Sun bets on digitisation as global economy driver

Sun Microsystems is taking a punt on digitisation of business and consumer activity as the biggest driver of the global economy over the next 30 years.

Speaking on Thursday at iPlanet's media and analyst symposium, Jim Hassell, Sun Microsystems Australia managing director, said the Industrial Revolution had come full circle to the point that e-commerce and e-tailing activity would be considered business as usual.

"This phenomenon called e-whatever will just become normal business - 'e' is not distinct any more."

According to Hassell, e-business is in its infancy internationally; however, he said growing user need for real-time enterprise and personal information would open myriad opportunities for businesses, making even the most mundane information, like patient x-ray records, accessible online.

Citing Forrester research, Hassell said the volume of data produced globally a year was two exabytes (the equivalent of 40 billion magazines worth of data), 80 billion photographs, two billion x-rays and 610 billion e-mails. -The idea of digitalising all that stuff will drive the Internet business, he said.

And if organisations are sceptical of the gains they can expect from e-commerce ventures, Hassell said the biggest gain lies in guaranteed cost savings.

Streamlining cumbersome processes, like supply chain management, drives down cost, increases existing revenue streams and creates new revenue channels, said Hassell. "For banks, the average cost of their transactions is cut by 90 per cent, and there's no transaction you can't do on the Net."

However, he warned that e-tailers in particular will fail if they lose sight of making margins after a sustained period of loss. Hassell said that most of the hype around dotcoms centred on them developing immature business models that lacked any focus on making a profit after an initial loss period. "You can''t keep selling high volume at low prices - you need to profit from your capital investment."

In Hassell's view, the benchmark for e-business success will not be how much a company sells, but the number of customer queries that turn into actual sales.

And the key to tapping the sweet spots in e-business lies in pinpointing core competencies, Hassell said.

For Sun's own customer General Motors (GM), such strategising came down to splitting the GM business into three core areas - buying, production and selling - then identifying where costs savings could be made in each area through enterprise-wide digitisation.

According to Hassell, since 1999 GM has saved around $160 billion by taking its operations online and lowering the cost of buying and selling.

On the technology front, Hassell said what differentiates one online business from the next is the ability to provide massive scale, continuous real-time access and an integrated technology stack customised to the user.iPlanet is an e-commerce solutions joint venture between Sun and Netscape.

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