Kuwaki
The 20th Century was one of extraordinary change in manufacturing, and the introduction of technologies like CAD/CAM/CAE led to basic changes in the way that products were mass produced. How do you see manufacturing being revolutionized in the coming century.

Foundylle
Well this is a very difficult question. We see from trends in America, that manufacturing will become more agile, and that products will be built to order.

Manufacturers will be able to get products to market much faster, and respond to customer needs much faster. The result will be the disappearance of inventory, better products, and enormous consolidation in all industries.

Foundyller
Of the technologies that we're likely to see are new materials, new rocesses, digital engineering, manufacturing, digital testing and quality control.

We may even have the complete elimination of prototypes However, we should keep in mind that a famous economist once said, that the revolution will be much bigger than you think, it will take much longer than you think, and it will be much different than you think and that's the nature of change.

This rule has held for fifty years. I think that when you do your planning and you think about what's going to happen, it's important to remember this.

Kuwaki
Then its very difficult to predict the future of the IT revolution.

I believe that we'll go away from mass production to the production of individual products that are made to order, it will be mass automation rather than mass production.

Individual requirements will be met by using mass automation and information about the customers needs ? the product will fit the customer more than the customer fitting the product. Of course productivity will definitely improve, immensely, leading to greater prosperity, and the people who are at the bottom of the economic levels will be able to afford products that only the very rich can afford today. That's certainly likely to continue for some time.

This is a very broad question and that basically is where its going. Companies that can't be agile, companies that can't bring products to markets fast, will probably be out of business, because if you can't respond, you miss the market opportunity.

Kuwaki
So speed is very important.

Foundyller
Yes, but I don't like to use the term "time-to-market". I want to use the term "time-to-money".

Because you can get something to market very quickly, but if the customer doesn't buy it, or if the customer sends the product back, or if the product breaks, you don't get much money. So the real challenge for a manufacturer is reduced "time-to-money".

Kuwaki
How are US vendors of CAD, CAM and CAE software reacting to the IT revolution?

Foundyller
Although we still have the major CAD/CAM vendors, to a great extent, CAD/CAM is becoming a commodity. What is most important is compatibility and interoperability.

People in the end will not buy a system because they can do certain kinds of designs or that they are easy to use because they will all be able to do the same things and they will all be easy to use. People will buy them because they produce a product, an output that is understandable to everyone. When we buy a word processor, in America, I take something that I know will work with everything, which is Microsoft Word. And the same thing is going to happen in CAD/CAM.

So what is really going to be important is interoperability. Having said that, the winners will be the companies that are able to consolidate their user base. The other question is where will the companies go once interoperability is achieved, and the focus is no longer on modeling or the creation of graphics.

And so the major CAD/CAM companies are already focussing their major energies on the distribution, the presentation and the interoperability of information and the management of that information whether that management is done in a PDM systems or a ERP system or middleware system.

Kuwaki
What do you see for ASP's?

Foundyller
Of the many ASP business models, none have been successful so far. I think none of the CAD/CAM sites that you see on the Internet today will survive in one year, I think they will all be either gone or very radically changed.

But something will work, its just a matter of waiting until you see something that's working, understand why its working, and copy it. But it will be working in a different domain, you have to bring it to your own domain.

Its just incredibly difficult. Today's conventional wisdom is that Internet business works if you have a business delivering service to your client, and you can use the Internet to deliver that service more efficiently. Its cost effective to you and its attractive to the client, you do better quality work for the client.

If on the other hand, you are using the Internet to get customers, you will fail. The Internet is more disruptive than anything else so far, because, in other situations, for example if you were selling CAD and someone else disrupts your business by selling CAD at half the price and is doing well, you know that if you sell at the same price you might also do well.

With the Internet, somebody may disrupt your business, but they may not be making any money at it, only taking customers away from you and they may never make money. If you try to do the same thing, you may be going down the road to destruction.

Kuwaki
Compared to IT business in the States, how do you see Engineering solution business in Japan？

Foundyller
If we talk about traditional packaged CAD/CAM software, in the States it's a business that for everybody but a very few companies is coming to an end. There's probably only one company for whom its really working well.

Everybody else's is making their advances through leveraging the data. Getting more value out of the data for the customer. What they do with the data, how they manage the data, how they're allowed to retrieve the data, how they distribute the data, that's where the money is made now, and that's the basis on which systems are purchased now. I think as far as the packaged software business goes, looking ahead, I think that it's over, and that as far as distribution goes, I don't think that the money will be in distribution, because I think that the software will be distributed directly over the Internet by the manufacturer.

For third parties the only business will be in maintenance, support, training, and systems integration. And strategic planning, and facilities management. Because the manufacturers will not want to do that. There may be business for somebody to do facilities management and quality assurance, where they will help the customer by installing and checking software, and new upgrades, testing a new upgrade to make sure that it is ready to be installed, and then doing the installation.

Kuwaki
Japan may be ten years behind, especially for infrastructure, and modification of systems. The adoption of IT has been very advanced in the US. How do you see IT revolution in Japan?

Foundyller
In some things. We're not five years ahead in television, consumer electronics, telephone technology. I don't think the US is advanced in the use of IT overall, or even in the use of the Internet overall.

I think that Europe especially France may be more advanced. I go to France a lot and I compare as a consumer between what I can do in the US and what I can do in France. Especially in the portable phone market, you can use your phone all over Europe, but of course Japan is even more advanced in portable phones. I think there are some lies in the world, some popularly held beliefs that people have, that are wrong.

One is that America is a young country, but it's not, it's a very old country. It's one of the oldest democracies in the world, it has the oldest government on the face of the planet. Every other country has had changes. We can't even go from yards to meters or Fahrenheit to Celsius. We don't like to change. In many respects Japan changes far faster than the United States. If you look at Japan a hundred years ago, it was a very different country, but if you look at the United States, many things have not changed.

In Japan you've made enormous changes in technology, and you've adopted that technology much more rapidly, you've taken in ideas from the outside and adapted them to Japanese conditions Japan does not have a software industry, and the reason is that Japanese companies will write software, and rewrite it for every customer, it's never a product, only a service. But it may be that this doesn't matter anymore, because all software is turning into a service, and Japan knows very well how to do services.

Lots and lots of different things which you can find which we haven't implemented very well in the US in IT. We have a mixture, some of it is like Japan, some of it is ahead of Japan, some of it is behind. What we do better than Japan, and what Japan can't seem to be able to do yet is in the financial area, Japan doesn't have a good venture capital system.

If I have a good idea here and it's very hard for me to get money to start a new company. In general our financial system is way ahead of Japan. Not the banking system, but the financial system, capital markets. We have very efficient capital markets. The other thing we have is optimism, faith in the future, and a willingness to take enormous risks.

It's socially acceptable to fail. You're admired that you start again. Perhaps this is the weakness of Japan, that all the knowledge that people get from failure, they are not allowed to put to work a second time around. That's the strength of the USA.

Kuwaki
Please advice for HZS in new revolution age.

Foundyller
In very general terms, you have to keep a very open mind, listen a lot, and think outside the box - don't think inside the framework where you are, think outside that framework, because you know everything inside that framework already.

You have probably built as much success as you ever will inside the framework that you know. So if you're going to more successful you have to look outside that framework. Everything changes very quickly and if you keep looking inside the framework you will miss the opportunity.

When something is going down, don't try and stop it, exploit the direction that it's going, and find something else, because you can waste a lot of energy and money and it will go down anyway. Conserve your resources for hanging on to something that is going up, not to stop something going down.