RSS
So says a recent Accenture survey of more than 1,000 companies looking to break into emerging markets. For many of them, the key word that defines their approach to systems is manual.
In fact, says the Accenture report, 45 percent of companies across 10 industries make only “moderate” use of technology in emerging markets. (Another 48 percent said they use it “extensively,” but the remaining 7 percent or so described their approach to I.T. as “limited.” So the nays have it.)
For purposes of the Accenture survey, the term “emerging markets” refers to those areas where global businesses have seen the most growth over the past three years, and expect more in the next three. Sixty-two percent, for example, placed China among their top three recent growth engines, while 40 percent ranked India in that category. Others areas of promise included Southeast Asia, Eastern Europe and Brazil.
It goes without saying that conditions in emerging economies are highly volatile and subject to enormous risk. So it stands to reason that a company would go to market with all of the best tools it can muster.
Not so with a lot of I.T., apparently. Banks and telecommunications are heavily tech-dependent, so they’re ahead of the curve. But many consumer-products manufacturers are lagging, says Mark George, Accenture’s global practice leader for operations and process strategy. They’re deficient in the areas of both supply chain planning and execution.
What the laggards lack are such modern-day tools as control towers – in essence, performance dashboards on steroids – that can closely monitor product as it moves through each stage of the supply chain. In theory, such systems ought to be providing companies with the ability to control everything from raw materials to finished goods, customized for individual markets.
A formal sales and operations planning (S&OP) process is yet another “must-have” capability, in George’s view. It provides the necessary snapshots of ever-shifting consumer demand, along with the ability to adjust supply-chain strategies in line with real-time market intelligence. And it helps to unify the functional siloes that plague so many organizations. Companies that aren’t deploying a combination of control towers, S&OP and enterprise resource planning (ERP) systems “are missing opportunities,” says George.
It’s not all about technology, of course. Accenture believes companies targeting emerging markets should be asking several key questions that range well beyond bits and bytes. They include:
--How well do we understand the market in question? Do we know what we don’t know?
--Do we have the skills and patience to pursue a “go-it-alone” strategy?
--Are there local companies with which we can partner?
--What can we learn from companies that have experience in the targeted market?
--What are the risks to brand, product, service quality and intellectual property from doing business in that market?
--Does the host market offer attractive companies for acquisition, as a means of gaining instant expertise?
Good partnership possibilities aren’t always available, however. “Experience shows that in emerging markets the ability to find resilient, robust and reliable partners is harder,” says George. Often technology can make the difference between success and failure.
One of the biggest barriers to acquiring modern I.T., at least in the minds of chief financial officers, is cost. In fact, we’ve been led to believe that a relentless focus on cutting overhead translates into the rock-bottom prices that cement consumer loyalty. That’s certainly true in the case of price leaders such as Wal-Mart Stores Inc. and other discounters. But it doesn’t tell the whole story – especially in new markets where a seller hopes to make a splash.
At times like that, customer service and great products can beat low prices. “What we’re finding is that leaders are setting the bar high,” says George. “They’re recognizing that in the long run, high quality costs less.”
Again, good I.T. can come to the rescue. “You’re not going to be agile if your processes are wasteful,” says George.
Actually, he doesn’t believe that cost and quality are necessarily at odds, even at the outset of a marketing campaign. “Organizations that are putting in robust execution systems, or something as simple as investing in process rigor, can often avoid the tradeoff between speed, quality and cost,” he says.
Providers of software in the cloud would argue that cost is no longer a barrier to deploying sophisticated I.T. anyway. Users get access to systems without having to devote extensive in-house resources to maintenance and upgrading. Considering all of the applications that go into a global supply chain, and the fact that networks still are not 100-percent accessible, vendors are probably overstating the case for the cloud today. But the technology is clearly moving in that direction.
The ideal number and nature of I.T. systems varies from country to country. But George says leaders tapping emerging markets are doing four things right: They’re deploying an array of strategies, including partnering, acquisition and investment. They’re honing their knowledge of local markets and customer taste. They’re investing wisely in technology. And they’re in it for the long term.
As Accenture senior managing director Mark Pearson puts it, the degree of agility that comes with the right investments “turns uncertain market conditions into a source of competitive advantage.”
