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Business Driven Technology
Unit 5

Transforming Organizations

McGraw-Hill/Irwin

Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

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ADDITIONAL CASE INFORMATION

E-espionage

This is a very scary scenario for the United States.

CNN: Staged Cyber Attack Reveals Vulnerability in Power Grid

Researchers who launched an experimental cyber attack caused a generator to self-destruct, alarming the federal government and electrical industry about what might happen if such an attack were carried out on a larger scale, CNN has learned. Sources familiar with the experiment said the same attack scenario could be used against huge generators that produce the country's electric power. Some experts fear bigger, coordinated attacks could cause widespread damage to electric infrastructure that could take months to fix. CNN has honored a request from the Department of Homeland Security not to divulge certain details about the experiment, dubbed "Aurora," and conducted in March at the Department of Energy's Idaho lab. In a previously classified video of the test CNN obtained, the generator shakes and smokes, and then stops. DHS acknowledged the experiment involved controlled hacking into a replica of a power plant's control system. Sources familiar with the test said researchers changed the operating cycle of the generator, sending it out of control.

http://www.cnn.com/2007/US/09/26/power.at.risk/index.html

Unit Five

  • Chapter Seventeen – Building Software to Support an Agile Organization

  • Chapter Eighteen – Managing Organizational Project

  • Chapter Nineteen - Outsourcing in the 21st Century

  • Chapter Twenty – Developing a 21st-Century Organization

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Chapter 20

Developing a 21st-Century Organization

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CLASSROOM OPENER

GREAT BUSINESS DECISIONS – Mattel Decides to Introduce the Ken Doll

You have to look everywhere, in every market, and at every angle to find the next great invention. Just ask Mattel who invented Barbie, one of the most successful toy launches ever. Barbie’s real name is Barbara Millicent Roberts and was the creation of Ruth Handler, wife of one of the founders of Mattel. Ruth observed her daughter, Barbara, playing with paper dolls and was inspired to make something a little more permanent. Mattel became a master at the Barbie industry, offering over 100 new outfits each year including executive, rock band member, and World Cup Soccer player. In 1961, the company decided to launch Barbie’s friend Ken, who soon became another one of the world’s best-selling toys. It was a truly successful brand extension, as Ken became Barbie’s partner for life.

LEARNING OUTCOMES

List and describe the four 21st century trends that businesses are focusing on and rank them in order of business importance

Explain how the integration of business and technology is shaping 21st century organizations

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A detailed review of the learning outcomes can be found at the end of the chapter in the textbook

Developing Organizations

  • 21ST century organizations must:
  • Recognize the immense power of technology
  • Carry out required organizational changes
  • Learn to operate in an entirely different way

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Organizations are facing changes more extensive and far reaching in their implications than anything since the modern industrial revolution took place in the early 1900s

Technology is one of the primary forces driving these changes

Organizations that want to survive in the 21st century must recognize the immense power of technology, carry out required organizational changes in the face of it, and learn to operate in an entirely different way

Developing Organizations

  • Industries that have changed due to technology
  • Travel
  • Entertainment
  • Electronics
  • Financial services
  • Retail
  • Automobiles
  • Education and training

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CLASSROOM EXERCISE

21ST Street

Break your class into groups and assign a different industry from Figure 5.12 to each group.

Have each group research the Internet to determine additional ways that technology is changing this industry.

Have your students present their findings to the class.

Industry Business Changes Due to Technology

Travel Travel site Expedia.com is now the biggest leisure-travel agency, with higher profit margins than even American Express. Thirteen percent of traditional travel agencies closed in 2002 because of their inability to compete with online travel.

Entertainment The music industry has kept Napster and others from operating, but $35 billion annual online downloads are wrecking the traditional music business. U.S. music unit sales are down 20 percent since 2000. The next big entertainment industry to feel the effects of e-business will be the $67 billion movie business.

Electronics Using the Internet to link suppliers and customers, Dell dictates industry profits. Its operating margins have risen from 7.3 percent in 2002 to 8 percent in 2003, even as it takes prices to levels where rivals cannot make money.

Financial services Nearly every public e-finance company remaining makes money, with online mortgage service LendingTree growing 70 percent a year. Processing online mortgage applications is now 40 percent cheaper for customers.

Retail Less than 5 percent of retail sales occur online. eBay was on track in 2003 to become one of the nation’s top 15 retailers, and Amazon.com will join the top 40. Wal-Mart’s e-business strategy is forcing rivals to make heavy investments in technology.

