The Crisis and I.T/I.S in the Greek Industry

Posted by on Jan 25, 2013 in Articles, Slider | 2 comments

The Crisis and I.T/I.S in the Greek Industry

 In the year 2008 the Greek industry was affected by the world economic crisis. It was clear that many things had changed and from that point and on nothing was ever going to be the same in terms of how business would be conducted. The crisis had an impact not only on the society and industry of Greece but also tilted the foundations of the Greek economy. One of them is technology. Particularly, the crisis has changed the way that industries perceive uses and invest in Information Technology.

 The crisis has caused instability in the society and in politics due to the austerity measures and increasing unemployment. The Greek society in the majority doesn’t have confidence in the government and its actions. All entrepreneurs share the same uncertainty about the future of the Greek economy resulting in every investment plan having a greater risk than usual, without increased profit. As a result companies are afraid to invest or to dare expand because they are pessimist of the future of the economy and the country.

  From the Greek Economy three sectors stand out from the rest. Their behavior and reactions both are interesting and important at same time because it shows an overview of the alignment of strategic planning and I.T in the Greek industries.                                                                        The Greek business world is managed by two groups. The traditional and modern way of thinking with each having taken different actions regarding the crisis and uses Information Technology in a different way.    

According to the information mentioned above, I chose to further elaborate on how the I.T. investment and infrastructure has been affected by the crisis. Thus, the questions that are going to be developed and answered are:

a)      How has the crisis affected the I.T investment in the Greek industry?

  • Positive Effects
  • Negative Effects

b)      What are companies planning to do in terms of I.T. /I.S. infrastructure to become more competitive?

 

How the crisis has affected the I.T investment in the Greek industry

  The majority of the companies had completed their investment in I.T during 2005. All the major investments had already taken place well before the crisis started.  The investment was about buying new computers, servers, E.R.P and creating a web site. The average Greek company has needs of about 5-10 or from 20 to 50 computers. 2-5 servers of various types (ex. ftp, e-mail and web server) and an E.R.P (Zaglis,2012).

    In the Greek industry there are two schools of thought. The first is the traditional way to manage a corporation and they way that perceive I.T. Meaning that I.T is another expense and obligatory in order to automate some bureaucratic procedures. The second group is consisted by younger people that perceive I.T as a tool for growth and corporate development.

Negative Effects

   Companies that are managed by traditional decision makers believe that don’t have a need to invest in further development of software or hardware.    In other words entrepreneurial action has stopped any future plan for projects or development of the corporation because is unadvisable due to the crisis. Even investments that are carried out and involve I.T in order to avoid costs, efforts are made to keep the expenses as low as possible.  An example given by Spyros Papaefthimiou (Papaefthimiou,2012) is that if any new investment requires new hardware despite the needs, new equipment is not going to be purchased, instead old computers, servers or systems will be used to cover any needs without taking in mind the result.

The data mentioned above can be translated in numbers.  The overall result of purchase (hardware, software) in the fiscal years of 2011 and 2012 it has been reduced in comparison with other years such as 2010. In more detail as mentioned in sepe.gr (s.e.p.e, 2012) in the quarter of 2012 there was a 26% decrease and in the second quarter a 12.9% decrease in hardware purchase. Also there was an 8.3% decrease in software purchase for professional use. 

  The phenomenon described above takes place because of the way that I.T is perceived by many. That cannot offer any business development but it is only use is to save costs.  For any investment on I.T the investor has to get convinced that he is going to take his/her money back in maximum 9 months (Zaglis, 2012).  Also Mr. Spyros Papaefthimiou described to me the point of view of some companies regard investing in I.T, “The purchase of new hardware or software which requires training is perceived like a nightmare from the companies because requires more time and money “. (Papaefthymiou, 2012)

      In other words the traditional managerial point of view is expressed. That is the lack of trust in the Greek government and uncertainty for the future of the Greek economy kills any future investment in Information Technology. In other words it’s clear that traditional decision makers are afraid for the future and are hesitant in investing even small amounts of money for any project.

  I have chosen to further analyze three sectors of the Greek economy (Imports-Exports, Constructions and Wholesale-Retail).  In the three sectors of the Greek industry the problem that crisis has caused in I.T investment is identical in many ways.  Such as there is not a well defined percent from the budget dedicated to I.T investments in every fiscal year, the entrepreneur must be 100% certain that investing in I.T will get the money his/hers back in short terms.  “Money which is being allocated from the budget is to cover inelastic expenses, such as maintenance and replacement of dysfunctional equipment”. (Zaglis, 2012)

 

  Another aspect that has been affected by the crisis is the investment on hardware. Information technology investment has been negatively affected by the Crisis for the following reason. The government has increased the taxation on every product in the Greek market. For any new investments the cost is increased without offering in return higher profit or more capabilities.

