Information Technology in the Digital Age Dr Sherif Kamel Department of Management School of...

Information Technology in the Digital Age

Dr Sherif KamelDepartment of Management

School of Business, Economics and Communication

Copyright © 2005 Sherif KamelCopyright © 2002 Turban, McLean and Wetherbe

Outline

Digital economy From marketplace to marketspace Business models Business pressures and drivers of change Organizational framework and responses Information systems building blocks Information systems functional perspectives Technology trends Management issues


Digital economy – the new economy

eBusiness: the use of electronic technologies to transact business

Collaboration: people and organizations interact, communicate, collaborate and search for information

Information exchange: storing, processing and transmission of information


Digital economy

The digital economy refers to an economy that is based on digital technologies, including digital communication networks, computers, and software

The digital economy is also sometimes called the Internet economy, the New economy, or the Web economy

Also known as marketspace


Digital economy – more issues

Electronic commerce (EC) is the use of web-based systems to support buying, selling, and customer service

Click-and-mortar companies add some eCommerce activities to their regular business

Networked computing connects several computers and other electronic devices via telecommunication networks

Information technology (IT) refers to the collection of computer systems used by an organization


Digital business

Your Domain/URL

Internet

POS

Appliance ServerStore 3

PCThin Client

Appliance

On-line Multi-station Store

Net Appliance

Store 1

On-lineSingle-station Store

On-line CustomersConsumer & Business

Commercial

E-commerce

Hub

AccountingPhone OrdersMail Orders

Order Fulfillment

STARS

Thin ClientThin Client

In-house operations

PCPC

PC

Purchasing

On-line Salesperson

Linux Credit Card Approval

Apache Server

Cold Fusion

Sybase ASE Database

Linux SSL

Apache Server

Beacon Hill's Stars

Tarentella

SCO UnixLinuxUnix

Business to BusinessServer

E-Commerce Server

Windows 2000

Offi ce Suite Video Conferencing

Server

IP Address 1

IP Address 2

IP Address 3

STARS

Networks

Internet

Telecommunications

ConsumerIn-office

Field Sales


From marketplace to marketspaceTaking a photo – the old way Buy film in a store Load your camera Take pictures Take roll of film to store for processing Pickup the film when ready Select specific photos for enlargement Mail to family and friends


From marketplace to marketspaceTaking a photo – the new way 1st generation digital photography

o Old economy except 6 and 7 were replaced by using a scanner and emailing

2nd generation digital photographyo Use a digital camera, no film, no processing

3rd generation digital photographyo Your digital camera is now your mobile phone, in your

binoculars or a palmtop computer


Business models

Business model is a method of doing business by which a company can generate revenue to sustain itself – how a company adds value to create a product or service “the value chain”o Nokia makes and sells cell phoneso TV stations provide free broadcasting (complex mix of

advertisers and content providers) o Internet portals (Yahoo) revenue generation

mechanisms


Case: Bristol-Myers Squibb (BMS)

Problemo BMS is a leading manufacture of pharmaceutical drugs,

beauty and infant-food productso Struggling to stay ahead in the new digital economy

Solutiono BMS initiated multiple web-based projects, overhauled

its management structure, revamped its procurement and supply chain processes, and expanded its portfolio of websites

Outcomeo BMS experienced over 100 million US dollars in annual

savings just from eProcurement


BMS lessons learnt

Global competition drives large corporations to find ways to reduce costs, increase productivity and improve customer service

Achievements could be realized through proper web-based systems

Major initiatives that BMS embarked upon includedo Reduce costs by introducing an eProcuremento Increase sales by utilizing the WWWo Improve relationships with employees and customers

(CRM)


Digital economy business models

Name-your-own price

Dynamic brokering

Affiliate marketing

eMarketplaces and exchanges


Name your-own price

Pioneered by www.priceline.com – a model that allows customers to state a price they are willing to pay for a product or service


Dynamic brokering

In the digital age customers can specify requirements for a service or a product

Such specifications are broadcast over the Internet “webcasted” to service providers in an automatic invitation to submit bids


Affiliate marketing

An arrangement in which marketing partners place a banner of a company, such as www.amazon.com on their website


eMarketplaces and exchanges

Thousands of electronic marketplaces, of different varieties, have sprung up – vertical and horizontal


Model environments

Interneto From about 50 million Internet users in 1997, there

could be as many as 750 million by 2007

Intranets utilize information technology to provide organizations with internal communication systems

Extranets combine intranets with the Internet to create a powerful inter-organizational systems for collaboration (groupware)


Business pressures and drivers of change


Market pressures Global economy and strong competition

o Global competition is intensified as governments become involved through the use of subsidies, tax policies, import/export regulations and incentives

o Rapid and inexpensive communication and transportation modes increase the magnitude of international trade

o Changing nature of the workforceo The workforce is becoming more diversified, with more females,

single parents, minorities, and handicapped persons working in all types of positions

