Finding governments' role in the Internet

This and other nuggets of organizational experience shared by companies and governments in the region, including Australia, China, Japan, New Zealand, South Korea and Singapore, can be found in Cisco Net Impact: Competitive Advantage from Internet Innovators in Asia Pacific and Japan.

Author Greg Pelling, who is the managing director for IT global development centers at Cisco Systems, worked on the book with help from several Cisco executives. Pelling compiled the experiences of various public and private sector organizations into the book, to offer an insight into how companies can use the technology to gain productivity and market reach.

In an interview with ZDNet Asia, Pelling shares his thoughts on several issues, including the development of the Internet in the Asia-Pacific and the challenges ahead.

What is lacking in the Asia-Pacific market in terms of Internet strategy?
There is no common issue. If you look at China, building of broadband wireless capability is going to be one of the things that it has tackled and continues to tackle. The governance around the technology, infrastructure and standardization is something we actually talked a little bit about in the book.

In India, you still have to run voice on one line and data on another, which doubles the cost and cripples the creative adoption of living-room technology. Being able to solve that issue for businesses, which allows them to get business investments much faster and much greater utilization of infrastructure, is part of the innovation Cisco has.

In Korea and Japan, the government's continued influence on broad adoption of the Internet, and Internet standards and technology in business, is going to be key, because the governments have always been a partner to businesses. The government has always played a major role. And a lot of times they even adopt it themselves first, to prove that it works, and then they work with businesses to help make it pervasive, not only in a given company, or in a given industry, but across industries.

Some of the innovative things that governments are doing, like swopping CEOs between their service providers, is to make sure that they are not doing the things that happened with other countries. For example, where they are developing infrastructure--where everyone tries to do the same thing--because that means hundreds of millions or billions of dollars in creating duplicate services and infrastructure that will never give you that capacity to give you a return on investment. This stifles continued investment growth in the nation. The government's ability to help and influence future development is important.

So, are governments the prime movers in getting businesses to adopt the Internet?
Governments traditionally invest in the future potential of the country like building roads and ports. They know that over a five- to 10-year period, this will speed up the general transportation of goods and services, which in turn generates economic and social benefits. The Internet represents the same thing.

If you leave it up to businesses to invest, they will go into whatever that gives them the greatest return on investment. Their role is not to invest in infrastructure that creates future country-wide benefits. This is where the government's role comes in.

Governments need to be very pragmatic about how fast they're going to invest, how consistently they will invest in standards, because as soon as you have multiple standards, your ability to maintain your costs can get out of control, and so making those decisions and allowing companies to make long-term investments based on the government's policies and plans is going to be very important in the ongoing economic development of the country.

The challenge in Asia is there are so many economies that are at the stage where they are making these transitions, and the governments need to step up and push the right buttons in the investment of this infrastructure, about the same time as they are making tradeoffs in healthcare, roads, schools…. So it's a very complex situation that they find themselves in.

They also realize that if they don't invest in the Internet, they will be missing out on opportunities. So they may have others come in and invest in some of the infrastructure also. There really hasn't been anything like the Internet before that has caused this review of investments and to be able to participate globally.

There is the government's ability to step in and say 'we're going to put in a certain amount of this capability to allow you to have that potential to do a certain thing'. This is why we believe that the governments have a very significant role to play to ensure that there's that capacity and capability.

What are the critical success factors for companies in the use of the Internet?
One is understanding the business problem that you're solving. Once the technology is in place, it's very hard to change how you do business.

The other one--which is not so much of a surprise--is management's commitment to understanding the business problem and the technological solution to that problem. It is no longer seen as 'the black box' or 'the IT department's problem', but it is the realization that this is about developing a future capability in the corporation…. So there is realization of the importance of management or leadership to not only look at the changes but the long-term investment of the technology, because some of these measures can take years to actually get in place across the organization.

The third one is recognizing the importance of standards. One of the benefits that the Internet has provided in a lot of organizations is the ability to have very consistent standards and much broader end-to-end connectivity, having much lower cost that you've ever had before.

What challenges are ahead for businesses?
A bunch of the work that I'm involved in today is about global capabilities and being able to set up and tap into optimal-cost, optimal-capability centers to actually do application development for our company.

We're seeing organizations like Tata Consultancy Services out of India set up outsourcing and call center operations in Uraguay as a low-cost base with the language requirements…to handle the tons of requirements from the east coast in the U.S. We see more and more globalization of capabilities occurring, every month now, and that's something that a lot of countries and a lot of regions are really struggling with because they see work shifting.

So there is a link to outsourcing?
You heard all the noise coming out of the U.S. saying China and India are stealing all the jobs, but this has been going on for 20 years now. It's not that they are stealing your jobs; it's that they are developing capabilities that your regions are no longer interested in and they are no longer economically viable.

Take a look at the textile industry shifting from parts of the U.S. to Europe, to Thailand, to India, to China, in five, six years, but the shift has been massive. All these regions that had this viable technology capability were losing them… very, very quickly. Nobody was stepping up to say 'what are we going to do about this?'

These are the opportunities or the challenges that the Internet is presenting, which I think is going to happen more and more in the future. It's not about fighting or stopping it; it's about being able to spot it. What you are going to about it and, more importantly, how do you take advantage of it?