PortCalls

Some regular readers of this column contacted me last week to relay their appreciation for the last two articles I wrote about the "human face" of IT in the Philippine ports industry. According to them, they somehow felt comfortable knowing the personalities behind technology initiatives that directly impact their business activities as port users.

At the same time they requested if I can write something about IT costs in a manner that will help them appreciate - if not fully understand - why IT costs in their respective organizations always seem to be getting bigger and exceeding budgeted amounts.

After giving some thought on how to write about this topic in a manner that will appeal to the layman and business practitioner, I have decided to approach this by focusing on the identification of various components of what can generally be categorized as IT costs.

Let us assume the scenario of a standard-size business enterprise intending to buy an accounting software package for its finance department.

Typical IT investment components
The typical IT investment summary checklist would normally consist of the following components:

a) hardware costs
- the host server on which the accounting software will be installed
- PC workstations that the finance people will use to connect to the host server in order to use the accounting software package
- printers to be utilized in generating accounting reports (involves either a network printer shared by all system users or individual printers permanently connected to client PC workstations

b) network infrastructure costs
- the network hub or device through which all PC workstations are physically connected in order to access the host server
- network cabling costs pertaining to the cable wiring that will connect the PC workstation and network printer to the network hub and the host server and network hub

c) software costs
- network operating system software (such as Windows NT or Windows 2000) that will manage the way client PCs and printers communicate with the host server
- application software cost which is the accounting software package itself that will reside on the host server
- client PC operating system software such as Windows XP which will reside on PC workstations
- office productivity software installed on PC workstations (Microsoft Office - Word, Excel, PowerPoint)

d) training costs
- technical training for in-house IT staff who will configure, manage and administer the network server and application software
- user training for the finance staff who will directly use the accounting software package
- specialized application software training if you want your own in-house staff to acquire the capability of making future system enhancements such as additional reports or data extraction programs

e) implementation costs
- professional services to be rendered by application software vendor in the event the software package has to be customized to fit your specific requirements (e.g., new screen designs that are not standard feature or new report format which is not part of the list of standard reports that come with the software)
- onsite presence of the vendor staff within your premises during and immediately after software installation and when your system goes "live"

f) software maintenance costs
- the amount you pay the vendor if you want coverage for software troubleshooting and problem-solving after the standard software warranty expires (this can either be software support through telephone, email or onsite response by vendor staff)
- the costs of regular software version upgrade or patches enhancement in order for you to have the most recent software version

Some helpful tips
In order to ensure that you pay only the costs that are applicable, my first advise is to require your vendor or supplier to identify all the costs you will incur based on the checklist above. Clients should never hesitate to ask all these information and require clarification on items you do not understand.

My second tip is to take time and review the purchase contract presented for your signature. Watch out for things like software maintenance provisions wherein for an annual fee you are entitled to a free software major upgrade (old version 3 to new version 4) and yet you will actually pay for implementation services to install the new version and re-configure your system.

If your IT vendor is unable or hesitant to provide the abovementioned clarification and information, my strongest advise is to stop any further business dealing with him and look for another vendor who is more willing to listen to your requirements and understand your business needs.

The author has 20 years experience in the development, project management and implementation of IT projects in Philippine ports, transport and logistics. He is presently an independent consultant for IT projects and initiatives in Philippine ports and transport industries. For comments or inquiries, email him at leo@morada.name.

Personalities who make IT happen in Philippine Ports Industry (September 15, 2003)

Today's column will again feature the human side of IT in the Philippine ports sector.

Last 01 September, I wrote about key personalities at the forefront of technology initiatives in the industry during the 1990s and where they are right now.

In this issue let me focus on personalities who play key roles in the computerization of various aspects of Philippine port operations.

Deputy Commissioner Alexander Arevalo
As Customs Deputy Commissioner for MIS & Technology Group, DepCom Arevalo faces the challenging task of overseeing the smooth transition of customs automation efforts to a new technology and policy environment.

In the aftermath of the promulgation of the Electronic Commerce Law and its implementing rules and regulations as well as the pervasive utilization of Internet-based systems for business-to-business transactions, DepCom Arevalo is expected to address head-on the opportunities and challenges in several major areas: major upgrade of BOC hardware systems (already more than five years in asset operating life), expanding ACOS system implementation in other major ports (such as the one undertaken in SBMA), and probably paving the way for eventual migration of ACOS to the new web-based version of ASYCUDA software.

