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Broadband Internet: As a driving factor of the business process outsourcing (BPO) revolution

15 Comments · Business outsourcing

In fall 2003, the Wall Street Journal published its annual report on telecommunications. In the front page article, the journal writer stated, “After years of hype and false starts we can finally declare it: The Age of Broadband is here.”

The article reports that by the end of 2003, 21 percent of all U.S. households will have broadband Internet and about 50 percent by 2008. It is also expected that more than 7 million businesses will have broadband connectivity in the United States by the end of 2003.

Broadband refers to the growing pipeline capacity of the Internet, allowing larger chunks of information to flow with fewer congestion issues.

Broadband is the term used to refer to Internet connectivity speeds that are in the range of 2 megabits/second (2 million bits/second).

Leading semiconductor maker Intel has predicted that by 2010 there will be 1.5 billion computers with broadband connections.

High-speed Internet access is becoming commonplace in regions where dial-up was once the only option. With broadband, workers in different countries can share data, while consumers can surf the Web for the latest bargains.

Growth in broadband connectivity is largest in regions where deployment is still scattered – Latin America (up 63 percent to 619,000), South and Southeast Asia (up 124 percent to 1.12 million), and the Middle East and Africa (up 123 percent to 107,000).

The Asia-Pacific region is the runaway regional leader, with nearly 11 million digital subscriber line (DSl0 users, followed by North America with 6.5 million and Western Europe with 6.3 million.

Eastern Europe has the lowest level of broadband connectivity, with barely 70,000 DSL users.

In relatively mature markets, the percentage of DSL subscribers who use the service at home is much larger than in new markets and smaller economies, where businesses account for a larger percentage.

In North America 22.6 percent of users are businesses, and the figure for Western Europe is 16.5 percent.

Hong Kong tops the world in broadband connectivity with more than 66 percent of Internet users opting for the high-speed connection. Highlights broadband/DSL leaders around the world.

Broadband penetration around the world is driven by the creative and business behaviors of users.

Research from the Pew Internet & American Life Project found a correlation between specific online behaviors and demand for high-speed access.

Pew found that broadband users are extraordinarily active information gatherers, multimedia users, and content creators.

Internet users with six or more years online who engage in similar activities are most likely to switch to high-speed access.

In fact, Pew found that of those dial-up users who are contemplating broadband, 43 percent logged six or more years online, compared to 30 percent of those online for three years or less.

Greater disparities in these behaviors are seen between less experienced dial-up users and those with broadband connections.

Although Western Europe currently lags behind North America, by 2005 the European market will match North America for size.

Undeveloped telecommunications infrastructure and economic volatility continues to hamper broadband growth in Latin America.

Abundant Data Storage
Data storage has always been a critical resource for business. In the days of paper-based record keeping, data storage was primarily accomplished via file cabinets, closets, and dingy overstuffed basements.

The computerization of the workplace gradually replaced paper-based filing systems at first with punch cards and later with magnetic tapes and then disk-based storage.

As the integration of the Internet and its related technologies into business processes and functions has progressed, data storage has gone from being a problem to one of oversupply.

Firms that had envisioned growing rich by supplying online data storage on an as-needed basis have discovered that storage has become a commodity – it is nearly as limitless as the Internet.

Advances in data storage, including sophisticated data retrieval, have driven down storage costs dramatically. Rare is the individual today who walks about with a floppy disk in his or her shirt pocket.

Rather, most have learned to transfer files into a virtually limitless cyberspace storage room, where they can be retrieved whenever and wherever needed.

The elimination of the barriers to data storage has enabled new ways of thinking about what is possible in the structure and procedures of the workplace.

In times when storage was scarce, difficult decision had to be made about what data to collect, keep, and eliminate. Even more limiting, in times when storage was scarce, decisions had to be made about who had access to critical information and when.

In an era of storage overcapacity, an embarrassment of riches awaits savvy executives if they can move beyond the scarcity mindset.

Data protection and access controls must continue to play a role in a storage-rich environment, but they play a different role.

In the storage-poor past, data access was controlled in part because storage limitations affected the number of copies of data that could be made.

That barrier has been lifted by digitized document storage that allows literally infinite distribution of key documents, forms, and plans.

In the past, gatekeepers, whose approval was needed to acquire and use company information, managed data access.

That barrier has been lifted by precision software-based systems that enable rapid access to very specific data sets based on prearranged approval levels.

These systems are constantly being upgraded to be more user friendly and can adapt quickly to unique work processes and systems.

One danger of shifting work to a third party is the potential loss of organizational learning.

When a process is executed internally, the organization’s employees handle the related transactions and, over time, are able to discern and adapt to specific patterns or trends. Some of these patterns concern customer or competitor behaviors.

When these transactions are no longer executed internally, there is potential for this vital learning to be lost.

With nearly infinite data storage, however, each transaction that occurs remotely can be stored for independent analysis.

As we discuss below, sophisticated analytical software can then be used to mine the transactional data to reveal customer or competitor patterns – preserving and even enhancing organizational learning.

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