet the driver, before any breakdown has occurred. Already, telemedicine makes use of network technology to provide access to consultant skills at remote locations. Even some surgical operations can be carried out in this way. Home shopping, home banking, even e-commerce appears tame alongside such innovation. Many organisations have already embraced the Internet and used it to derive competitive advantages.

For Amazon Books (www.amazon.co.uk) and Dell Computers (www.dell.com) the Internet is not hype or science fiction. It is an everyday tool essential to the way they conduct business. 

They and their customers take its functionality for granted. However, its reach is bigger than that. The Internet is having a fundamental effect on the macro-economic environment in the global economy.

Repercussions
These achievements are well and good, but this renaissance has powerful repercussions for the economy. The e-economy never sleeps. The metaphorical store is open 24-hours-a-day and opened not only for the locals. National economic boundaries have been eroded for employment as well as trade. The global collaboration facilitated by the Internet means that companies could choose to locate cost and production centres where it is most beneficial and yet managed centrally. 

Low-skill jobs will migrate to cheaper labour pools. Communication networks will form the glue to hold these dispersed organisations together. 

For the first time, democracy will no longer be an idealistic word, it will function lively at every level of application of the Internet, raising challenges to those who find it difficult to adopt.

Choices
Innovative and imaginative forward thinkers are deploying the Internet and associated technologies to out-manoeuvre some of the most successful corporations of the 21st century. Those closest to the Internet are predicting hockey stick growths in recovering investments in a matter of 2-3 years, encouraging the introduction of Internet-based telecommunication infrastructure to the most remote but emerging economies. The agility of the Internet helps to reach new targets of individual and company-wide productivity, redefine industry benchmarks for efficiency, forge better relationships with their suppliers and attain greater levels of customer services. Hence, the e-economy is a growing force in the world, the impact of which will affect us all. The Internet is more than just a way of doing business, it has become the way ahead even for the critics. If the surveys, market statistics doesn't convince businesses, hopefully the above evidence of applications will. As a nation faced with selecting a strategy to cope with this impending tidal wave of change, there are really only three choices:

1. Do nothing and hope it will go away.

2. Wait and see what happens and respond to external pressures at a bygone era.

3. Plan to benefit from the change within and benefit from the economic transformation embracing the e-economy immediately.

For those seeking rapid growth in quantum leaps in this severely competitive global marketplace, the third would be the only viable choice. More and more transactions are taking place on-line. Respected analysts are already forecasting that the value of the e-economy early in the next century will rival the gross domestic product of western countries let alone those of the Third World. As for the slow growth or no growth nations, getting out of the spiral is to grow out of it through new wealth creating strategies.

A powerful force
One should rephrase John F. Kennedy's famous quote on these lines - 'ask not what the Internet can do for you but ask what you need the Internet to do for you'. The question is do we have plans for e-learning, e-business, e-governance, e-health, e-electioneering, e-sports, EDI for regulatory authorisations and coordination, e-lancing (freelancing), e-entertainment or for e-anything or are we waiting till the tide pressurises us to take the first steps as we traditionally have done? The Internet can do anything better, faster and extremely cost effectively, if only the concept could be conceived and then demand for such a 'power'. Those paralysed to imagine and conceive will obviously find it extremely difficult to see the light that shines through the Internet. E-learning has the godly power to change poverty and poor health conditions of many in underdeveloped countries situated at gruelling locations, difficult to access by roads or other traditional means. E-commerce could assist the poor farmer to sell forward his yield to a global market without having to rely on government subsidies. It is only a question of whether we can conceive such an enormous power to make an economic transformation beyond traditional paradigms and applications. Hence, there is no other substitute other than to think, imagine and conceive new development models, a new world order and a new economy so that the Internet could deliver the unimaginable.

Computers, Internet and biotechnology are the driving forces behind the New Economy: they are fuelled only by knowledge to realise wisdom. Inexpensiveness and global availability of the communications technology has made it possible to exchange and trade in information and ideas on a larger scale. The New Economy is for those who need speed to pick up and grow rapidly to catch up or gain a lead with the rest of the world. It is most realistic for those who lack legacy economies or are riding at the bottom of economic scales with basic economic wheels, as the transformation could be rapid and require only a few steps forward. Accessing the Internet entails insignificant investment on the infrastructure compared to brick and mortar to build concrete bridges, ports or roads and yet not be able to reach the masses the Internet could reach. Furthermore, unlike the economic/social division most brick and mortar infrastructures create, the Internet infrastructure invites all scales of entrepreneurs to participate for economic development employing every drop of resource in the nation, grasped through its connectivity to the entire globe to rapidly realise true wealth. More and more people today are turning their backs on well-trodden paths through this transformation from the industrial to the knowledge society. Sociologists claim that the Internet has made it possible to de-territorialise people, work, regions and even countries. As far as our immediate society is concerned, the effect can go as far as cast, creed, religion, race, and even deeper. Hence, this transformation is much more needed to us in social terms than in economic terms to become truly independent by overcoming many an obstacle, confidently building on the true capital of the 21st century: creativity and people. The e-economy spawned by the Internet is clearly a force to be imagined and realised very strategically before we 'miss the economic bus' once again, as compared to many emerging new economies across the globe.