All of these are in addition to keeping a close watch on the latest initiatives resulting from ongoing programs of the World Customs Organization and dynamic demands of enhancing current functionalities of ACOS.

A very important positive factor for his technology initiatives is the fact that the BOC computerization continues to receive tangible support from both private industry and international funding agencies.

Elizabeth C. Follosco
Beth, as colleagues and peers in the port industry call her, is presently the Manager of Management & Information Services Department (MISD) of the Philippine Ports Authority. She is also the Project Director for the PPA Management Information System (MIS) computerization project - a technology initiative intended to automate PPA's mission-critical business activities nationwide in all the ports that it manages.

A major challenge posed by the PPA MIS project, which has been rolled out in some piers at the North Harbor, is that it is so far the single most important technology initiative in the ports industry in terms of comprehensive nationwide scope and timetable.

Beth initially joined government service in June 1978 after graduating from the University of the Philippines with a degree in chemical engineering. At present she is also Deputy Head - Permanent Secretariat of the ASEAN Ports Association (APA).

Elzar Dodjie Simon
I consider Dodjie Simon as one of the most interesting IT personalities in the ports industry today for a single reason - he exemplifies the successful fusion of the music and IT corporate worlds.

A very well-known composer, he is the winner of several local and international song-writing contests; he also bagged the grand prize at the Metro Pop song competition a few years ago. His songs have been interpreted by many of the country's leading singers. One of his recent compositions is being used in the TV advertisement of a leading IT educational institution.

But before everyone forgets that our column today is about IT personalities, let me mention that Dodjie is currently ATI's Vice President for Information Technology. He worked as systems manager of the Veterans Affairs office of the US Embassy before joining ATI six years ago. He is also the Regional IT Manager for East Asia of P&O Ports, a position that gives him responsibility to oversee IT initiatives in P&O terminals in China, Thailand, and Indonesia.

One of his major challenges is aligning ATI's IT strategy with corporate business strategy and global P&O Ports technology initiatives.

Elmore Ignacio
As MIS Manager of ICTSI, Elmore ensures that MICT's IT systems and facilities support mission-critical business activities of the country's busiest container port. Elmore ensures technology support and direction for MICT, which this year is again expected to breach the 1-million TEU mark.

Elmore oversaw the in-house development of a highly innovative terminal monitoring software to enhance operational efficiency and productivity. The software, known as Terminal Operations Management System or TOPMAN, provides real-time information on key container operations for both vessel and yard activities through a dashboard-style graphical view of ongoing operations.

So there you are - those are the key personalities who currently influence the technology landscape of Philippine ports. All have an in-depth understanding of the core business requirements of their respective organizations, and all know fully well how to effectively utilize information and communication technology to ultimately benefit Philippine port users.

Today's column will be different from all the others I have written. Our topic is not about the latest technology trends. Neither is it on cargo security which I have delved upon during the last 2 issues of this column.

I have no intention even of writing about my recent IT work experience during the past 3 weeks in one of India's leading IT centers (the city of Hyderabad of course somehow pales in comparison with the city of Bangalore where Microsoft Chairman Bill Gates, the CEO of Dell Computers and the founder of Yahoo all made highly publicized visits).

Today I will write about the human side of IT in the Philippine ports sector. Specifically, I will re-visit the 1990s and enumerate leading personalities who by virtue of their organizational position and responsibility were thrust into the forefront of influencing and even determining the future direction of the technology landscape of our industry.

I am very fortunate to have directly worked with all of them in numerous technology initiatives and their vision, dedication and hard work helped make IT happen during those years.

Commissioner Guillermo Parayno
If there is ever to be a first name that must be mentioned, my hands down choice is Commissioner Parayno who is now the present BIR Commissioner. Everyone remembers him for his legacy in implementing BOC computerization.

One of my most unforgettable work experience with him was in 1995 when I had to accompany him to the rooftop of the Customs Port of Manila building and demonstrate the operations of our newly-installed radio data terminal system in Asian Terminals. For those who do not know that area, the only way to get there is to climb several flights of wooden - and wobbly - stairs.

