A whirlwind of an IDC Directions Conference in San Jose today. The focus was on globalization and technology. An “Agenda for a Shrinking Globe: Seizing Opportunities in a Connected World”. A heady mix of the level of detail to expected from professional analysts and sweeping generalizations that time alone will prove the value of. Here’s some of what I heard.

IT Market Outlook in Four Emerging Markets: Brazil, Russia, India and China

The famous “BRIC” countries hold the promise of the highest growth rates by many measures (IT spend, population under 30, percent broadband penetration etc etc). Some fun facts:

• India had 2.5M college graduates a year, of which 184,000 are engineering graduates (although there’s considerable debate about how you count engineering graduates — like other minorities their numbers seem often misrepresented). China has 2.4M graduates and 16M enrolled in college.
• In a few short years India is expected to become the world’s 3rd largest economy, behind China and the USA.
• India’s population is 1.08B – growing at 15M annually (adding just under two New York Cities a year).
• 73% of Russia’s population is urban.
• 30% of India’s population has a mobile phone.

John Gantz: IT & Communications: Disruptions Ahead

Gantz was the first presenter of the day to mention Friedman’s book The World is Flat. I heard seven people quote it in total (five presenters and two in the buffet line for lunch). He revealed the ‘parallel universe’ of the MySpace generation where a band like Hawthorne Heights can get 350,000 “friends” and succeed as a rock band with no MSM exposure.

Following Friedman’s discussion of Brickwork he highlighted A. J. Jacobs’ Outsourced Life – a real-world experiment at outsourcing executive assistant tasks to a Dooneysburesque lady in Bangalore name Honey K. Balani (really!) at the bargain price of $1,000 month for a standard 40 hour week. Of course, she and Mr. Jacobs never meet face-to-face — but how many executives really need to see their assistant’s smiling face each day? And Honey is so, obliging.

Gantz puts all this in the context of the exploitation of new technologies unleashed in the last 1990’s now coming to fruition. The convergence of 1.3B Internet and 3.2B phone users will give rise to a new range of unforeseen opportunities for customer interaction. From 24B web-based transactions in 2005 he predicts a 50-fold increase to 800B by 2015 – excluding podcasts, streaming video and all the really good stuff!

Does, he asks, your company know how to use this new ‘internetwork’ to the fullest extent possible? I would suggest that if you are still having church-lady style debates about the etiquette of your company “blogging policy”, perhaps not.

We were treated to an explanation of the famous observation that the Chinese characters for “crisis” and “opportunity” are the same. Well, not quite. But wēijī does have a similar look n’ feel to untutored eyes.

Frank Gens: Flattening the world of Enterprise IT

Fascinating observations on the different agendas of CEO’s and CIO’s. The former want to go fast with IT implementations. The latter advise caution. As enterprise IT vendors (hardware and software) champion the move from arthritic to dynamic IT (Sun’s N1; IBM’s On Demand Computing; HP’s Adaptive Enterprise) the reality is less than 10% of all customers have a project in place. There’s a serious chance for disruption.

The Small and Medium Sized (SMB) market is the likely origin of this disruption. Just as Chris Anderson of WIRED observed The Long Tail of new media replacing blockbuster hits of yesteryear with new niche’s for all, so this opportunity might occur with IT solutions distributed via the web to millions of SMB’s vs. the top, say, 2,000 accounts globally. And guess what? SMB’s account for 60% of GDP in the USA, 72% of GDP in China and fully 80% of GDP in Latin America. These under-served markets are ripe for driving demand down this “long tail” and making multiple small engagements pay totals previously enjoyed by fewer large value sales. Different supply chains and routes to market are, of course, required to find profits.

Bob Welch: Challenges and Opportunities of Globalization for Services Companies

The afternoon sessions brought as many globalization/flattening discussions as the morning.

Welch raised the point that it’s hard to do global scale and be consistent. Channel partners are key to success. Again, multiple routes to market must be coordinated.

Innovation must be measured by client outcomes, not by posting stats on how many patents a year your company logs.

Carl Olofson: Building the Star Trek Computer – Ask a Question, Get One Correct Answer

Marrying the traditionally separate fields of transaction processing and content requires unstructured data be schematized and semanticized. The pay-off is a Captain Kirk level of ease of use, when you ask “Computer…” and you get one answer.

David Tapper: Building an Optimal Service Delivery Model to Ensure Customer Satisfaction in a “Flat” World

The Web 2.0/3.0 applications such as salesforce.com, Google, eBay and others allow virtual teams to become productive in hours instead of days or months. The route from Onshore to Offshore leads just as surely to Virtual. The building blocks you use to plug solutions into and out of the enterprise are key. People want to consume functions, not hardware. As with the long tail, companies who win will mine gold dust, not gold bricks.

Robert Reich: China, India and the Future of Everything

The grand finale!

Reich, former Clinton Secretary of Labor, held the audience in the palm of his hand as he delivered a stunning keynote. Well rehearsed, poised, with commanding presence, sans PowerPoint, sans notes:

He reviewed three storm clouds on the horizon for the American economy:

1. Oil prices climbing due to demand from India and China exceeding supply.
2. America living beyond its means with a $400B deficit and the dollar sinking into the setting sun as foreign investors look for better returns elsewhere.
3. Consumers finally running out of steam as their negative savings rate and precarious home equity loans get called in.

Against this, he proposed some long-term opportunities:

1. Globalization:
” Rarely in public discourse has a word gone so directly from obscurity to meaningless without any intervening period of coherence as the term ‘globalization’ – most people don’t know what they mean when they talk about it!”

Criticizing the ‘cartoon version’ which sees country A selling to country B and visa versa he highlighted how “Everything is coming from everywhere”, and standards of living are not a result of national companies owning the whole process, but of adding value to the global distribution of goods.

Jobs are outsourced to India at the same time that foreign companies invest in operations in the USA. What parts of your “American auto” are made in the US of A?

2. Technological change:
Long gone are the days where economies of scale allowed oligopolistic companies to dominate in terms of size alone. Today companies reap profits and maintain barriers to entry by out-innovating and capturing this in their brand and their people. “Brand is discounted present value of future innovation.”

China is actually losing manufacturing jobs as it grows. Old, inefficient, state-run companies are being replaced with innovative manufacturing organizations in Eastern China. To maintain the flow of people from rural areas to the cities, and minimize social unrest, the Chinese have no choice but to keep their currency low and encourage manufacturing to grow.

3. Demographics:
As the Baby Boomer’s lurch penniless toward retirement they face a minimal crisis in Social Security but a huge crisis in Medicare. The smaller talent pool that the West faces will force companies to do a better job of recruiting and retaining staff. Employees will gravitate to companies that offer work which is exciting, based on new technology and linked to something bigger than themselves. Companies must treat people as a whole person and deliver a reasonable work-life balance.

Reich’s own decision to step down from politics was driven by the desire to spend time with his teenage children – he later turned down lucrative consulting jobs to see his son win races.