Disruptive IT Impacts Companies, Competition, and Careers

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IT for Management: On-Demand Strategies for Performance, Growth, and Sustainability

Eleventh Edition

Turban, Pollard, Wood

Chapter 1

Disruptive IT Impacts Companies, Competition, and Careers

Learning Objectives (1 of 4)

Doing Business in the On-Demand Economy

On-demand Economy is the economic activity created by technology companies that fulfill consumer demand through the immediate provisioning of products and services.

Propelled by proliferation of

Smartphone-connected consumers

Simple and secure purchase flows

Location-based services

Growth of app-driven companies like Airbnb, Uber, GrubHub have disrupted markets.

Doing Business in the On-demand Economy: Airbnb, Uber

On-demand business models of Airbnb and Uber have been extremely successful.

Key Strategic and Tactical Questions

Doing Business in the On-demand Economy: Digital Business Models

Digital business models refer to how companies engage their customers digitally to create value via websites, social channels, and mobile devices.

Doing Business in the On-Demand Economy: Terminology

Business Model is how an enterprise generates revenue or sustains itself.

Digital Business Model is defined by how a business makes money via digital technology.

Customer Experience (CX) is about building the digital infrastructure that allows customers to do whatever they want to do, through whatever channel they choose to do it.

Doing Business in the On-demand Economy: Digital Business Models

Why develop digital business models?

Deliver an incredible customer experience

Turn a profit

Increase market share

Engage their employees

How does the customer experience (CX) measure up?

There is a strong relationship between the quality of a firm’s CX and brand loyalty, which in turn increases revenue.

Top IT Management Issues

Technology Alignment with the Business

Security, Cybersecurity, & Privacy

Innovation

IT Agility & Flexibility

Business Cost Reduction & Controls

IT Cost Reduction & Controls

Speed of IT Delivery & IT Time to Market

Business Strategic Planning

Business Productivity & Efficiency

Comparison of Top 10 Management Priorities (Adapted from Kappelman, McLean, Johnson, and Gerhart 2017)

Doing Business in the On-Demand Economy: Business Objectives (1 of 2)

Product Development—IT helps businesses respond quickly to changing customer demands

Stakeholder Integration—companies use their investor relations websites to communicate with shareholders, research analysts, and others in the market

Process Improvement—An ERP systems replaces dozens of legacy systems for finance, human resources, and other functional areas, to increase efficiency and cost-effectiveness of internal business processes

Doing Business in the On-Demand Economy: Business Objectives (2 of 2)

Cost Efficiencies—IT allows companies to reduce transaction and implementation costs, such as costs of duplication and postage of email vs snail mail.

Competitive Advantage—Companies can use agile development, prototyping, and other systems methodologies to bring a product to market cost effectively and quickly.

Globalization—companies can outsource most of their non-core functions, such as HR and finance, to offshore companies and use ICT to stay in contact with its global employees, customers and suppliers 24/7

Doing Business in the On-Demand Economy: Questions (1 of 2)

What precipitated the on-demand economy?

How is IT contributing to the success of the on-demand economy?

List the six IT business objectives

What are the key strategic and tactical questions that determine an organization’s profitability and management performance?

Doing Business in the On-Demand Economy: Questions (2 of 2)

What is a business model?

What is a digital business model?

Give two examples of how companies are transitioning to digital business models.

What factors are driving the move to digital business models?

Learning Objectives (2 of 4)

Business Process Improvement: Terminology (1 of 2)

Business Process is a series of steps by which an organization coordinates and organizes tasks to get work done.

Process is comprised of the activities that convert inputs into outputs by doing work.

Deliverables are outputs created through work toward a desired benefit or expected performance improvement.

Performance is a result of processes where maximizing efficiency over one’s competitors is a critical success factor.

Business Process Improvement: Components of a Business Process

INPUTS

Raw materials, data, knowledge, expertise

ACTIVITIES

Work that transforms input & acts on data and knowledge

DELIVERABLES

Products, services, plans, or actions

Business Process Improvement: Characteristics

Business Process Characteristics

Formal Processes or Standard Operating Procedures (SOP): documented and have well-established steps.

Informal Processes: typically undocumented, undefined, or are knowledge-intensive.

Range from slow, rigid to fast-moving, adaptive.

Can be rigid, resistant to change, or adaptive, responding to change.

Eight Phases of Business Process Reengineering

1. Develop Vision & Objectives

2. Understand Existing Processes

3. Identify Process for Redesign

4. Identify Change Levers

5. Implement New Process

6. Make New Process Operational

7. Evaluate New Process

8. Perform Continuous Improvement

Business Process Improvement: BPR

Process Improvement

Continuous examination to determine whether processes are still necessary or operating at peak efficiency by eliminating wasted steps called Business Process Reengineering (BPR).

Digital technology enhances processes by:

Automating manual procedures

Expanding data flows to reach more functions and parallel sequential activities

Creating innovative business processes to create new models.

Gaining a Competitive Advantage: Components

Business Process Improvement: Terminology (2 of 2)

Agility is the ability to respond quickly.

Responsiveness is IT capacity that can be easily scaled up or down as needed.

Flexibility is the ability to quickly integrate new business functions or to easily reconfigure software or applications.

IT agility, flexibility, and mobility are tightly interrelated and fully dependent on an organization’s IT infrastructure and architecture.

Business Process Improvement: IT Consumerization

IT Consumerization is the migration of consumer technology into enterprise IT environments. It’s caused by personally owned IT becoming a capable and cost-effective solution for expensive enterprise equivalents.

Software Support for BPM

Process Management

Consists of methods, tools, and technology to support and continuously improve business processes also known as Business Process Management (BPM).