To this day, I make it a point to read his roadmap to customs modernization because the document encapsulates his IT vision and strategy for the Bureau of Customs.

Deputy Commissioner Oscar Brillo
The first time I met Oscar Brillo was when he was still District Collector of the Port of Manila. During the early stages of the customs modernization project, it was from him that I gained full understanding of the concept and dynamics of the single administrative document (SAD) as an important trade facilitation instrument.
He was the first to be appointed as BOC Deputy Commissioner for the MIS & Technology Group. The creation of that position is a milestone in the operationalization of capacity building for sustaining customs automation throughout the future.

Deputy Commissioner Cecilia Reyes
The technology projects on which I worked very closely with Mrs Reyes were the electronic inward foreign manifest system and the development and implementation of the customs On-Line Release System. These initiatives constitute milestones in the beneficial collaboration between BOC and its stakeholders in the cargo-handling sector - ATI and ICTSI.

She is currently an Assistant Secretary at the Department of Transportation and Communication where her long experience in information and communication technology is proving very valuable in overseeing the continued implementation of various technology initiatives under that department. She is also a member of the Project Steering Committee for the PPA MIS Computerization Project.

Paul Finley
Mr Finley joined ATI in the mid-1990s as Senior Manager of the Information Management Department; he was my immediate superior. Then and now, Paul is a windsurfing enthusiast. It was during his time that ATI successfully implemented its radio data transmission (RDT) system, Navis SPARCS vessel and yard planning system, and Client Access System for electronic inquiry for vessel schedules and container movements.

He later became ATI Senior Vice President for Operations. He then went on to join Navis Corporation in the US as director for global sales. Mr Finley currently holds a senior management position in Northport, Klang, Malaysia.

Carlo Mojica
As MIS Manager of ICTSI a few years back, Mr. Mojica's position provided him with technology leadership responsibilities to ensure that ICTSI stays in the forefront of continuously improving MICT port operations efficiency through information technology. His designation as MIS Manager ended a period that lasted several years during which ICTSI had several IT heads in quick succession.

He currently works at Jurong Port Corporation in Singapore where he and his family have relocated.

These personalities constitute the human face of IT in Philippine ports during the 1990s. I will soon feature in my next columns the current personalities at the helm of making technology work for all of us.

Indian Suppliers' Compliance with US Cargo Security Requirements (August 18, 2003)

HYDERABAD, INDIA - Returning to India on my second business visit in less than two months, I cannot help but notice similarities in challenges the manufacturing and transport supply chain sectors here confront just like their counterparts in the Philippines.

A front-page article published in the 11 August issue of leading Indian newspaper, The Economic Times, caught my interest. It was entitled "US Retailers May Ask Indian Suppliers To Be On Guard".
According to the article, security guards monitoring close circuit televisions (CCTVs) round the clock may soon become a reality for Indian companies supplying to US retail giants. High-tech security devices such as surveillance cameras could become ubiquitous in Indian factories because of a law which requires exporters to take strict measures to reduce the threat of terrorist attacks.

Leading American retailers and apparel brands such as Wl-Mart, JC Penney and Phillips Van Heusen are in the process of implementing a plan to bring their dedicated suppliers in India under stringent cargo security checks and measures in compliance with requirements of the Customs-Trade Partnership Against Terrorism (C-TPAT) program intended to secure commercial shipments to the US against terrorist attacks.

The measures include mandatory installation of CCTVs with a view of critical locations in Indian plants or factories. US buyers are reported to be insisting that each factory should have 8-foot fences or walls to keep out intruders. The building should be constructed with materials resistant to unauthorized access.

The objective of the program is spelled out in a communication (including a detailed questionnaire on security measures) that Wal-Mart recently sent to all its suppliers in India.

The communication states: "Wal-Mart's policy is that all suppliers establish procedures to guard against introduction of non-manifested cargo into inbound shipments. Such items would include drugs, biological agents, weapons, radio-active materials, illegal aliens and other contraband."
C-TPAT recommendations for manufacturers are very straightforward insofar as developing and implementing a sound plan to enhance security procedures. These are general recommendations that should be followed on a case by case basis depending on the company's size and structure and may not be applicable to all.

