1

Business Growth: The JourneyIntroduction

BT Oracle SeminarBirmingham

16 November 2005

Prof. Jim NortonSenior Policy Adviser

UK Institute of DirectorsFormer Director UK Cabinet Office PIU e-Commerce team

www.profjimnorton.com

The second half of the chessboard

Original idea: George Gilder at the Cato-Brookings Institution conference"Regulation in the Digital Age," held in Washington D.C. on April 17-18, 1997.

2

The cost-performance of electronics doubles every18-24 months (Moore’s Law)

110

1001,000

10,000100,000

1,000,00010,000,000

100,000,0001,000,000,000

10,000,000,000

100,000,000,0001,000,000,000,000

1940 1950 1960 1970 1980 1990 2000 2010 2020 2030

Source: Analysys

33 Doublings

Moore’s Law in Action:Intel Microprocessors

Source: Intel & Silicon Image

0

5

10

15

20

25

30

35

40

45

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

M T

rans

isto

rs

4004

8008

8080 8086 80286 80386DX 80486DXPentium

Pentium II

Pentium III

Pentium 4

2T/18

3

Opto-electronics follow the same path (Moore’sLaw operates in telecoms, too)

Source: Analysys

32 Doublings

Yemi Lawal:

pp346003 opfibre &

Yemi Lawal:

pp346003 opfibre &

1980 1985 1990 1995 2000 20050

5000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

45 000

1975

Mbit/s

Gigabit Ethernet installed base growth

0

10

20

30

40

50

60

1998 1999 2000 2001 2002 2003E 2004E

GBE Ports (Installed)

Mill

ions

Source: IDC & Silicon Image

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The cost-performance of magnetic storage doublesroughly every 18months…

110

1001,000

10,000100,000

1,000,00010,000,000

100,000,0001,000,000,000

10,000,000,000

100,000,000,0001,000,000,000,000

1940 1950 1960 1970 1980 1990 2000 2010 2020 2030

Source: Silicon Image

26 Doublings

Magnetic disk costs (3.5” platters)

020406080100120140

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

$/GB

Source: IDC & Silicon Image

5

Cooper’s law for wireless

1

100

10,000

1,000,000

100,000,000

10,000,000,000

1,000,000,000,000

100,000,000,000,000

1895 1905 1915 1925 1935 1945 1955 1965 1975 1985 1995 2005

Cooper’s Law, (after ArrayComm Chairman, Martin Cooper), states that thenumber of conversations (voice and data) conducted over a given area, in all of theuseful radio spectrum, has doubled every two and a half years for the last 105 years,ever since Marconi discovered radio in 1895

43 Doublings

Source: ArrayComm

The structure of the economy is changing

Structural demand forcommunications and

IT

Cost of basictechnologies

Cost to users Short termdemand

Source: Analysys

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We are drowning in data….

Where is the life we have lost in living?Where is the wisdom we have lost in knowledge?Where is the knowledge we have lost in information?

T S Eliot, Choruses from ‘The Rock’, 1934

And a codicil for the 21st century…Where is the information we have lost in data?

The World produces more than 2 Exabytes (2 Billion Gigabytes)of unique information per year, more than 250 Megabytes forevery man, woman and child on earth…

Dramatic growth of broadband connections in UK

There were 8.096M broadband connections in the UK at the start ofJune 2005. Connections are still being added at more than 60,000per month

Source: UK Ofcom Communications market update Aug 2005

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Broadband impact on e-business processes

ADOPT ADAPT ABSORB

Speed up processes• Fast always-on access

for e-mail and web

• Improvedcommunications

• Improved productivity

• Improved staffsatisfaction

• Reduced costs

Adapt processes• More efficient

procurement

• More flexible working

• More e-Learning

• Adapt sales & mktg.

• Exploit VoIP

New processes• Address new

markets

• New businessmodels

• Outsource non-corefunctions

• Reduce office space

Time

Ben

efit

Source:

UK BroadbandStakeholder Forum

What quantifiable benefits are we seeing from business use of broadband access?

84.3% of respondents cite productivity improvements from broadband access.64% of respondents see a direct link between broadband and increased profits.

84.3

61.5

33.517.5

7.1 3.1 1.80

102030405060708090

100

Prod

uctiv

ityim

prov

emen

t

Cost

sav

ings

Impr

oved

cust

omer

satis

f'n

Reve

nue

incr

ease

s

Oth

er

No b

enef

its

Don'

t kno

w

% R

espo

nden

ts

Source: UK/IoD Policy Unit survey on broadband access Oct 2004

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Better and faster R&D. Better information fordecisions

Can now do jobs we would nothave contemplated four years

ago.

Couldn’t do business without it.

Improved communications with/foroutworkers

Quick access to worldwide web withhuge increase in use at low fixed

monthly cost.

Many respondents believe that broadband access brings very significant business benefits

Transforms way of working.

Speed and ability to workanywhere in the World

Source: UK/IoD Policy Unit survey on broadband access Oct 2004

What measures do you take to protect your home (or home office) PC against viruses and other security threats?

There are still significant vulnerabilities with 10% of respondents notusing a firewall and 23% not regularly installing security updates…

89.896.3

76.6

0.30

10

20

30

40

50

60

70

80

90

100

Firewall installed Virus checkersoftware

Suppliers'security updates

regularlyinstalled

None

% R

espo

nden

ts

Source: UK/IoD Policy Unit survey on broadband access Oct 2004

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HG Wells’ prophetic vision of the future,The Shape of Things to Come, 1933

“It is remarkable to note how long mankind was ableto carry on without any knowledge organisationwhatever. … Nor was there any conception of theneed of a permanent system of ordered knowledge,continually revised, until the 20th century wasnearing its end. … [To those of an earlier age] ourFundamental Knowledge System … with its specialstations everywhere … would have seemedincredibly vast.”

E-Business benchmark winners 2004

Source: UK DTI Business in the Information Age:International Benchmarking Study 2004 Page 105www2.bah.com/dti2004

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Year on year sophistication index change

Source: UK DTI Business in the Information Age: International Benchmarking Study 2004 Page 106www2.bah.com/dti2004

UK ICT sophistication index

Source: UK DTI Business in the Information Age: International Benchmarking Study 2004 Page 17www2.bah.com/dti2004

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Some final thoughts….

E-business has not gone away! The excess of gloom on the‘downside’ was just as wrong as the earlier excess of ‘hype’.

Normal ‘Darwinian’ processes have removed from the marketthose who had wacky business plans and little common sense…

E-business is now being integrated into ‘traditional’ business,bringing major cost savings, service enhancements and newbusiness opportunities. Secure interoperability is an essentialelement of these savings and improvements…

Affordable broadband access levels the playing field betweenlarge and small business but, combined with the fallibility ofsmall office & home users, raises significant security exposures.

Remember that, in e-business, people and processes are muchmore of a challenge than technology…

Questions & Answers

Slides can be downloaded from:

www.profjimnorton.com/btoraclebrm.pdf