ICT in Business ISD 155 - KNUST PDF

ICT in Business ISD 155 Prof. Kwame Owusu Kwateng / Dr. Evans Amoah Department of Supply Chain and Information Systems KNUST School of Business KNUST - Kumasi Digital Transformation and Enterprise IT Architecture www.knust.edu.gh  Business Perspective Fr...

ICT in Business ISD 155 Prof. Kwame Owusu Kwateng / Dr. Evans Amoah Department of Supply Chain and Information Systems KNUST School of Business KNUST - Kumasi Digital Transformation and Enterprise IT Architecture www.knust.edu.gh  Business Perspective From a business perspective, this lecture addresses the following issues: – The powerful impacts of digital technology on businesses – How some leading companies are deploying digital technology to change their business models, business processes, and customer experience. – The importance of managing information and knowledge as a key organizational asset. – The architecture of IS www.knust.edu.gh  Digital Transformation (1/4) Many forward-thinking managers and entrepreneurs are digitally transforming their existing business models and reinventing their businesses. 87% of business leaders have digital transformation as a company priority, and 79% of corporate strategists are reinventing their business and creating new revenue streams (Gartner, 2019). Companies such as Uber, Airbnb, Shyp, TaskRabbit, and other participants are leveraging IT to create exciting new business models and revolutionize the way workers, businesses, and customers interact and compete. Peter Hinssen a well known business consultant describes the change in digital technology as follows: “Technology used to be nice. It used to be about making things a little www.knust.edu.gh bit better, a little bit more efficient. But, technology stopped being nice: it’s disruptive. It’s changing our business models, our consumer markets, our organizations.“  Digital Transformation (2/4) Do the concepts of digitization, digitalization and digital transformation mean the same thing? Digitization: The technical process of converting analog signals into a digital form. – Digitization reduces paper clutter and improves efficiency by making information easier to store, search, and find. Digitalization: The use of digital technologies and data (digitized and natively digital) to create revenue, improve business, replace business processes, and create an environment for digital business. – Digitalization involves using digital technologies to automate processes for better outcomes and to optimize value. – Digitalization involves incremental improvements. www.knust.edu.gh  Digital Transformation (3/4) Digital Transformation (DT): A fundamental change process, enabled by the innovative use of digital technologies accompanied by the strategic leverage of key resources and capabilities, aiming to radically improve an entity (organization, a business network, an industry, or society) and redefine its value proposition for its stakeholders. – It is the innovative use of various advanced digital technologies to radically improve an organization and create value for stakeholders. – Digital transformation involves radical improvements. Incremental improvement Vs. Radical improvement Incremental improvement implies small-step improvements and continuous process-oriented modification. Radical improvement is characterized by an episodic www.knust.edu.gh occurrence, intending dramatic results.  Digital Transformation (4/4) Emerging technologies for DT include social media, mobile technologies, the Internet of Things, cloud technologies, big data analytics, artificial intelligence, blockchains, etc. DT changes how business entities operate, creating value and bringing different experiences to various stakeholders involved. Berman (2012) argues that information technology provides three key transformational opportunities: i. creating new business models; ii. improving operational processes; and iii. enhancing customer experiences. www.knust.edu.gh  Key strategic and tactical questions  Some key strategic and tactical questions determine an organization’s profitability and management performance.  Answers to each question require an understanding of the capabilities of mundane to complex IT, which ones to implement, and how to manage them www.knust.edu.gh  Disruptive Digital Business Models Business model: It defines the products/services a company will sell, its target market, the cost associated with doing business, and the company’s ongoing plan for achieving its goals. – It is a company’s core strategy for making a profit. Digital business models: Prescribes how businesses make money and meet their goals using digital technologies. Disruptive digital business models: Innovative and transformative approaches that leverage digital technologies to fundamentally alter traditional industries or create entirely new markets. DT drives radical changes in business models to enable organizations to provide goods and services to customers in a way they want them delivered, when they want them, and where they want to access them. – Companies that adopt digital business models are better positioned to take advantage of www.knust.edu.gh business opportunities and survive.  Examples of Disruptive Digital Business Subscription: Customer Models pays for access to a product/service for a specific period. Examples include Netflix and Apple Music. Freemium: Customer gets either a ‘basic’, free, or trial version of a product or service. The customer has the option to upgrade to a paid version. Examples include LinkedIn and Dropbox. Free: Customer is the product. Customer data is the most valuable part of the business along with his/her attention for advertising purposes. Examples include Google and Facebook. On-demand: A business model where products or services are provided to customers immediately or as needed, typically facilitated through technology. – This model allows users to access goods, services, or content whenever they require them, often through digital platforms or applications. Examples include ridesharing services such as Bolt, Uber, and Glovo. Sharing economy: An economic system in which goods or services www.knust.edu.gh are shared between private individuals either for free or for a fee, typically arranged through an  What is a Business Process? Business process: A series of steps by which organizations coordinate and organize tasks to get work