The manufacturer is expected to have a written security procedure plan in place that addresses the following:

Physical Security: All buildings should be constructed of materials, which resist unlawful entry and protect against outside intrusion. Physical security should include:

Adequate locking devices for external and internal doors, windows, gates, and fences.
Segregation and marking of international, domestic, high-value, and dangerous goods cargo within the warehouse by a safe, caged, or otherwise fenced-in area.
Adequate lighting provided inside and outside the facility to include parking areas.
Separate parking area for private vehicles separate from the shipping, loading dock, and cargo areas.
Having internal/external communications systems in place to contact internal security personnel or local law enforcement police.

Access Controls: Unauthorized access to the shipping, loading dock and cargo areas should be prohibited. Controls should include:

Procedural Security: Measures for the handling of incoming and outgoing goods should include the protection against the introduction, exchange, or loss of any legal or illegal material. Security controls should include:

Having a designated security officer to supervise the introduction/removal of cargo.
Properly marked, weighed, counted, and documented products.
Procedures for verifying seals on containers, trailers, and railcars.
Procedures for detecting and reporting shortages and overages.
Procedures for tracking the timely movement of incoming and outgoing goods.
Proper storage of empty and full containers to prevent unauthorized access.
Procedures to notify Customs and other law enforcement agencies in cases where anomalies or illegal activities are detected or suspected by the company.

Personnel Security: Companies should conduct employment screening of prospective employees to include periodic background checks and application verifications.

Education and Training Awareness: A security awareness program should be provided to employees including recognizing internal conspiracies, maintaining product integrity, and determining and addressing unauthorized
access. These programs should encourage active employee participation in security controls.

Everyone in the freight and transport business is familiar with the buzzwords on cargo security - Customs-Trade Partnership Against Terrorism (C-TPAT), Container Security Initiative (CSI), 24-Hour Advanced Manifest Rule.

For today's column, we shall take a glimpse on rationalizations made last year on the need for new cargo security measures.

As early as April 2002 the International Maritime Organization (IMO) through its Maritime Safety Committee discussed a comprehensive set of proposals submitted by the US to improve container security. These included sealing of containers, non-intrusive detection and inspection, trusted agents and shippers, shipper identification numbers and cargo information in electronic format.

Sealing of Containers: Container seals are widely used as a form of control to indicate that the cargo consigned is untouched en route. Maritime containers conforming to ISO standards have two interlocking rear doors with a hasp capable of accepting a security seal. While a vast majority of containers are affixed with some type of seal, there is no universal standard or requirement for container seals, either mechanically or electronically. Fundamental to container security is ensuring that once a container is loaded and offered for shipment, it is secure from illegal intrusion for the purpose of smuggling contraband, especially that which threatens maritime security.

The US recognized that the ultimate end state for container seals are active electronic seals capable of storing and transmitting sufficient amounts of data for all shipping needs. All container seals must provide the necessary level of security while allowing for smooth facilitation of commerce.

Non-intrusive detection and inspection: Non-Intrusive Inspection (NII) technology, such as the type used by US Customs, has been deployed and used to conduct thousands of inbound and outbound examinations resulting in hundreds of contraband seizures. These systems, in many cases, provide the capability to perform thorough examinations of cargo without having to resort to the costly, time consuming process of unloading cargo for manual searches, or intrusive examinations of conveyances by drilling or dismantling.

A mix of technologies designed to complement one another and present a layered defense to smuggling attempts is the most effective method of inspection. Deployment of NII technologies allows for augmentation of staff in an attempt to maintain an alert posture while efficiently processing legitimate passengers and trade.
The US recommended that the issue of non-intrusive detection and inspection of containers be a subject of discussion with recommendations referred to the World Customs Organization (WCO) for further development and implementation by WCOs.

Trusted agents and shippers: In order to create an efficient and secure processing of cross-border trade, world customs organizations, nation-states and the trade community need to redefine the way cargo and conveyances transit the globe. The US, through the C-TPAT, provides a forum in which the business community and the US can exchange anti-terrorism ideas, concepts and information. The program increases security of the entire commercial process from manufacture through transportation and importation to ultimate distribution.

Through C-TPAT, trade partners will make a commitment to both trade security and trade compliance, which are rooted in the same business practices, to work closely with companies whose good business practices ensure supply chain security and compliance with trade laws. This program summarizes the United States' efforts to develop trusted agents and shippers in the trade environment.