    Within the 4 years of the crisis and counting many representatives of companies stopped to operate. This has lead to the situation that purchasing products or maintain them has been difficult or impossible.

 

Positive Effects

  The positive impact of the crisis is that entrepreneurs started to look for options that would be cost effective without affecting the relationship with the client any negative way. The investment in e-business had begun well before the crisis but it was a slow process. With the coming of crisis the public turned on-line to satisfy its needs. A research conducted by the Greek statistical authority (Yahoo, 2012) resulted in 14.0% increase in usage of internet for transactions in the first quarter of 2012 with comparison of 2010-2011.

 

 The Greek industry feels more comfortable investing on-line due to the fact that the target market is getting familiar with internet and starts to enjoy the benefits of e-shopping. As a result the trust of consumers towards the e-business services has increased providing a bridge of communication between the industry and the Greek consumer. A research from Focus Bari (pmjournal, 2012) showed that 94% of buyers were pleased with their purchase and over all experience. 

Companies have started to invest heavily on internet marketing despite the crisis. As seen from the image below advertising is slowly but gradually increasing. The target market is changing from physical to cyber.  

  The investment in e-shops has increased not only in quantity but in quality as well (Oikonomoy, 2012). A lot of time and effort is spent in the site in order to be updated and stand apart from the others (Lydia Sarantidi, 2012). Motives are given to clients in order all transactions to be electronically because companies offer quality services through e-business and at the same time feedback can be monitored and evaluated. The services offerd through the web have increased in number and in quality. As a matter of fact decision makers have a high level when it comes to quality services (Lydia Sarantidi, 2012). 

Whole Sale-Retail Sector

A major benefit in the Whole Sale- Retail sector is that all middle parties were excluded. The advantages of shorter supply chain are reduced cost and faster service of the client as stated in the official governmental document for promoting e-business. With the two variables mentioned above a company can gain competitive advantage in the difficult times of the crisis. One of the first companies to heavily invest in e-business was Plaisio (www.plaisio.gr). Plaisio through its web site offers lower prices, wider variety of products as well as further information that might interest the customer.  

Construction Sector

For many years the construction sector was one of the main pillars of growth of the Greek economy.  The benefit of the sector gained from investing in e-business was the national and international display of products. In the interview with Mr. Petros George Sarantidis (Peter George Sarantidis, 2012) informed me that foreigners and the Greek homogeneity of other countries used internet to find a house or flat in Attika. For example the company received many calls from Greeks living in Australia which were interested in flats and had found all the information on-line.

Imports-Exports Sector

The Import Export Sector through the use of e-business has been able to reach more clients abroad.  Also the communication and transactions with suppliers it is through technology which saves money to both sides.

 

What are companies planning to do in terms of IT/IS infrastructure to become more competitive?

    As mentioned above all industries are searching innovative solutions not only to withstand the financial crisis but as well as to gain competitive advantages.  The old school decision makers have started to realize that Information Technology can be something more than automation and saving costs.  In terms of direct action companies haven’t don’t much. But have started to explore unconventional ways to become more competitive.

   Various technologies exist and can be used in many different ways. One of the most popular is cloud computing. A research conducted by REGUS (S.E.P.E,2012) among others showed that 45% of the executives questioned are considering cloud technology as a solution that can reduce costs and at the same time to provide the basis for growth.  The specific technology is relatively new in Greece and is possible to be used as a platform for investing in to the future and without increasing costs. As mentioned by M.K. Manou (S.E.P.E,2012)    “The number of companies that are going to take advantage of technologies that provide adaptability and solutions in various levels is going to increase the next year.”

  Another solution is virtualization. According to Symantec (s.ep.e, 2012) are thinking 75% to invest on server virtualization. The definition of server virtualization as given from the site Techserver: “Server virtualization is the masking of server resources, including the number and identity of individual physical servers, processors, and operating systems, from server users. The server administrator uses a software application to divide one physical server into multiple isolated virtual environments. (Techserver, 2009) “Server virtualization technology provides a number of competitive advantages:

 

a) Faster Development:  The environment of Virtualization is able to provide a high volatility for developers and users. More than one virtual system can easily be added according to the needs or specifications of the company. The only variable that is to be considered is if hardware is able to support it.

 In case that few changes have to take place developers and testers can work in the same virtual environment that a client is using. As a result deployment time is reduced considerably. Increasing the quality of services provided. Through virtualization a company can beat any rival competition by just creating another iconic server in the same hardware.

b) Better resource utilization: A virtualized environment will have less physical hardware. Even the allocated hardware is better utilized to run at their maximum efficiency. These will assist the organization to gain higher return on investments (ROI). Higher ROI will attract more investors for the organization.

