Lacey's Paper Round

This week it is Lexmark who announce strong profits, joining Apple, IBM, and Intel in the slump-beating club. Eyebrow raiser of the week goes to The Economist, which reports on the US health-care industry and finds that it spends a staggeringly low 1-2% of revenue on informations systems. And the bad news: European technology firms can't get anybody to work for them in the US. They don't pay enough. Did I miss something? If you find an interesting report about computing or the Internet in the dead tree press send it me, Eugene Lacey, Editor in Chief, ZDNet UK.

Firms that outsource IT risk giving away part of their brain -- Financial Times

Business schools have long taught the importance of core competency, a discipline that teaches managers to appreciate where the real value is in an organisation. Now the whole notion of core competence is under challenge. In a series of articles on Digital Business, the Financical Times Tony Jackson writes: "Applying [core competency] has never been easy. In the digital age, it is harder still. This leads Philip Evans of the Boston Consulting Group to query the whole concept of core competency." However, in the same article Jackson goes on to warn that "By entrusting its IT function to others, a company risks outsourcing part of its brain." -- Financial Times, October 22, 1998

Web shopping - "The ultimate triumph of consumerism" -- Financial Times

The FT's Vanessa Hunter interviewed the retail expert, Professor Gary Hamel, chairman of Stategos and "distinguished research fellow at Harvard Business School". Hamel told the FT that e-shopping was going to give consumers an unpredented amount of control over what they buy. "It is the ultimate triumph of consumerism... I think most companies have a bigger danger of under-estimating than overestimating the impact." -- Financial Times, October 22, 1998

Kodak preaching co-existence of digital photography and snaps -- Sunday Times

The Sunday Times' David Hewson was not convinced by a recent presentation of Kodak's business strategy. "What will happen is coexistence, and, to be precise, a new product, Picture CD, that will, for about $5 in America, let you get your pictures back as images on a CD so you can fiddle with them on a computer." Having given this summary of the Kodak approach Hewson then tears it apart: "And if it's the best Kodak can do to stamp its leadership on the emerging digital scene then clearly this is a company marooned in orbit around the planet Clueless." -- Sunday Times Innovations, Octber 25, 1998

"No one wants to work for" European technolgy firms in the US -- Wall Street Journal

According to the Wall Street Journal, UK tech firms have a serious problem: no-one wants to work for them. The reason? "Europeans don't offer adequate stock-option programs, don't pay as much in basic salary and don't have the allure of a sexy start-up." To make matters worse, European tech firms also risk having star performers poached by Silicon Valley. "Euopean companies had better watch out, because their U.S. rivals are also beginning to stray overseas to poach executive talent." -- Wall Street Journal, October 20, 1998

Health care industry spends a mere 1%-2% on information systems -- The Economist

The Econonmist reported on recent research based on American experience that found the health care industry "spends a measly 1-2% of annual revenues on information systems, compared with 7% in banks and financial institutions". This provides an obvious opportunity for firms to win a higher spend from the health-care industry, and IT in hospitals is being tipped as a high growth area in the future. "The health-care information technology industry is growing by more than 18% a year...earnings will more than double to $26 billion by 2002." -- The Economist, October 24, 1998

Lexmark enjoys strong Q3 -- Wall Street Journal

Proving that it is not all bad news out there, Lexmark follows Apple, IBM, and Intel in posting Q3 earnings above analyst predictions. The Wall Street Journal wrote: "Third-quarter earnings jumped 41% and revenue climbed 20%"... Lexmark said revenue from printers and related supplies rose 25%, with growth coming in all geographies except Asia." -- Wall Street Journal, October 21, 1998