Shipper Identification Numbers: The use of a standardized number to identify all shippers of merchandise is considered an important element in the data collection portion of US cargo security initiatives, which are implemented in the US by the US Customs Service. The standardized number should provide information identifying the shipper (consignor, seller, exporter, manufacturer and even the factory of production) in a standardized format such as the Dun & Bradstreet Data Universal Numbering System (DUNS) number.

The shipper identification number should be provided in an electronic format prior to lading. This would allow for important edits for validation of data and greater reliability in the targeting of illegally imported merchandise. Those goods improperly identified or unidentified as to shipper would be subject to more stringent controls and inspection. Conversely, shipper identification could be used as a key factor for expediting low risk merchandise from proven shippers.

Cargo Information in Electronic Format: Electronic reporting of shipment identifying data prior to the container being laden for shipment is key to securing the supply chain. The primary focus of this data is verifiable, identifying information on all of the participants in the transaction (manufacturers, shippers, carriers, importers, consignees) tied to an accurate description of the merchandise.

Standardizing of Customs and other regulatory reporting data and transmission prior to lading allows for evaluation of the data by Customs in order to validate it and make examination decisions prior to the placement of the container onboard a vessel. This reduces the risk that non-legitimate interests could use the supply chain as a weapon by providing information about the shipment.

Discovering Useful Technology Innovation in a Foreign Country (July 21, 2003)

HYDERABAD, INDIA - Today's column is written in the city of Hyderabad in the state of Andra Pradesh, India where this columnist is currently on a 10-day business visit. It is interesting to note that India is considered the primary competitor of the Philippines in terms of IT software development expertise.

Just like any first-time visitor to a foreign city, one of the first things this writer did was to try and experience local attractions in terms of food and shopping. After a flurry of visits to all the pearl shops I could find (all selling white, pink and black pearls) and realizing that all the cooked food I tasted was always flavored with curry and other spices, I am happy to learn about two (2) useful technology innovations which I hope could find its way to the Philippines.

Tracking Truck Movements & Location By Telephone
A new telephone tracking system for long-haul trucks and other vehicles by means of telephone has been developed by a Hyderabad-based company called Aasia-onwheels Network Limited.

The unique tracking system ensures constant contact between the truck driver on the move hundreds of miles away and the owner of the vehicle through "voice mail". It likewise provides information about truck location.

The system works in this manner. Two (2) sets of cards are provided - one for the driver to carry along with the vehicle and the other one retained by the truck owner.

All that the driver or owner has to do is make a local telephone call to a designated number inscribed on the card issued to them and leave the message. If the driver dials the number from any telephone location, he hears the owner's voice and the message.

Similarly, if the driver wants to send a message to the owner, he has to dial the allotted number and leave the message, which can be picked up by the owner from anywhere in the city. A local call is sufficient to send and hear the message (in seven Indian languages and English).

Aasia-onwheels Network Limited invested its own virtual private network with computer servers in numerous locations equipped with Interactive Voice response System.

The company claims this system is the most economical and dependable way of communication for transport owners with vehicles deployed for long distances.

DVD Video Jukebox
An Indian firm called i3 has developed what is considered the world's first and only video jukebox. It is found in some outlets of a coffee chain called Caf? Coffee Day and the owners are reported to have already filed a global product patent in the US to protect it.

The video jukebox stores 4,476 songs in DVD format in 14 hard discs of 120 gigabytes each. The operating system is Windows XP which everyone with computers at home and in the office are very familiar.

The result is evident when one watches the jukebox in action. Obviously it has a very fast microprocessor and lots of computer memory because even when the songs queue up there is no loss of speed on response time on the screen.

The most visible component of the product is the screen where customers watch the performance of DVD music album. It is a plasma screen where video resolution is simply excellent. Local newspapers also report that the launch of the video jukebox has in effect created a new marketing medium.
Brands like Nike, Reebok and Samsung have already made arrangements with i3 owners. While the music video plays, the logo of the advertiser is prominently displayed on the top left side of the large plasma screen.

i3 also claims to have developed a new technology for picture conversion. This enables the video jukebox to display the music album with no bars from the DVD.

Right now, it is reported that the revenue model of i3 and its video jukebox is completely advertisement based. A nominal expenditure is incurred when the company pays per video, per play to the music companies which provide the song. This hardly makes up for the cost of the installation.

