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Introduction

The original Factors of business and production were Money, Materials, Machines and Men.  They still are, but with a few big changes caused by – the Services sector, the Internet of Things and the Smartphone. In this article, let’s engage in some present and future gazing, and discuss the changes in these Factors:

Money

We can already see how money has been transformed over the last few years. At the click of a button, money moves across continents. In India we have a partially convertible currency. Even so this affects Indian investors:

1. Our stock exchanges seem to be powered by FII money, rather than domestic funds (as of now). The US Fed’s quantitative easing program and its expected taper, may change both sentiment and actual flow of money.
2. FDI is a good source of long-term investments into the Indian economy. China famously attracted massive FDI over the last decade, powering an exports and manufacturing boom. FDI needs to perk up in India.
3. The banking collapse of 2008 in USA, and its influence on the Indian market is a grim reminder of the global effects of US money problems. 
4. Plastic (and virtual) money today is a massive change at an early phase. Within the country, transfers and payments are becoming faster, cheaper, efficient and traceable. It’s conceivable that in a few years even small change transactions will be fulfilled using Cards.
5. RBI has done a good job of bringing the country closer financially. Banks talk to each other, and services are delivered in a uniform way. This needs to improve through banking sector growth and innovation.
6. The next, and complex task is to track and bring black money into the system. To do this, the government needs to encourage and reward transparency and disclosures. Will it bite the bullet? Its to be seen.

Materials

While a lot of the materials we use are the same as decades ago, like Fuels and Commodities, there is a small but growing element of R&D driven new materials. These power advances in Space and Defense sectors, and can soon diffuse into our daily lives. One example is usage of plastics, aluminium and carbon in automobiles. Another is mixing ethanol with Petrol, a green innovation. And 3D printing. Solar power is now almost comparable in total cost to that from fossil fuels, due to improvements in fuel cell materials and manufacture.

Machines (and Computers, Applications and Mobiles)

A couple of decades ago Machine meant tools and devices used in factories. Now things have changed:

1. The Services sectors have taken off, with 60% of the Indian economy from Services. These of course extend across Agriculture, Retail, IT and BPO, Tourism, Construction, etc. So instead of the Machine, the tool of creation could now be a shop, a mobile phone or a computer.
   

   Mobile Phone (Photo credit: johnmuk)

2. As factory machines improved manufacturing productivity, today computers improve office productivity across the spectrum of firms. From courier boy to CEO, office employees benefit from emails, internet search and use of office applications to do work faster, more accurately and better retrievable.
3. The cutting edge now is the Internet of Things. This refers to using internet to monitor, maintain and control a range of Machines and devices in our daily personal life, or life at work. While computers and smartphones provide access to this world, machines like Automobiles and airplanes are rapidly becoming totally wired, whose entire data is already available real time. These are just a small step away from full internet based personal access and control.
4. Internet now permits all this data and services to be accessed remotely – it doesn’t matter if the user is in the same city or another continent. This is an opportunity for Indian businesses, not just IT/ software and BPO but across the board such as Lawyers, CAs, design firms, ad agencies, consumer electronics firms, factory services firms, etc. The question to be asked is – how can internet improve what I want most from my business. This could be service delivery, client communication, satisfaction assessment, machine monitoring and maintenance, logistics tracking, etc. And there could be a superior, cheaper way …..
5. ERP systems that captured all the business activities and reported and reconciled transactions were a black box to the outside world. They now need to open up. Its safer now. Data storage can be in remote data centers. Better suppliers and vendors are a few clicks away. Collaboration is easier. Customers want to connect with your systems and receive accurate routine information. Service providers can handle your accounting, payroll, HR and IT systems from afar, using the best applications and resources, helping you focus on your core competencies.
6. The Smartphone is now at the center of innovation. Computer sales have flattened, while smartphones seem to be just taking off. This digital extension of a person is always on, as adaptable as a computer, and new apps and small hardware tweaks are going to push the limits of its utility for years to come. The basic phone, TV, computer, camera and internet are already integrated. Whats Next is that this device will power and control the (personal) internet of things. And the business Internet of Things will not be far behind.

Finally Men

Men (and women) as the creators and users of these new tools of business need to, more than ever before, embrace change. The changes are in new ways of doing things, in new locations where things can be done and in new tools to be used.

• Creators in the IT industry need to build apps and make solutions. Users need to try out these new ways and new sites and adopt the useful.

• The Social Networking phenomenon has in recent years introduced us to Facebook, LinkedIn and Twitter, allowing us to find and communicate with anyone on the globe. Blogging and Support sites allow us to solve our problems using experiences from others to help us along. Google search helps find answers from content accessible online. The Internet of Things is Social Networking extended to devices and things around us. The difference is that on Social networking you laugh, cry, inform and update. With the IoT, you monitor, control, and order the things/ devices. For business, this is very powerful.
• The basis of this is of course education. More specifically, computer education. The young seem to embrace this effortlessly. Recent experiences showed that young children when exposed to computers for the first time often in a few months learn to use the device quite well for a range of tasks. Without even a teacher to show them how. The older folks will learn more slowly, but this needs to be done.
• Education is one sector that can be transformed using the computer. A single teacher instead of teaching 30 students in a physical class can teach 200 in a live video streaming session. And 20,000 by creating a packaged video/software module delivered on demand over internet maybe with limited supervisory assistance. The possibilities are limitless, especially given India’s current education and literacy challenges, and the visible demographics.

Conclusion:

The internet boom of 1999 came too fast, promised too much, and burst. Today 14 years later, we are seeing some real benefits. As the Factors of Production have changed, so have the problems we face. But think of the potential windfalls from new solutions. There is no option to innovation.  

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Disclaimer:

These reports and documents have been prepared by JainMatrix Investments Ltd. They are not to be copied, reused or made available to others without prior permission of JainMatrix Investments. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com

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