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 ......... 3

CONSULTANT TALKS ................................................................................... 7

PUTTING STRATEGIES TO THE TEST: MCKINSEY GLOBAL SURVEY RESULTS ........ 7

HOW THE GROWTH OF EMERGING MARKETS WILL STRAIN GLOBAL FINANCE....... 9

INCREASED LABOUR MOBILITY TO MEET DEMANDS FOR ECONOMIC GROWTH ... 12

CROSS WORD ..............................................................................................14

CONSULTING FUN .......................................................................................15

consultingclub@jbims.edu Page 2
 CONVOYAGE January ‘11

An Article: Power of the Cloud in the world of

Business
By this case the internet). By this, data,
applications and computing power are all
lodged at a remote location from the user.

So how does the User leverage this to his

advantage? Well, he simply logs in by
providing a user name and a password,

Vineet Inamdar and only pays for those applications

1st Year MMS, JBIMS which he wants.
Think about the way you do business.
It is similar to a building where every
You might have the best technology
office in a building uses the same
available, talented resources and might be
infrastructure and basic facilities available
highly successful. But are you doing
but still has the capability to customize its
enough? Are you doing it the right way?
own office space.
When you need to start a business, you
Cloud computing is a mere extension of
need to have so many resources in your
Software as a Service (SaaS). It can also be
hand: Business applications like SAP or
called as a Utility computing similar to
other ERP software, servers and technical
utility services like Electricity and Water
people to run, monitor and debug these
where you pay only for what you use.
applications, power costs, operational and
set up costs which can be enormous. To be in business, you need technology
and to make the best use of the resources
Plus there are always problems with
available with you, you have to leverage
version upgrades, or technology becoming
your IT costs where Cloud Computing
outdated, or technical issues which
helps you out.
needlessly frustrate you. Welcome to the
world of cloud computing. Cloud What does it have in store for the various

Computing is a concept where the entire firms across the globe??

applications runs from a virtual cloud (In

consultingclub@jbims.edu Page 3

Traditionally bigger firms have deep
pockets to buy the latest technology and
use the traditional client server
architecture. But for start-up, small and
medium enterprise firms, the only way to
survive and make progress is
embracing cheap but effective technology.
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. The
concept of cloud computing incorporates
web infrastructure, software as a service
(SaaS), Web 2.0 and other emerging
technologies. It works on the concept of
multi – tenancy where in a single software
runs on a server, but the same is used by
multiple clients (called tenants in this
case).
The advantages of Cloud Computing is
that it gives the organization a very rapid
start up, since no time is wasted for
resource allocation or for set up, scalable
CONVOYAGE January ‘11
since the number of users can grow but
everyone shares only one single instance
of the software, reduction in capital
expenditure and operating costs.
What would decide whether you should
by
move your application(s) over the cloud
or not??
It depends on how fair is your usage of
the data and the application. If the
application has a fairly consistent load
throughout the day, it then makes no
sense to move it to the cloud. But in cases
of applications with high variations in the
traffic, it is better to move the application
since it will have better utilization. Also,
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
application.
A classic example in this case is of Pixar
Animation Studios, 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
management environment) because every
frame of their movies takes eight hours to
render today on a single processor, which
consultingclub@jbims.edu Page 4