   Another solution is Customer Relationship Management. According to Information of Technology and Communication (T.Π.Κ., 2012) Greek companies have started to invest more in C.R.M. technologies. The definition of C.R.M is (Management Study Guide, 2012) “Customer Relationship Management is an upright concept or strategy to solidify relations with customers and at the same time reducing cost and enhancing productivity and profitability in business. An ideal CRM system is a centralized collection all data sources under an organization and provides an atomistic real time vision of customer information”

  Some advantages of such a system are: Better customer service. Due to centralization of information the company can expect new needs of its customers and work to meet them before requested. Moreover, as mentioned in the official site of Microsoft Corporation “Access to a centralized, customizable view of sales and support activity along with complete customer history either online or offline and from any location using a Web browser” (Microsoft). In addition, another benefit is as mentioned by Microsoft Corp.  “Shorter sales cycles and improved close rates with tools that enable lead and opportunity management, workflow rules customization for automated sales processes, quote creation and order management” (Microsoft).

  According to Deloitte (s.ep.e, 2012) companies as a reaction have started to adopt a new model called remote working. Through this technique companies aim to invest the money saved from renting offices. The technology that allowed this technique to blossom in the Greek industry is smart phones and laptops. The capabilities that offer are such that communication within the company is increased and can combine the advantages of cloud computing. For example Digital Drop Box (digitaldropbox.com) offers cloud services; any employee can upload any file. Then the file can be accesses by other employees that have the application on their smart phone and have the appropriate credentials.

 The investment in mobile technology has allowed companies to expand in the social media world as well. Through the social media companies have started to advertise for free, form groups and forums for customers to exchange ideas and at the same time to get direct feedback (Lydia Sarantidis, 2012). Also e-business has changed marketing as well. Marketers create mini games or competitions to draw attention in Facebook for example.

Whole Sale-Retail

The sector already has started to use smart devises and laptops for better communication and services. Many companies have already started to get familiar with the technologies described above. In my opinion it’s going to take time about 2-3 years in order to feel confident and start to use virtualization and cloud.

Imports Exports

The specific sector in general terms uses technology more than the other two. The currents needs of the market don’t enhance the adaption of new technologies. The entrepreneurs are covered with the already infrastructure.

Construction Sector

The sector in comparison of the three is the most affected by the crisis. Even before the crisis construction companies didn’t invest in Information Technology and/or Information Systems. No planning or actions are taken to invest in I.T/IS.

 

The crisis has covered the Greek society since 2008. The traditional and modern ways of thinking have been challenge to overcome the crisis. As described above each group has already taken defensive measures to survive the crisis. The first group has implemented budget cuts and perceives I.T as an expense. The second group uses or plans to use innovative technological solutions which offer direct quality services to customers and reduces expenses.  

  The technologies that are mostly appealing to the Greek Industry are Cloud computing, virtualization and C.R.M. The reasons are that through implementation almost nothing has to change in terms of management and the know how to conduct business. Also the solutions offered are complete meaning that provides benefits to clients, suppliers and the company itself.  Moreover, the results are almost instant and direct to any third party and developers.  The features described above are what an average Greek decision maker seeks in I.T/I.S to help in the strategic planning.

   The crisis serves as a transition to change the perception of I.T in the Greek industry and the change of the Greek market.  The increase in sales of laptops and smart phones is evidence that the Greek industry and the Greek consumer is in a transition period. At the same time consumers with their increased use of the internet as well as mobile platforms and the industry that uses new technologies to gain competitive advantages are leading Greece in the digitalized mobile era.

  My personal point of view is that the gains of winning a bet of insisting in the modernization of the economy and way of thinking could be a huge benefit for Greece and provide a way out of the financial crisis. To support my claims the current Minister of Economics Mr. Stournaras mentioned that a successful introduction to cloud computing will allow private and public organizations to have positive growth rates and contribute in the overall competitiveness of the Greek economy (s.e.p.e., 2012). A research conducted by I.O.B.E resulted that if Cloud is implemented within the next 5 years then the benefits for the Greek economy will be 21 billion Euros and create 30.000 jobs (s.e.p.e,2012).

 The three companies that I used to analyze/focus are not random.  These specific industrial sectors are the pillars of the Greek economy. The examination of the three companies shows an overall intention of the future in the average Greek business. All sectors mentioned above traditionally have internal and external activities which mean that have to compete in international level and have to comply with higher standards and use any available tools in order to gain a number of advantages.

 Information technology and Information Systems always played a supportive role in the Greek industry. Although as a department is essential and a must in the modern days, it was never used by the Greek industry for anything more than automation.  Many companies have started to invest or consider investing in new technologies that will help develop any future business plans. From the begging of the financial crisis a movement in Information technology especially in the mobile technology was spotted, once the C.E.O’s realized that it could provide multiple solutions and gain a competitive advantage.

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Sarantidis Michail
afceayouth.com representative