Information technology: buy or sell it, but above all, use it
15 Jan 2000
What can be made of the recent boom in Internet-related stocks and shares? Well, at the moment, very little. Led by Freeserve, many of the recently floated ISP companies are now trading on the stock market at less than their start-up price. After the hype comes the reality - the reality of fledging companies operating in an increasingly competitive market where price/earnings ratios tend to carry a little more weight than numbers of `hits' on web sites.
Unfortunately, the reality is also that investors will now tread rather more warily around technology-based companies in general. This is not a new phenomenon, as any start-up biotechnology company can confirm. Despite the endemic short-termism of our financial institutions, they nevertheless prefer their investments to be based on reliable, well-managed companies with a competitive edge in their own marketplace.
The paradox here, however, is that reliable, well-managed companies tend to gain that competitive edge by themselves investing in the latest technology. Nowhere is this more so than in the mainstream process industries like chemicals or oil and gas. These have long been at the forefront of process technology advances, but they are now also starting to reap the benefits of their investments in information technology.
As featured in our special Process IT section this month (starting on p24), the process industries now have the support of specialist IT vendors who have developed software and systems specifically to meet the demands of continuous and batch processing companies. Just as many chemical companies have re-engineered themselves, either through acquisitions, mergers or disposals, so too have process engineering companies like Aspen Technology, and process control companies such as Fisher-Rosemount, Honeywell and Foxboro.
What all these companies have realised is that their traditional customer-base is changing. Their blue-chip customers no longer want to run separate engineering or production departments, or keep sales and distribution away from raw-material ordering. Integration is now the name of the game, and IT provides the rules by which to play it.
AspenTech, for example, has moved in only a few years from its process engineering design and simulation beginnings to a fully-fledged process IT company, capable of offering everything from engineering data management (see p24) to complete supply chain solutions. And all the previously monolithic distributed control system (DCS) manufacturers now reach up from the plantfloor and offer links into enterprise resource planning (ERP) systems.
According to AspenTech's v-p Brian Harkins, supply chain management depends on such links between different IT systems, be they ERP systems, DCS or other control systems, or the business systems used by a company's customers and suppliers. However, he still believes that process knowledge is crucial to business operations - and IT holds the key to disseminating that knowledge.
