InformationWeek

March 26, 2001

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Developing Nations Schooled In Quality, Reliability, Speed

By Mary E. Thyfault (mthyfaul@cmp.com)

More on digital divide strategies:

sidebar: Developing Nations Schooled In Quality, Reliability, Speed

E-Learning Crossfire (2/26/01)

Advice To The President-Elect (1/8/01)

n the hilly city of Chongqing, in the southwestern province of Sichuan, China, much of the telephone cable is aboveground on crumbling concrete and rusting metal posts. "This city has a very poor infrastructure," says John Larson, Ford Motor Co.'s director of IT for Asia Pacific and South Africa. "Nobody here can guarantee a high level of reliable data communications."

But reliability is exactly what Ford needs. It's investing $80 million in a venture with Chongqing Changan Automobile Co. to build a manufacturing plant in the hopes of capturing one of China's fastest-growing markets--for cars priced at less than $15,000.

Before it could build cars, Ford spent almost a year building a relationship with the local telephone company and educating the Chinese on Western concepts of quality, reliability, and speed. Case in point: Rather than zip files over fiber, the Chinese are used to spending a month or more manually exchanging hard copies of engineering drawings. "We had to move them to thinking [in terms of] minutes for the electronic version," Larson says.

Once the Chinese understood Ford's needs for fiber, Ford had to teach them about fiber optics. "It's a trade-off. We give training and access to new technology in exchange for the infrastructure," Larson says. The high-speed line should be operational in six months, just in time for the plant's 2003 opening.

With global deregulation of telecommunications taking hold, Western CIOs say they can go almost anywhere their business takes them, from India to China to South America, and even to Africa.

"There isn't one place where we do business that we couldn't take our network," says Frank Monteleone, VP of infrastructure and operations for Baxter Healthcare, in Deerfield, Ill. Baxter is deploying a global frame relay IP network to give its 45,000 employees in 50 countries consistent access to human resources and product information, and next year, companywide training.

Finding the necessary technology in developing nations isn't easy. As much as 80% of the world's population has never made a phone call, says the World Resources Institute, a nonprofit group that studies global economic development and environmental issues.

Worldwide, high-tech infrastructure is still patchy. The governments of Malaysia, South Korea, and Taiwan have invested millions of dollars in their telecom and electrical infrastructures. But in areas such as Indonesia, Laos, Vietnam, and Africa, there's virtually no Internet penetration.

Infrastructure is also spotty in South America. "The availability of fiber-optic cables outside the 10 main metropolitan areas is zero," says Jairo Avritchir, IT director for Dell Computadores do Brazil. Dell had to wait three months to get a fiber-optic cable to Porto Alegre, the southern state of Rio Grande do Sul, where Dell's plant is located.

While prices for telecom services are coming down rapidly in many markets--they've dropped 300% in China--they're still high. In China, the costs of lines can still be as much as $10,000 per month for a 2-Mbps leased line. Until last year, National Semiconductor Corp. used a dial-up line in Brazil because a 56-Kbps frame relay connection would have cost "tens of thousands of dollars," says Mike Glynn, IT director for business applications for the electronics manufacturer. At the end of last year, National Semiconductor was able to install a 384-Kbps connection to the Internet in San Pablo. But in some areas of Brazil, the cost of an international line is 800% higher than in the United States.

The cost of IT talent in developing nations is also changing. Country by country, as the IT talent pool improves, the cost increases. DuPont & Co. pays IT staffers in China $60,000 to $70,000, compared with $4,000 or $5,000 a few years ago. "The resource shortage is always there and the demand is always much higher than supply," says Phuong Tram, CIO and director of E-business for crop protection, health, and nutrition at DuPont. "It's a vicious circle." For now, Brazil is a good place to find IT talent. DuPont has hired local staff to do SAP and XML application development "at a very effective rate," Tram says.

But training can only go so far. "We still train every single one of our people to do everything manually and we will for a long time to come," says Oliver Deschry, chief technology officer of DHL International Ltd., a shipping company that delivers in 227 countries via bicycle, boat, or elephant. "If the technology isn't there, we can't have our business stop."

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