information technology and the fashion industry

CONFIDENTIAL

This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from McKinsey & Company. This material was used by McKinsey & Company during an oral presentation; it is not a complete record of the discussion.

Document

DateNASSCOM India Leadership Forum

February 8, 2007

Web 2.0Fundamental or Fad?

John Hagel, III

[email protected]

www. johnhagel.com

mailto:[email protected]

Copyright John Hagel III, 20072

* FootnoteSource: Sources

Unit of measureInformation Technology And The Fashion Industry



Unit of measureWeb 2.0 – The Hype Escalates

Articles mentioning “Web 2.0”

Jan-

05M

ar-0

5M

ay-0

5Ju

l-05

Sep-

05N

ov-0

5

Jan-

06M

ar-0

6

May

-06

Jul-0

6

Sep

-06

Nov

-06

200

400

600

800

1000

1200

0



Unit of measureWeb 2.0

What is it?

Where’s the money?

What’s required?



Unit of measureA Prominent Skeptic

“. . . Web 2.0 is of course a piece of jargon, nobody even knows what it means”

Tim Berners – Lee, 2006



Unit of measure A Prominent Evangelist

“The network as platform” Tim O’Reilly, 2005



Unit of measureAnother Prominent Evangelist

“Web 2.0 is people” Ross Mayfield, 2005



Unit of measureO’Reilly Again

“ Web 2.0 is the business evolution in the computer industry caused by the move

to the internet as platform. Chief among these rules is this: Build applications that harness network effects to get better the more people use them”

Tim O’Reilly, 2006



Unit of measureUnderstandable Reaction

“There’s something happening here, what it is ain’t exactly clear ”

Buffalo Springfield



Unit of measureWeb 2.0 - My Definition

“An emerging network centric platform

to support

distributed, collaborative and cumulative creation

by its users”



Unit of measureThe Contrast

Presentation Participation

Publication Conversation

Aggregationof information

Aggregationof people andfunctionality

Consumption Creation

Web 1.0 Web 2.0



Unit of measureWeb 2.0 and SOA - Similarities

• Re-conceive software and data as services

• View services as platforms

• Support distributed and cumulative creation

• Built upon foundation of XML



Unit of measureWeb 2.0 and SOA – Cultural Chasm

SOA evangelists

Web 2.0 technologies arelight-weight “toys” not suitable for “real work”

Primary focus

Connect people

Primary focus

Connect applicationsand databases

Web 2.0 evangelists

Will SOA’s ever do realwork given “bloated”standards and timeconsumed in generatingarchitectural blue prints?



Unit of measureTechnology EvolutionFrom Web 1.0 To Web 2.0

AJAX Information Functionality

Emerging Network-CentricPlatform

ForDistributed, Collaborative

and Cumulative Creation byits Users

Web 2.0

XMLIsolation Connectivity

Social Software(Wikis, tags,Video over IP, etc.)

Individual Community

RSS/OPML

Surf Subscribe

ApplicationCreation

PeopleConnection



Unit of measureWeb 2.0

What is it?


What’s required?



Unit of measureI.T. Performance Levers – Process vs. Practice

Exception

ExceptionException

Exception



Unit of measureThe Shadow Economy – Exception-Handling

Exception HandlingPercentage of Staff Time

Source: IT Outsourcer Data

32%

68%

Exception

HandlingActivities

RoutineProcessActivities



Unit of measureWeb 2.0 Tools

Identify and locate appropriate experts

Create effective collaborative environments

Mobilize relevant resources and tools

Document exception handling incidents

Provide pattern recognition and analysis tools



Unit of measureCompelling Business Case

― Near-term cost savings – more efficient tacit collaboration

― Longer-term innovation platform – pattern recognition



Unit of measure

RetailingDistribution

Centers

Global

Li & Fung – Process Orchestration

10,000 suppliers

48 countries

YarnCutting

Bangladesh

LogisticsLogistics Logistics Logistics Logistics

YarnWeavingTaiwan

YarnSourcing

Korea

YarnDyeing

Thailand

FinalAssembly

Mexico

ZippersJapan

Quality Control



Unit of measureImplications For Next Generation Outsourcers/Orchestrators

From

Low cost provisionof generic capacity

Coordination of dispersed service providers and service consumers

Accelerated development and delivery of new I.T. based services

Enhanced visibility for service consumers

Continued reduction of operating inefficiencies

Development of more sophisticated SLA’s and performance measurement systems

To

Flexible configurationof capability



Unit of measureFrom In-Out To Out-In: Reverse Architectural Migration

Enterprise

Glass House

DepartmentsEnterpriseEnterprise

Enterprise

Enterprise

Enterprise

Enterprise

Enterprise Enterprise

Work Group



Unit of measureContrasting Architectures

In-Out Out-In

Control One control point Autonomousentities

Resources Heterogeneous Heterogeneoussquared

Transactions Fine grainedShort - lived

Coarse grainedLong - lived

Outlook Optimistic Pessimistic



Unit of measureNext Wave of Enterprise IT Value Creation

Unmet Business Needs

• Exception handling

• Distributed process networks

• Open innovation

• Supply networks

• Collaboration marketing

New I.T. Architectures

– Combining SOA & Web 2.0

– Outside-In

– Relational



Unit of measureWeb 2.0Web 2.0

What is it?


What’s required?



Unit of measureDecision – Making Focus Shifting

Veto

PurchaseDecisions

BusinessBusinessLineLine

ManagersManagers

EnterprisePlatforms

TargetedBusiness/ITInitiatives

CFOCFO

CIOCIO

RiskAverse

RiskTaking



Unit of measureWhat Decision Makers Want

• Near – term

• Targeted

• Modest investment

PragmaticPerformanceImprovement

No Regrets

Micro - SalesMega - Sales

“Big Bang”Visions and

Projects



Unit of measureThe Sales Challenge

Centralized,Easy To Target

Decision-Makers

Dispersed,Hard To Find

Decision-Makers

Technology SaleHorizontal SaleQualify vs. CompetitionRelationship Selling

Business Sale“Vertical” SaleQualify NeedReference Selling



Unit of measureThe Sales Opportunity

– Manage Risk– Support Architectural Migration– Help Develop Business Case

– Help on Near-Term Business Needs– Manage Risk– Keep Informed on New Technologies

CIO/ITManagers

Business LineManagers



Unit of measureFundamental or Fad?

― Near-term business impact?

― Longer-term evolution potential?

CONFIDENTIAL

This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from McKinsey & Company. This material was used by McKinsey & Company during an oral presentation; it is not a complete record of the discussion.

Document

DateNASSCOM India Leadership Forum

February 8, 2007

Web 2.0Fundamental or Fad?

John Hagel, III

[email protected]

www. johnhagel.com

mailto:[email protected]

information technology and the fashion industry

Lifestyle