Therefore, the money at the end of the day comes from advertisers who want to reach the customers of hotels, restaurant and fast food chains in major Indian cities.

In today's column I will write about recent and ongoing IT developments as of this month which I sincerely believe should make port users feel happy. These events provide a highly positive outlook for our industry in terms of distinct and tangible benefits that shall continue to be derived from extensive application of information and communications technology to meet business needs of various port user groups.

The PPA MIS Computerization Project is scheduled to commence within this month the initial roll-out of its port operations system for domestic terminal operations in a pilot site at North Harbor. This is really the start of what is envisioned as a nationwide implementation in all PPA-managed ports throughout the country.

Functionalities include a vessel information management module, cargo and container monitoring, and computerized invoicing of port dues and cargo charges. The system includes a facility for electronic submission of vessel's notice of arrival, application for berth, and inward manifest.

This constitutes the first tangible and extensive computerization initiative by PPA. The choice of its initial pilot site implementation is highly significant considering that North Harbor operations handle the main bulk of domestic terminal cargo and passenger volume in the entire country.

The real challenge is how PPA can effectively manage the smooth transition from a generally manual operations to an automated environment. The system's successful implementation is expected to make it easier for port users to transact with PPA when availing of port services.

For this reason alone, all port users should welcome the initial implementation of PPA's computerization project.

For several weeks last month the system operations of EDI Gateway at the Bureau of Customs suffered severe and prolonged disruptions due to technical problems. This gateway facility is the sole data communication channel through which electronic import declarations filed by importers/consignees using the services of BOC-accredited value-added networks are coursed through. At the same time all ACOS import release instructions for outside CY/CFS operators (known as On-Line Release System II or OLRS II) are also sent through the EDI Gateway.

The operations of this facility are now back to normal, thanks to the concerted efforts of BOC and private sector stakeholders.

It is significant to note, however, that its existing technical configuration originally set up during the mid-1990s will soon have to be upgraded since the risk of technology obsolescence has already overtaken the system. This situation is also true for other ACOS components such PC hardware. A lifespan of five years is normally considered as the IT benchmark in determining the "useful life" of hardware and software systems in a business environment. Hence, a system is said to have reached the end of its useful life after five years and thus should either be upgraded, enhanced or even replaced by a new configuration.

Fortunately for BOC and all port users, a number of private sector entities are currently extending valuable technology assistance in terms of the latest hardware and software solutions so that customs can sustain its level of automation.

The WebTrack SMS module launched by ATI last May appears to be gaining widespread interest within the ranks of various port user groups. This is a pioneering technology initiative in the Philippine ports industry and makes electronic inquiry on real-time vessel/container/cargo movement information easily accessible through text messaging.

The Port Users Confederation (PUC) and its top leadership are spearheading efforts to further disseminate information on the functionalities of WebTrack SMS and its benefits through seminars being conducted for its various members. It is also interesting to note that before it was launched to the general public, the refinement of this system was undertaken based on active inputs from port user groups such as screen design formats and the type of information that should be made available.

We can look forward to further enhancements of WebTrack SMS in the immediate future as more port user groups give positive feedback on its ease of use and tangible benefits.

A new technology provider is expected to make its entry in the Philippine market within this month through a software offering focused on the business requirements of freight forwarding companies.

The technology solution called e-Freight is developed by a software firm based in Bangalore, India and will be marketed jointly with a local Filipino partner. Initial information obtained by this column reveals that e-Freight addresses the logistics functions of the freight forwarding industry domain involving Air and Sea Freight. It encompasses all business entities of this domain like workflow, tracking, inventory, receivables and human resource management.

Its main functionalities are: Customer, Carrier and Agent Contracts (quotation management), Reservation Card (Cargo Booking) Maintenance, Credit Approval, Weight and Measurement Recording, Master Bills Maintenance, House Bill Maintenance, Customer Invoices/Agent Invoices Profit & Loss, Cargo Status Update, and Consolidation Planning.

Its core modules are airfreight operations, sea freight operations, HRD, Finance, and sales force automation.

It will be very interesting to know how the local freight forwarding industry will react to the entry of this new packaged software. For now, let us consider this a positive development and let its own merits and promised benefits be the ultimate gauge of how it will be accepted by its target clients.