BPM software is used to map processes performed manually, by computers, or to design new processes.

BPM requires buy-in from a broad cross section of the business, the right technology selection, and highly effective change management to be successful.

Business Process Improvement and Competitive Advantage

What is a business process? Give three examples.

What is the difference between business deliverables and objectives?

List and give examples of the three components of a business process.

Explain the differences between formal and informal processes.

What is the standard operating procedure (SOP)?

What is the purpose of business process management (BPM)?

What are the characteristics of an agile organization?

Explain IT consumerization.

Define competitive advantage.

Learning Objectives (3 of 4)

IT Innovation and Disruption: Intro SMAC Model

Social-Mobile-Analytics-Cloud (SMAC) Model

Huge data centers accessible via the Internet form the fore for the cloud by providing 24/7 access to storage, apps, and services.

Handheld and wearable devices and their users form the edge of the cloud.

Social channels connect the core and edge.

The SMAC integration creates the technical and services infrastructure needed to digital business.

IT Innovation and Disruption: Social-Mobile-Analytics-Cloud (SMAC)

Model of the integration of cloud, mobile, and social technologies. The cloud forms the core. Mobile devices are the endpoints. Social networks create the connection.

IT Innovation and Disruption: SMAC Influence

Social-Mobile-Analytics-Cloud (SMAC)

Powerful social influences impact advertising and marketing.

Consumer devices go digital and offer new services.

eBay’s move to cloud technology improves sellers’ and buyers’ experiences

IT Innovation and Disruption: Mega Trends (1 of 4)

Mega Trends are forces that shape or create the future of business, the economy, and society.

Connectivity

Need to connect across multiple channels and platforms

Cloud Services are any computing resource provided over the Internet on demand, rather than run applications from software stored on company-owned server or computer.

Digital resources no longer dependent on buying/owning that resource.

IT Innovation and Disruption: Mega Trends (2 of 4)

Big Data and Data Analytics

Commonly defined as high-volume, mostly text data

80-90% consists of Unstructured data, having no predictable format

Multiple channels and sources:

Machine-generated data from sensors and mobile devices

Social media content from clicks, tweets, blogs

Clickstream data from Internet searches

IT Innovation and Disruption: Mega Trends (3 of 4)

Digitization is the process of transforming any kind of activity or information into a digital format that can be collected, stored, searched, and analyzed electronically—and efficiently.

Banks digitizing mortgage application/decision process cut costs per new mortgage by 70%

Telecomm company created self-serve, prepaid service to order and activate phones

Shoe retailer using in-store inventory system to know immediately if item was in stock

IT Innovation and Disruption: Mega Trends (4 of 4)

Machine-to-machine (M2M) Technology

Enables sensor-embedded products to share reliable real time data via radio signals

Internet of Things (IoT) refers to a set of capabilities enabled when physical things are connected to the internet via sensors

M2M and IoT are widely used to automate businesses ranging from transportation to healthcare

IT Innovation and Disruption: Lessons Learned

Companies using technology as a genuine competitive differentiator can reap these benefits:

Exploit the power of software

Develop, deliver, disrupt—quickly!

Boost speed and efficiency with Automated Programming Interfaces (AIPs)

Leverage third-party innovation

Maximize returns with smarter IT investments

IT Innovation and Disruption

What are the benefits of cloud computing?

What is machine-to-machine (M2M) technology? Give an example of a business process that could be automated with M2M.

Describe the relationships in the SMAC model.

What impacts are the SMAC model having on business?

Why have mobile devices given consumers more power in the marketplace?

Explain why connectivity is important in today’s on-demand economy.

In what ways is IT disrupting business?

Learning Objectives (4 of 4)

IT and You: On-Demand Workers

Profile of U.S. On-Demand Workers (45 million)

Expected their financial situation to improve over the coming year—28.8 million

Under 35 years of age—23 million

Live in urban areas—18.45 million

63% are motivated to work in the on-demand economy to earn supplemental income

Survey ( Chriss , 2016)

IT and You: IT as a Career

IT job growth is estimated at 12% from 2014 to 2024, faster than the average for all other occupations. This means about 488,500 new jobs.

The median annual wage for computer and IT occupations was $81,430 in May 2015, which was considerably higher than the median annual wage of $36,200 for all other occupations

In 2017 only 2% of all IT workers were unemployed

IT and You: IT as a Career (1 of 2)

IT Managers—play a vital role in the implementation and administration of digital technology. They plan, coordinate, and direct research on the computer-related activities of firms.

Chief Technology Officers (CTOs)—evaluate the newest and most innovative technologies and determine how they can be applied for competitive advantage.

IT Project Managers—develop requirements, budgets, and schedules for their firm’s information technology projects. They coordinate such projects from development through implementation.

IT and You: IT as a Career (2 of 2)

Data Scientists manage and analyze massive sets of data for purposes such as target marketing, trend analysis, and the creation of individually tailored products and services.

Enterprises that want to take advantage of big data use real time data from tweets, sensors, and their big data sources to gain insights into their customers’ interests and preference, to create new products and services, and to respond to changes in usage patterns as they occur.

Big data analytics has increased the demand for data scientists.

IT and You: Become an Informed IT User

Understand how using IT can improve organizational performance, benefit organizational growth, facilitate teamwork, and improve individual productivity

Understand how businesses can use IT to enhance the customer experience

Be able to offer input into the development and use of IT

Know how to find emerging technologies to make radical improvement in business processes

Foster your entrepreneurial tendencies to start your own on-demand business

IT and You

Why is IT a major enabler of business performance and success?

Explain why it is beneficial to study IT today.

Why are IT job prospects strong?

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