A-IT Trends in Business and Innovation

Course Information

• Course title: Managing Businesses Under New Technologies
• Course code: QMB 6930: MANAGEMENT INFORMATION SYSTEMS
• Lecture code: OA
• Instructor: Anuj Kumar

About the Instructor

• Anuj Kumar is the Matherly Professor of Information Systems
• PhD in Information Systems Management from Carnegie Mellon University (2011)
• Research interests include technology-mediated multichannel operations (QR Codes), online product recommendation networks (algorithms), and technology and society

The EPInc Platform

• An AI-enabled peer-driven knowledge diffusion platform
• Provides various resources and links concerning the platform. The URLs are included in the presentation.

My Research in News – Algorithmic Product Recommendations

• Articles available online exploring the value of product recommendations to consumers, optimizing online sales with hybrid recommendations, and the effectiveness of website recommendations. The URLs are included in the presentation.

My Research in News – Online School Ratings

• Warrington professor's TEDx talk on how online school ratings accelerate segregation in America
• Articles about accelerating segregation from online school ratings, and brick and mortar "showrooms" for stores surviving in the digital age.

Course Logistics

• Course components include lectures, case presentations, and class discussions
• Assessment methods involve a final exam (40%), case presentation (35%), and pop quizzes (25%). Pop quizzes cover material from the previous lectures and are administered at the start of class.

The "First Machine Age"

• Focuses on overcoming muscle power limitations.
• Includes factories, mass production, and railways.
• Highlights the steam revolution as the largest transformation in world history.

Is Technology Transformational?

• In 1850, the United States economy was small, roughly the size of Italy
• 40 years later, the US economy became the largest globally— attributed to the railroad
• Discusses whether IT qualifies as a transformational technology
• Covers related terms such as digital transformation, digital disruption, and digital ubiquity

The "Second Machine Age"

• Three fundamental forces that shape the second machine age: exponential improvement in computer gear, digitization, and digitization-enabled innovation

Moore's Law in ICT

• Moore's Law, an observation made by Intel co-founder Gordon Moore in 1965, states that the number of transistors per square inch on integrated circuits doubles roughly every 18 months
• Moore's Law predictions about digital trends, emphasizing their ongoing momentum
• Graph presentation included for visualizing the computing power growth vs communication power increase trends.

If Moore's Law Applied Everywhere

• Comparing Intel's first-generation microchip (4004 - 1971) with the fifth-generation Core i5 processor in terms of performance, energy efficiency, and cost
• Shows how advances in computing would translate to equivalent advancements in a physical context, like a car.

Digitization

• Digitization is the encoding of information into a stream of bits
• Digitization's impact on data volume, velocity, and variety creation
• Examples: user-generated data (e.g., social interactions), machine-generated data (e.g., machine-to-machine communication), location data, and social interactions

Digitization Affects Costs

• Digitization decreases search, replication, transportation, tracking, and verification costs
• This impact encourages platform-based business models and promotes opportunities for advertising, and price discrimination.

Digitization Enabled Innovation

• Exa and Zettabytes of data, along with advanced computing methods, enable better science
• Providing better explanation and prediction of phenomena
• Some Examples given in the presentation

Digitization & Disruptive Innovation

• Introduction of a paper from McKinsey & Company (Jan 2014) about digitization and disruptive innovation
• A video link associated with the topic

Summary of Video

• Digitization affects all economic sectors, encompassing more than just text, images, and videos, such as social interaction, physical world attributes and activities, among others
• The positive impact on goods/services variety, volume, and quality at competitive low prices
• Challenges: employment and value capture
• The importance of accessing global talent, using data-driven decision-making, and conducting tests/experiments for innovation

Competitive Advantage through IT

• Information Technology (IT) refers broadly to computer, networking and communication technologies
• Historical use was primarily for automating behind-the-scenes back-office activities
• Current focus on gaining competitive advantage through IT
• Two historical examples: American Airlines SABRE System, and Merrill Lynch Cash Management Account

American Airlines SABRE System

• Integrated database storing flight schedules, routes, and pricing for multiple airlines: High-speed & efficient agent interactions
• Providing a competitive advantage to American Airlines over competitors
• The SABRE System example details how IT-based systems were initially conceived and how IT was used for a competitive advantage.
• Describes actions that lead to a loss of competitive advantage due to legal interventions.

Merrill Lynch Cash Management Account

• Integrated database keeping track of customer accounts, their savings, checking and brokerage information: Allows fine-tuning of liquidity levels.
• Automated decision-making software to track opportunities and execute relevant investments

Business Model

• Business strategy incorporates organizational resources through well-designed business processes to create value for consumers
• Element details of a business model: customers’ value proposition, profit (revenue - cost) model, critical tangible/intangible resources, business processes
• Discussion about how business strategy affects IT strategy compared to the vice-versa scenario.