done within and across their different business functions. Business processes can be formal or informal. Formal process: Has documented and well-established steps. For example bank loan approval system. – Routine formal processes are typically referred to as standard operating procedures. Informal process: Typically undocumented, has inputs that may not be yet identified, and are knowledge-intensive www.knust.edu.gh  Business Process Reengineering? Business process reengineering (BPR): The radical redesign of core business processes to achieve a dramatic improvement in productivity, cycle times, and quality. Cycle times: A period to complete one cycle of an operation or task from start to finish. BPR proposes that simply applying IT to a manual or outdated process does not always optimize it. – Instead, processes need to be examined to determine whether they are still necessary. www.knust.edu.gh 12  BPR Goals The goal of BPR is to eliminate unnecessary, non-value-added processes, and simplify and automate the remaining processes to significantly reduce cycle time, labor, and costs. After eliminating waste, technology can enhance processes by: i. Automating existing manual processes; ii. Expanding the data flows to reach more functions to make it possible for sequential activities to occur in parallel; iii. Creating innovative business processes that, in turn, create new business models. For instance, consumers can scan an image of a product and land on an e-commerce site, such as Amazon.com, selling that product. This process flips the traditional selling process by making it customer-centric. www.knust.edu.gh Eight Phases of Business Process Reengineering? www.knust.edu.gh Comparing IT infrastructure, IT architecture, and Enterprise Architecture 15  IT Infrastructure  Inventory of the physical IT devices that an organization owns and operates.  Describes organization’s entire collection of hardware, software, networks, data centers, facilities and related equipment.  Does not include people or process components of an IS. 16  IT Architecture  Guides the process of planning, acquiring, building, modifying, interfacing, and deploying IT resources in a single department within an organization.  Should offer a way to systematically identify technologies that work together to satisfy the needs of the departments’ users.  Blueprint for how future technology acquisitions and deployment will take place.  The IT architecture is developed first and foremost based on department direction and business requirements. 17  Enterprise architecture (EA)  A conceptual blueprint that defines the structure and operation of an organization’s strategy, information, processes, and IT assets.  The EA adds value to an organization in that it can provide the basis for organizational change just as architectural plans guide a construction project.  Solves two critical challenges: where an organization is going and how it will get there. 18  Measuring EA Success: KPIs The success of EA in an organization is calculated by measuring a set of key performance indicators (KPIs). KPIs are a set of quantifiable measures used to evaluate factors that are critical to the success of an organization. KPIs help reduce the complex nature of EA performance to a small number of understandable measures such as capabilities, operational performance, project performance, and financial performance. 19  Strategic Focus of EA  There are two specific strategic issues that the EA is designed to address:  IT systems' complexity: IT systems have become unmanageably complex and expensive to maintain.  Poor business alignment: Organizations find it difficult to keep their increasingly expensive IT systems aligned with business needs. Business and IT Benefits of EA o Cuts IT costs; increases productivity with information, insight, and ideas o Determines competitiveness, flexibility, and IT economics o Aligns IT capabilities with business strategy to grow, innovate, and respond to market demands o Reduces risk of buying or building systems and enterprise apps 20 EA Components 21  Enterprise systems Enterprise systems aim to support the business processes of an organization across any functional boundaries that exist within that organization. – They use Internet technology to integrate information within the business and with external stakeholders such as customers, suppliers, and partners. Four main elements of an enterprise system are the following: – Enterprise resource planning (ERP) which is concerned with internal production, distribution, and financial processes – Customer relationship management (CRM) which is concerned with marketing and sales processes – Supply chain management (SCM) which is concerned with the flow of materials, information, and customers through the supply chain – Supplier relationship management (SRM) which is concerned with sourcing, purchasing, and warehousing of goods and services. www.knust.edu.gh Enterprise systems in comparison to separate functional applications www.knust.edu.gh  IS and strategic advantage For different markets, to what extent can IS support or impact: – Cost leadership – Product differentiation – Innovation – Segmentation www.knust.edu.gh  Information Systems (ISs) and Corporate Culture ISs do not exist in isolation. – They have a purpose and a social (organizational) context. A common purpose for ISs is to provide a solution to a business problem. The social context of the system consists of the values and beliefs that determine what is admissible and possible within the culture of the organization and among the people involved. – For example, a company may believe that superb customer service and on-time delivery are critical success factors. This belief system influences IT investments, among www.knust.edu.gh other factors.  IS Value The business value of IT is determined by the people who use them, the business processes they support, and the culture of the organization. IS value is determined by the relationships among ISs, people, and business processes―all of which are influenced strongly by organizational culture. In an organization, there may be a culture of distrust between the technology and business employees. – There is a need for genuine commitment to change in order to address such issues. – That commitment must come from the highest level www.knust.edu.gh of the organization―senior management. THANK YOU