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Journal: Productivity and IT 3

Journal by nelsonal
Quick quiz, who is most responsible for the productivity gains of the 1990s Gordon Moore (Intel), Bill Gates (MS), Sam Walton (Walmart), or Jack Walsh (GE)?

The answer is Sam Walton, a recent study found that Wal-Mart accounted for half the productivity improvements over the last two decades. Most people don't think about something so decidedly low tech as retail being a big productivity gainer (and they didn't even install a ton of self serve checkouts to get it).

The odd thing is that while I would guess that Wal-Mart would attribute their gains in no small part to IT products, they don't spend a whole lot on them. Total equipment spending was ~$3 billion last year (including all equipment not just IT) which is pretty tiny compared to revenue ($250 billion), income ($9 billion), or any other measure of company size. Compare this to your company or even other retailers. Another example could be Dell. Their total capital spending was $300 million, that includes all of factories, R&D centers, cars, and servers. Obviously both companies use leases to reduce that number but even doubling those and you aren't coming anywhere near the $400 billion spent on IT in the US in 2003 (according to the BEA).

I guess my question is how come Walmart and dell can spend less than 1% of total technology spending but pull more than half of the productivity gains. I think most technology is sold as a productivity enhancement. That means that the remaining 99% of spending is being wasted on the other half of the productivity gains.

I have several questions as a result of this information:

What makes Dell & WalMart so much better at applying technology?
Is this the real answer to the recent article and book about Does IT really matter? (Perhaps it is not IT that matters so much but the abilty to apply IT that will continue to matter.)
Why do other managers continue to spend so heavily on IT?
After spending it what are the others missing that causes such small improvements?

Of course this is a great time to share your stories about PHBs who wasted a year's worth of budget on a server that remains underutilized and ineffective.
I have my own opinions about the answers (you saw the hints of it in my response to the second question, but I'd love to see what others thought and perhaps we can collectively improve our organizations' ability to improve their own IT spending productivity/cost ratio.
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Journal: 401 (k) plans and Company Stock 5

Journal by nelsonal
I just ran across this article today. So I thought I'd bring it up to anyone who might come across this journal. It is terribly unwise to keep an outsized portion of your savings in company stock, for two reasons. First you are not nearly diversified well enough. As an example, if you had two returns over 10 years, one gets 5%/year and the other an average of 7% with 25% std deviation (pretty low compared to big technology stock st deviations (MS had 54% stdev over the last 14 years)). I used 43%, -15%, 35%, -17%, -10%, 25%, 20% -15% -20% and 25%. Which do you think results in the most money after 10 years?
The 5% return. The negative returns throw you further from the geometric mean [nth root of the product of(1+rn)] your geometric return is only 4.5% for the second set of returns. That and the application of correllation to returns is the basis of modern portfolio theory.
The second reason is that if something bad happens to the company you lose your job and your nest egg if it is entirely in company stock.
So, ASAP you should go log into your 401k administrator's [plan sponsors] page (or call if they are out of date) and find out what you are invested in, and speak with a professional (or do some research yourself) on how to allocate your assets to assure you a more prosperous retirement.
That is all, enjoy your weekend, but please go look at your 401k on monday.
User Journal

Journal: Linux servers 2

Journal by nelsonal
If you haven't seen them yet, you might want to check out the Linux server numbers that IDC released late last week. A few things I found notable: Linux servers went up in price (quartly unit growth was well below revenue growth) compare this to the other types of systems which all declined. Also Linux servers now account for almost 10% of server revenues, so far it looks like it hasn't really taken share from Windows servers rather sapped the growth that Windows systems would have taken from Unix. My queries are do you think the price increases came from the high end IBM machines that have Linux installed? Second, the next 10% (likely to come over the next two or three years) do you think it will come more from Unix systems or Windows systems? Anyone else have some observations from about the server market to enighten us?
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Journal: To get things rolling 2

Journal by nelsonal
Here's the first topic. Sorry if this one is a bit technical, I'm thinking that in the future they will be more like the Oracle Peoplesoft deal, but this has been on my mind for some time. Feel free to suggest other ideas in the comments.
I've been thinking about exchange rates a ton lately. Especially the Euro. Here's my deep, dark fear: the Euro replaces the US dollar as a primary financial value store. I don't think this will happen soon, but over the next decade or two. Here are the concerns. Huge trade deficit, with no real expectation that it will decline, medicare scaryness, and an administration (unlikely to change no matter who wins the election) that is happy with deficit spending to keep the economy growing, and increasingly investory friendly European capital markets. If I'm a rich fellow outside of both the US and Europe, I'd certainly prefer to have my investments there than here. I realize that Asian central banks have a vested interest in this game, but how long can they ignore generally much better currency adjusted returns?
If you have any thoughts (or even flames) please feel free to reply.
User Journal

Journal: First Post

Journal by nelsonal
First off, if you've never seen Weebl & Bob you might want to check them out. They are a bit offbeat, but anyone who likes Mr. Scruff can't be all bad.
After that is out of the way, if you are reading this it is likely that you have read my posts and know that I'm an investment analyst. I keep returning to the conclusion that /., has a healthy group of other business minded folks. I've tried to nab as friends those who show an investor mindset, along a bunch of with other interesting viewpoints. Anyway, it seems like there have been more than a few market related articles over the past few weeks, and I was wondering if others would be intersted in joining in ad hoc market focused discusion with me. So if you are game keep reading my journal, I'll post on the market news with primarily tech companies and we can engage in discussion. I have had a chance to read everything from the sell side and found that the smart folks here are much faster and better than anyone on the street.
For anyone intimdated my econ or financial topics, feel free to ask questions. I will try to help in any way I can. I probably can't give any speciific advice about S&P companies but anything else is largely fair game.
On to the serious stuff this is meant to be an educational forum, not an advice forum. I will do my best to keep the discusion off invstment ideas, toward more general ideas, but if you invest in something mentioned here without any further due dillegence, YOU ARE A FOOL, and you are not going to sue me or other posters.
Now that such formalities are out of the way, break out the champange and caviar, hopefully this wil become the new capitalist's forum.

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