Powerful customerso Consumer sophistication and expectations increase as customers

become more knowledgeable about the availability and quality of products and services


Technology pressures

Technology innovations and obsolescenceo Today’s state-of-the-art products may be obsolete

tomorrow – thus technology accelerates the competitive forces

Information overloado The amount of information available on the Internet

more than doubles every yearo The management of information is critical


Social pressures

Social responsibilityo Issues range from the environment to education

Government regulationso Regulation issues involve health, safety, environmental

control, and equal opportunity

Government deregulationo Deregulation can be a blessing to one company but a

curse to another company

Ethical issueso Business ethics relates to standards of right and wrong

in business practices


Organizational framework


Organizational responses

Organizations need to respond to business, societal and technical pressures with critical response activities

A typical industry-level response to the digital economy is disintermediation, or the elimination of intermediary organizations

Organizations can also take proactive measures, to create a change in the market placeo Exploiting opportunities created by external pressures



Strategic systems for competitive advantageo Provide organizations with strategies to increase their market

share, better negotiate with suppliers, or stop competitors

Continuous improvement efforts (operational efficiency)o Aim to improve a company’s productivity and quality. Examples

include: Improved productivity Managing enterprise data Just-in-time (JIT) Innovation and creativity Total quality management Change management Knowledge management Customer service



Business process reengineering (BPR)o Refers to the introduction of a major innovation in an

organization’s structure and the way it conducts business

o Major areas in which IT supports BPR: Reducing cycle time and time to market Empowerment of employees and collaborative work Customer-focused approach and CRM Restructuring and team-based structure



Business allianceso Many companies realize that alliances with other

companies, even competitors, can be very beneficial

Electronic commerce/electronic businesso Doing business electronically is the newest and perhaps

most promising strategy that many companies can pursue


Organizational response todrivers of change


Information systems (IS)

Information systems (IS) collect, process, store, analyze, and disseminate information for a specific purpose

Information Systems are comprised ofo inputs (data, instructions)o outputs (reports, calculations)o feedback mechanisms that controls the operationo an environment that it works within

Computer-based information system (CBIS) is an information system that uses computer technology to perform some or all of its intended tasks


IS as a system


IS building blocks Hardware

o devices such as processor, monitor, keyboard, and printer Software

o programs that enable the hardware to process data Data

o collection of related files, tables, relations, and so on, that stores data

Networko connecting system that permits the sharing of resources between

computers Procedures

o instructions about how to combine the above components People

o individuals who work with the system or use its output


mCommerce

mCommerce (mobile commerce) refers to the conduct of eCommerce via wireless devices

Commercial application of mobile computing based on wireless networks

Growing interest in mCommerce because the number of mobile devices is projected to top 1.5 billion by 2005

Location-based commerce (lCommerce) is an application of mCommerce that offers customers the location information of anything they want to purchase


Future devices @ home

Network computer (NC) first introduced in 1997, does not have a hard drive – served by a central computing station, and temporarily receives and can use applications and data stored elsewhere on the network

Integrated home computing (IHC) – home computing, television, telephone, home security systems, and other devices will be integrated and managed in one unit (smart home)


Applications and operations

Marketing Sales Manufacturing Purchasing Finance Accounting Retail operations Wholesale Human resources Content management …and more…


Information systems

Functional perspectiveo Marketing

Identify customers Determine what they want Planning products Advertising and promoting products Determine prices for products

o Sales Contact customers Sell the product Take the order Follow-up on the sale 5 year sales forecast


Information systems

Functional perspectiveo Manufacturing

Control Equipment and machinery Design new products When and quantity of products to produce New production facilities Generate the work order

o Purchasing Which vendors Quantity to purchase Coop, rebate tracking Handle delivery discrepancies Generate the purchase order


Information systems

Functional perspectiveo Finance

Financial Assets Investment management Banking Long term budgets

o Accounting Accounts Receivable Disbursements Payroll Depreciation Earned Coop and Rebates


Information systems

Functional perspectiveo Human Resources

Employee wages, salaries and benefits Long term labor requirements Tracking vacation, sick, Track employee skills Interview and review employees


Technology trends

Internet Mobile Computing and mCommerce Wireless networks Smart devices Networked enterprise Network computer


Why study IS?

You will be more effective in your chosen career if you understand information and comprehend how successful information systems are built, used, and managed

You also will be more effective if you know how to recognize and avoid unsuccessful systems and failures

Developing computer literacy will only enhance your information literacy


Management issues

Recognizing opportunities for using IT and web-based systems

Who will build, operate, and maintain the information systemso Need to minimize the cost of IT while maximizing its

benefitso Opt for outsourcing (partial – full-fledged)

Cost-benefit analysis Ethics and social issues when implementing IT Organizational transformation

Information Technology in the Digital Age Dr Sherif Kamel Department of Management School of...

Documents

Transcript of Information Technology in the Digital Age Dr Sherif Kamel Department of Management School of...