means it would take them about 272 years
to render an entire movie.
With Azure, they can get the job done as
fast as they need. The result is huge spikes
in Pixar‘s usage of Azure as they render
on-demand.
Some industry examples where companies
have actually cut down on their IT costs
drastically and become more optimally
competitive:
KPIT Cummins:
Headquartered in Pune, India, KPIT
Cummins is an emerging leader in
providing consulting, solutions
services in the fields of finance, accounts
and manufacturing.
To handle issues like the increasing cost
of hardware, software licenses, power
usage and consumption, the company
migrated to a virtual environment and
optimized the server space utilization.
By reducing the number of servers from
120 to 20, and increasing the server
utilization, the company managed to get
newer applications deployed
provision servers from several months to a
few hours.
Coca Cola Enterprises:
CONVOYAGE January ‘11
Coca-Cola Enterprises is the world’s
largest marketer, producer and distributor
of Coca-Cola products. In order to grow
against heavy competition and a complex
environment, there was a need to
effectively communicate with its
employees, particularly with its sales
employees to deliver information to them
in real time. In order to fill up this
messaging need and maintain contact
with the employees, they migrated to
Microsoft online services where the
software and data were hosted online with
real time support. Traditional way of
communication was via email to which
and
sales employees had limited access. But
now, it was possible for them to
communicate with the company since
there was ample support for the software
through multiple devices like mobile
phones and computers.
Negatives on Cloud Computing:
While the entire concept of cloud
computing has gathered steam in the past
few months, there have been increasing
criticisms on cloud computing.
and
Larry Ellision, CEO and co-founder of
Oracle while quoting some companies
which boasted of providing ERP systems
on the cloud, said it was unclear on what
could be hosted from the server. He said
consultingclub@jbims.edu Page 5

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. Software as a Service has co- existed
with traditional software vendors for
several years.
Also, the biggest disadvantage is that of
data security. 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.
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.
Another disadvantage is that they would
provide you the same set of service to
consultingclub@jbims.edu
CONVOYAGE January ‘11
everyone who uses it. So even though you
could customize it, 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.
Also, cloud computing might be
successful for small and medium
enterprises. But for traditional large scale
organizations, it is always economical to
have your own server (private cloud) and
host applications rather than migrating
your application to some third party
vendor.
Whether cloud computing showers itself
upon the world or not, only time will tell
since there are too many constraints,
primarily of security to be handled.
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.
References:
www.microsoft.com
Page 6
 CONVOYAGE January ‘11

CONSULTANT TALKS
Putting strategies to the test: McKinsey Global Survey results

Creating a winning strategy is a struggle for most companies; some seem content
just to play along. They may not be asking themselves the right questions.

Competitive advantage is the essential beating strategy, assessing how the

ingredient of any strategy. Yet for many
companies, advantage is an elusive goal.
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
rest say their strategies are better
described as matching industry best
practices and delivering operational
imperatives—in other words, just playing
along.
In this survey, 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, based on years of
work with clients and academic research,
make for a good strategy. The first—
whether the strategy will beat the market
by creating competitive advantage—is
comprehensive. The remaining nine tests
disaggregate the picture of a market-
strategy positions the company in the
market, what level of insight the strategy
rests on, and what the implementation
plan involves. Nearly two-thirds of
respondents indicate that their companies
pass three or fewer of the ten tests,
meaning that our description of the test
closely describes a particular element of
their strategies. And only 2 percent of
respondents say their companies pass nine
or all ten tests.
While it’s certainly possible for a strategy
to succeed at a company that fails all or
even most of the tests, the results
underscore that companies can do much
more to pressure-test their strategies. 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.

consultingclub@jbims.edu Page 7
 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, the results
underscore that companies can do much
more to pressure-test their strategies. 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.
Taking the tests to the bottom line
Whether executives say their companies
pass a given test is likely, of course, to be
partly related to whether they think it
matters. And indeed, there is a rough
correlation between passing a test and
executives saying a test is instrumental to
financial performance. For example, when
asked which three tests have the most
positive effect on financial performance,
more executives select flexibility to make
choices in the future than any other test.
And as Exhibit 2 shows, this is the test the
most companies pass. Conversely, novel
insight is the test rated least important to
financial performance and passed least
frequently.
When executives assess the tests’ impact
on financial performance, some
interesting differences arise among
industry sectors (Exhibit 4). Executives in
the energy industry, for example, are
likelier than all others to say a focus on
trends has a good effect on their financial
performance, with 46 percent saying so.
Executives in the health care and high-
tech sectors, meanwhile, stress the
importance of management having a
strong belief in the strategy’s underlying
assumptions; nearly half of them cite that
test.

consultingclub@jbims.edu Page 8
 CONVOYAGE January ‘11

How the growth of emerging markets will strain global finance

Surging demand for capital, led by developing economies, could put upward pressure
on interest rates and crowd out some investment.