Strategic Roles of the IT

• Types of strategic IT roles:
• Automation: Cost reduction, better response time, and higher productivity
• Control: Tighter control, better handling, and accuracy of business processes
• Empowerment: Effective response to situations from increased data, information, knowledge, and business intelligence tools
• Collaboration: Innovation through better collaboration among skilled employees

Examples: Strategic Role of IT

• Presentation showing various business scenarios in which IT played a critical role in developing a new competitive advantage for companies
• These include examples from Walmart, Amazon, and other major companies

Examples of IT-Enabled Business Model Innovation

• Presents different business models in which IT was primarily a source of innovation for business models.
• Shows distinct examples of how IT was central to creating innovative models from a competitive approach

IT as a Platform

• IT systems function as platforms for collecting, processing, and managing information.
• Allows for the identification of knowledge gaps, personalized learning content, and efficient information display
• Advantages provided by these systems are shown, including the real-time data collection that IT platforms offer

Sustainability of IT Enabled Competitive Advantage

• Competitors quickly imitate (and even improve on) successful IT-based competitive actions
• Factors to consider in assessing the sustainability of IT-based competitive advantages: Factors such as easily accessible and replicable IT
• Factors that help maintain these advantages: Superior technical and/or business capabilities
• Various methods of assessing the sustainability of IT actions

Barriers to Erosion of IT Enabled Competitive Advantage

• The barriers to erode IT-enabled competitive advantage include: • IT Resources: IT assets (hardware, software, data), IT capabilities (managing and implementing broad IT to capitalize on opportunities) • Complementary Resources: Organizational changes; project management and execution capabilities • Preemptive Barriers: Customer switching costs and establishing relationships with other partners

Emerging IT Enabled Business Trends

• Discussion about emerging IT-enabled business trends, encompassing social technologies, big data and advanced analytics, Internet of Things (IoT), multichannel operations, cloud computing, platform-mediated business models, AI and cognitive computing, and other topics

Two Emerging Themes

• Discussion about the digitization of virtually everything, the increasing digitization of products and services, the role of sensors to capture usage data, more personalized approaches, and blurring the line between physical and digital worlds
• Emphasizes changes in technology paradigms.

Top Trends in IT Enabled Business

• Top trends in IT-enabled business, including social technologies, big data and advanced analytics, IoT, omnichannel operations, cloud computing, AI, cognitive computing and other emerging technologies
• The impact of trends in emerging economies and public sectors on businesses

Social Technologies

• Social technologies connect organizations with both internal and external audiences through collaboration and crowdsourcing, such as Facebook, YouTube, Innocentive, Quirky and others
• These systems can identify new ways of capturing innovation and leveraging peer economies through collaborative models

Big Data

• Gathering huge amounts of data enables new insights with advanced analytics
• Enables personalization in business strategies (Netflix, UPS, IBM, Target)
• Demonstrates the use of data for new product and service offerings

Internet of Things (IoT)

• IoT is larger than commonly realized, encompassing "smart" objects in real-life environments beyond smart phones or TVs.
• Discusses its potential for productivity and growth through effective data collection, aggregation, and analysis

Multichannel Operations

• The rapid growth of channels for business interactions (phone, web, and mobile)
• Discusses challenges, the opportunities, and the blurring of distinctions between digital and physical interactions.

Cloud Computing

• Cloud computing is revolutionizing how business computing is performed
• Transforming how resources are allocated and leveraged
• The “pay-as-you-go” model is mentioned and some companies are referenced in this context.

Platform Mediated Business Models

• Products and services that tie together two or more customer groups
• Examples: credit cards, newspapers, health maintenance organizations (HMOs), and computer operating systems are given by way of examples.
• Examples of recent and traditional companies and how they employ similar models

AI and Cognitive Computing

• Traditional machine learning versus deep learning approaches, focusing on supervision needs
• Discusses the evolution in AI and cognitive computing in light of recent technological advancements
• Covers computer vision and natural language processing
• Features of generative AI are illustrated (e.g., creative tasks and large language models (LLMs))

GenAI

• Most AI models are "discriminative" and focus on historical data for analysis
• Describing whether a credit card transaction is fraudulent or making predictions based on past transactions
• GenAI is capable of producing content and performing creative tasks
• Different models employed within the world of GenAI (Stable Difffusion, LLMs)

Autonomous Driving

• Discusses the digitization of the automobile industry, with a focus on changes to car ownership models
• The OECD study and other data are referenced concerning how this affects society
• The implications that autonomous driving has on jobs in the transportation industry

Emerging Economies and Public Sector

• Large markets are growing quickly with increased internet and mobile adoption
• Discusses the growth in entrepreneurship and financing
• Examples included, such as Universal ID (Aadhar) in India, mobile technology and childcare in India and China, Telemedicine, and MOOCs
• The educational platforms that encourage innovation in the educational sector.

Each One of These Trends Is Hugely Transformative

• Emphasizes the transformative nature of the technologies and their potential impact on businesses and society as a whole

This quiz covers key concepts related to IT-enabled business trends, including crowdsourcing, peer economies, and data analytics. Assess your knowledge of how these technologies influence operational excellence and business model innovations in various companies. Test your understanding of the emerging digital and physical convergence in business practices.