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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Mike Buckley who wrote (16078)1/23/2000 2:56:00 PM
From: pkapsiotis  Read Replies (1) of 54805
 
Mike, Re: ITWO and ERP players

I do not believe that the ERP players will be successful in this. I had researched the company a year ago for a job interview and this is what was my conclusion back then. I am not an expert on the subject but as a business person this is my feeling and how I understand the company in simple words -what is important is to link it to how their strategy has evolved - let's not link it to valuations for now :

1. ITWO's success in based on the fact that they were able to load the enormous amount of data into memory and thus compute the scheduling for manufacturing in a few hours rather than days.
2. Given that the next thing was to develop the algorithms that would solve the scheduling problem. The work in this field was linked through acquisitions and further development in other areas such as logistics etc. The company had a lead in this because the above factor #1 gave them more computing power thus more flexibility to try more things.
3. An important part of the strategy formulation process is the vision that the employees share. As the ITWO vision is to add 50B of value to their customers by (I think 2005) this lead to a shift of strategy towards eBPO (electronic business process optimization) that applies what the company has learned in the SCM area to all the functions of a company in a similar way that ERP does. They simply realized that they could not get to the vision simply by SCM so they went after other markets (ERP). That's why this company is so powerful. Excellent management.
4. eBPO is much better that ERP because ERP looks at the past and makes forecasts for the future. As the CEO of ITWO has stated ERP is like driving a car by looking at the rear mirror. On the other hand eBPO gets the demand in a form that of an order that is already placed and then allocates resources (inventory, machine time, HR, financial, product development time etc) based on this order.
5. This concept allows to optimize the whole company or value chain rather than sub-optimizing manufacturing, or logistics. You can have world class logistics and try to save 2-3% per year (I am picking just an example) but if you look at the overall picture this tool supposingly will tell you to allocate more resources to product development thus making the product e.g. less bulky and therefore achieving savings it the area of 10% in logistics. In summary it optimizes GLOBALLY. As more and more manufacturers are going to go direct this is going to be powerful.

In summary, since ITWO's success in my opinion derives from the leap that the memory computation ability has brought and the culture of the company I really think the company will be able to survive the ERP attack.

Thanks,

Panos

Bruce Brown, I hope that?s the idea behind it
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