Progress
Networks, specifically the Internet, are becoming the basis of economic activity and progress. This is not like how railroads, roads, the power grid and the telephone supported the vertically integrated corporation. The Internet is transforming businesses in how they procure, how they sell, how they get paid, what they sell and even transforming the supportive services.
Business models
Instead of thinking of New Economy companies as Internet companies or dot coms, think about them as companies that use the Internet infrastructure to create effective business-web-based business models. In this sense, the New Economy can include steel companies, garment manufacturers, freight forwarders, banks and insurance companies, tea, rubber and commodity exporters, gas distribution companies, and cement manufacturers just as the old economy can include high-technology firms. But they will differ in how they deliver and service clientele through the Internet. The most powerful impact can be observed from entrepreneurs with a worthy product or service that can be offered to the global market at large.
Sources of value
In today's economy value is created by brain, not brawn, and most labour is knowledge work. Knowledge infuses itself throughout products and services. Measuring knowledge-based assets suggest wealth contained in such assets can outstrip wealth contained in physical assets and even bank accounts which local accounting bodies will need to take serious consideration as a true reflection of the new economy.
Ownership of wealth
Business tycoons owned the most wealth in industrial economies and the balance trickled down to layers of their loyalists leaving a large poverty base across the entire globe. Today, 60% of Americans own stock and the biggest shareholders are labour pension funds. Most economic growth comes from small companies, entrepreneurial everywhere. The ones who delayed or failed to participate in the global wealth transfer were due to physical constraints in entering those markets. Today, the Internet has brought the globe closer to each and everyone who seeks to participate in the New Economy.
Educational models and institutions
As lifelong learning becomes the norm, services of private companies, not public institutions are proliferating to meet the growing demands. The model of pedagogy is also changing with the growth of interactive, self-paced, student-focused learning. Colleges are becoming nodes on communication networks, not just places where people go to study. The possibility for a medical student to learn of the arts and to explore the space simultaneously is all a click away through the concept of e-learning, an unimaginable task a few years ago. Moreover, possibilities to offer instant education to prevent life threatening diseases to people living in remote corners of the world instantly, at a fraction of a cost against doing them physically is possible due to the Internet.
Governance
Industrial-age bureaucracies rose simultaneously with vertically integrated corporations and mimicked its structure. Today, it is very difficult to distinguish whether a private company is private as they often operate like public corporations. Moreover, they confuse the clientele when they preach customer focus and deliver totally opposite services as a result of internally focused processes designed to cater within the vertical silos. New Net-driven governance structures, such as the Knowledge Network of Los Angeles, enable Internet-based cooperation between public and private organisations to deliver services for citizens. Many countries are expecting to see similar changes at the core of the democratic process in voting and thereafter to build relationships between citizens and the state. These countries and organisations that chose to embrace the Net to offer better products and services to the customer/public, firstly made a pledge to consciously improve its services to serve the customers/public before the Internet gave them a simple, effective medium to develop on their commitment.
First steps
If it seems daunting, it is worth remembering that the extraordinary and completely unplanned transformative process underway today began with the simplest of acts: connecting just two networks. In the absence of an abundance of highly valuable natural resources such as petroleum and precious metals to naturally attract wealth from other wealthy nations, the only alternative we have today is to activate clusters of economic modules spread across the nation by linking them to the rest of the world. Let new economies be borne either for a farmer to purchase forward, a producer to reach a wider market or service niche markets from one extreme corner to the other across the globe. This process will most likely eliminate middlemen in the traditional economies who monopolies the traditional market routes and generate a whole new economic cycle where producers could reach out directly to the consumers or the value adders wherever they may be in the globe. The first step to take advantage from this rewarding and challenging economic model is to link each economic cluster to the Internet and echo commitment in principle to the nation at large. Secondly, it is for the government not to interfere in the economic boom and allow wealth to be harvested without obstructing the process with shortsighted tax structures. If necessary, a process could be maintained to record the products and services generated through the Internet so that the economic boom could be monitored. Let there be wealth that flows to our land produced from our indigenous resources with absolutely no obstacle. This will also entice the government too to embrace e-governance as a step to wed with the new economy and participate in its creation. It is not policies that need to be drafted but persuasion of entrepreneurs to develop new strategies over the Internet. Impact of this initiative will naturally promote production of quality products and services even for the local market diminishing demand for cheap substitutes entering the local market.
Downward spiral
Today the local broom made out of high quality coconut bi-products is already losing its presence even in the local market against imported designer brooms made out of synthetic materials destroying local industries as well as our environment and health. This situation can be turned upside down purely by offering a quality indigenous broom to a wider global market and the impact to the economy would be threefold: increased dollar earnings, prevention of rupee transfers and priceless saving of damage to the environment.

In spite of the real wealth this economic model brings to the country, this model will be a possible threat to those who are accustomed to capitalising on cheap labour by exploiting them in menial work or exporting them to the Middle East. The existence of such institutionalised sustenance of poverty would be threatened in the presence of the proposed economic model. The coconut grower no longer will have to sell his property for new factories or housing projects or send his children to the local garment factory for menial labour rates scattering their self respect but increase productivity of his plantation to meet the increased global demands. Professional services at large will be compelled to offer quality services in return for increased revenue as there would be new wealth earned through a decent product or service as against the Mahaweli economic boom in Sri Lanka that was limited to a few. This is the only way to turn the downward spiral upside down in the shortest possible time period. The new challenge would not be whether we could compete on cheap labour internationally but whether we could produce the demand that the world market needs.

A nation committed to develop is one willing to embrace the bridge (Internet) that links us to the entire globe from within itself. Therefore, the key question is not whether to deploy Internet technology nations have no choice if they want to stay competitive but that leadership deploys it.

The writer Anura K.T. de Silva is an IT specialist with over 15 years of extensive expertise in Information Technology and Communication. He is a former executive director, IT, BOI and currently the CEO of iOnosphere Lanka (Pvt) Ltd.
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