Automobiles The cost of producing vehicles is down because of SCM and Web based purchasing. eBay has become the leading U.S. used-car dealer, and most major car sites are profitable.

Education and training Cisco saved $133 million in 2002 by moving training sessions to the Internet, and the University of Phoenix online college classes please investors.

21st Century Organizational Trends

  • 21st century business trends include:
  • Uncertainty in terms of future business scenarios and economic outlooks
  • Emphasis on strategic analysis for cost reduction and productivity enhancements
  • Focus on improved business resiliency via the applications of enhanced security

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Ask your students if they can think of any additional business trends for the 21st century

There are a number of great links on digital technology and how it is changing our lives
http://www.cnn.com/SPECIALS/2006/digital.world/

21st Century Organizational Trends

  • Four technology areas where organizations are focusing:

IT infrastructures

Security

Ebusiness

Integrations

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CLASSROOM EXERCISE

Century Turn

Break your students into groups and ask them to rank the four technology areas in order of importance to a business

Have your students present their ranking, along with their justifications, to the entire class

This is a great question for a class debate

Increased Focus on IT Infrastructures

  • IT infrastructure – the hardware, software, and telecommunications equipment that, when combined, provide the underlying foundation to support the organization's goals

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In the early days of the Internet, the basic Internet infrastructure in terms of protocols and standards was unsophisticated, but software companies managed to enhance the Internet and offer compelling applications for functional business areas

The original design for the Internet and the Web was for simple e-mail, document exchange, and the display of static content, not for sophisticated and dynamic business applications that require access to back-end systems and databases

Increased Focus on Security

  • Physical security integration and best security practices

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Security is a hot topic and concerns are widespread

Increasingly opening up their networks and applications to customers, partners, and suppliers using an ever more diverse set of computing devices and networks, businesses can benefit from deploying the latest advances in security technologies

These benefits include:

Fewer disruptions to organizational systems

Increased productivity of employees

Greater advances in administration, authorization, and authentication techniques

Increased Focus on EBusiness

  • New ebusiness trends include:
  • Mobile commerce – the ability to purchase goods and services through a wireless Internet-enabled device
  • Telematics – blending computers and wireless telecommunications technologies with the goal of efficiently conveying information over vast networks to improve business operations
  • Electronic tagging – a technique for identifying and tracking assets and individuals
  • Radio frequency identification (RFID) – chips or smart labels that can store unique identifiers and relay this information to electronic readers

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These are all subcategoreis within mobile business that open up new opportunities for mobility beyond simple employee applications

Electronic tagging and RFID are especially interesting because they extend wireless and mobile technologies not just to humans, but also to a wide range of objects such as consumer and industrial products

Increased Focus on Integration

  • The integration of business and technology

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IT has penetrated the heart of organizations and will stay there in the future

The integration of business and technology has allowed organizations to increase their share of the global economy, transform the way they conduct business, and become more efficient and effective

Increased Focus on Integration

  • Overall, core business relationships and models are changing
  • Product-centricity to customer-centricity
  • Mass production to mass customization
  • The value in material things to the value of knowledge and intelligence

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The past few years have produced a confluence of events that have reshaped the global economy

Around the world, free-market competition has flourished and a new globally interdependent financial system has emerged

Reflecting these changes, core business relationships and models are dramatically changing

Increased Focus on Integration

  • A new series of business success factors and challenges are emerging
  • Organization agility
  • Focus on core competencies and processes
  • Redefinition of the value chain
  • Instantaneous business response
  • Ability to scale resources and infrastructure across geographic boundaries

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These developments add up to an environment that is vastly more complex than that of even five years ago

This in turn has resulted in organizations increasingly embracing new business models

The new environment requires organizations to focus externally on their business processes and integration architectures

The virtually integrated business model will cause a sharp increase in the number of business partners and the closeness of integration between them

Increased Focus on Integration

  • Never before have IT investments played such a critical role in business success

  • As business strategies continue to evolve, the distinction between “the business” and “IT” will virtually disappear

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CLASSROOM EXERCISE

Great Business Decisions

This IM has covered numerous great business decisions from the invention of the Reaper to the decision to extend the Barbie line to add the Ken doll. Ask your students to research the Internet for additional examples of great business decisions that have changed our world and our lives. Have your students’ present their findings to the class.

LEARNING OUTCOME REVIEW

  • Now that you have finished the chapter please review the learning outcomes in your text

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Be sure to review the learning outcomes included in the end-of-chapter material

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