Short-term doldrums aside, the world’s
corporations would seem to be in a strong
position to grow as the global economy
recovers. They enjoy healthy cash
balances, with $3.8 trillion in cash
holdings at the end of 2009, and they
have access to cheap capital, with real
long-term interest rates languishing near
1.5 percent. Indeed, as developing
economies continue to pick up the pace of
urbanization, the prognosis for companies
that can tap into that growth over the next
decade looks promising.
Yet all those new roads, ports, water and
power systems, and other kinds of public
infrastructure—and the many companies
building new plants and buying
machinery—may put unexpected strains
on the global financial system. The
McKinsey Global Institute’s (MGI) recent
analysis finds that by 2030, the world’s
supply of capital—that is, its willingness
to save—will fall short of its demand for
capital, or the desired level of investment
needed to finance all those projects.
Indeed, household saving rates have
generally declined in mature economies
for nearly three decades, and an aging
population seems unlikely to reverse that
trend. China’s efforts to rebalance its
economy toward increased consumption
will reduce global saving as well.
The gap between the world’s supply of,
and demand for, capital to invest could
put upward pressure on real interest rates,
crowd out some investment, and
potentially act as a drag on growth.
Moreover, as patterns of global saving and
investment shift, capital flows between
countries will likely change course,
requiring new channels of financial
intermediation and policy intervention.
These findings have important
implications for business executives,
investors, government policy makers, and
financial institutions alike.

consultingclub@jbims.edu Page 9

Surging demand for capital
Several economic periods in history have
required massive investment in physical
assets such as infrastructure, factories, and
housing. These eras include the industrial
revolution and the post–World War II
reconstruction of Europe and Japan. We
are now at the beginning of another
investment boom, this time fueled by
rapid growth in emerging markets.
Across Africa, Asia, and Latin America,
the demand for new homes, transport
systems, water systems, factories, offices,
hospitals, schools, and shopping centres
consultingclub@jbims.edu
CONVOYAGE January ‘11
has already caused investment to jump.
The global investment rate increased from
a recent low of 20.8 percent of GDP in
2002 to 23.7 percent in 2008 but then
dipped again during the global recession
of 2009. 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. Considering the
very low levels of physical-capital stock
these economies have accumulated, our
analysis suggests that high investment
rates could continue for decades.
Page 10
 CONVOYAGE January ‘11

In several scenarios of economic growth, we demand of about $4 trillion in

project that global investment demand infrastructure and $5 trillion in residential
could exceed 25 percent of GDP by 2030. real estate in 2030, if the global economy
To support growth in line with the grows in line with the consensus of
forecasters’ consensus, global investment forecasters.
will amount to $24 trillion in 2030,
compared with about $11 trillion in 2008.
When we examine alternative growth
scenarios, we find that investment will still
increase from current levels, though less so
in the event of slower global GDP growth.

The mix of global investment will shift as

emerging-market economies grow. When
mature economies invest, they are largely
upgrading their capital stock: factories
replace old machinery with more efficient
equipment, and people make home
improvements. But the coming investment
boom will involve relatively more
investment in infrastructure and residential
real estate. Consider the fact that emerging
economies already invest in infrastructure at
a rate more than two times higher than that
of mature economies (5.7 percent of GDP
versus 2.8 percent, respectively, in 2008).
The gap exists in all categories of
infrastructure but is particularly large in
transportation (for instance, roads, airports,
and railways), followed by power and water
systems. We project global investment

consultingclub@jbims.edu Page 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
• Demand will be biggest for highly
educated professionals, technicians, and
managers. Professionals will be
particularly high demand in the trade,
transportation, and communications
industries in developing nations.
• In the next two decades, demand for
professionals in manufacturing will peak
at more than 10 percent in developing
countries, exceeding 4 percent across all
countries sampled. (Labor-demand
growth rates are compounded annually.)
• Health care research and development
alone will generate enormous demand for
skilled labor worldwide.
• Employees without critical knowledge
and technical skills will be left behind.
CONVOYAGE January ‘11
If left unaddressed, talent scarcity will
become a threat to sustained growth,
particularly in knowledge-based
economies. “Human capital has replaced
financial capital as the engine of economic
prosperity,” said Hans-Paul Bürkner,
BCG’s president and chief executive
officer.
in The roots of the global talent risk include
the widely uneven quality of educational
systems, erratic employability of the
workers in the Southern Hemisphere, and
demographic changes in the Northern
Hemisphere, where retirement of the baby
boomers will result in an unprecedented
talent deficit.
In Canada, Germany, the United
Kingdom, and the United States, expected
immigration and birth rates will not offset
the workforce losses caused by aging
populations. Today, foreign-born workers
with university degrees or equivalent
qualifications make up just 2 percent of
the European labor market, compared
with 4.5 percent in the United States and
nearly 10 percent in Canada. Improved
consultingclub@jbims.edu Page 12
 CONVOYAGE January ‘11

education and training must go hand in hand with increased labor migration.

“The global problem is no longer a mere • Encourage temporary and virtual

talent mismatch. The scale of the predicted mobility to access required skills easily.
talent gap requires concerted action, starting
• Extend the pool by tapping women, older
with—and going well beyond—removing
professionals, the disadvantaged, and
barriers to the mobility of talent,” said Piers
immigrants.
A. Cumberlege, senior director, head of
partnership, World Economic Forum.
Members of the Global Agenda Council on
Skills and Talent Mobility, as well as more
The report proposes seven core responses to
than 100 high-level experts and
global talent risk:
practitioners, contributed to the
• Introduce strategic workforce planning recommendations in the report and to the
to address imbalances between labor supply talent mobility dialogue hosted by the
and demand. World Economic Forum online and at
meetings in Brussels, Doha, Davos-Klosters,
• Ease migration to attract the right talent
Dubai, Montreal, New Delhi, and New York
globally.
in 2009 and 2010.

• Foster “brain circulation” to mitigate

The World Economic Forum Annual
brain drain.
Meeting 2011 in Davos-Klosters will seek to
catalyze a pragmatic, result-driven action
• Increase employability by advancing
focused on effective sharing of good
technological literacy and cross-cultural
practices.
learning skills.

• Develop a talent “trellis” by focusing on

horizontal and vertical career and education
paths.

consultingclub@jbims.edu Page 13
 CONVOYAGE January ‘11

CROSS WORD
Business and Finance

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

consultingclub@jbims.edu Page 14
 CONVOYAGE January ‘11

CONSULTING FUN

consultingclub@jbims.edu Page 15
 CONVOYAGE January ‘11

The Consulting Club

-Enhancing Quality…

Contact us- consultingclub@jbims.edu

Senior Members-
Dr. Rahul Salvi Prasad Gholve
Cell- +919819292862 Cell- +919769220527
Email id - rahulsalvi11@jbims.edu Email id - prasadgholve11@jbims.edu

Saurabh Sonparote Ekinath Khedekar

Cell- +919819539767 Cell- +919821708412
Email id-saurabhsonparote11@jbims.edu Email id - ekinathkhedekar11@jbims.edu

Junior Members-
Mayank Goel Parinita Jatkar
Cell - +919920018159 Cell - +919867798948
Email id - mayankgoel12@jbims.edu Email id - parinitajatkar12@jbims.edu

Pramod Kanojia Kush Tandon

Cell - +919867393620 Cell - +919987442845
Email id - pramodkanojia12@jbims.edu Email id – kushtandon12@jbims.edu

consultingclub@jbims.edu Page 16