IT Disrupts Businesses PDF

A. LECTURE 1: IT DISRUPTS BUSINESSES Doing Business in the On-Demand Economy The on-demand economy is the economic activity created by technology companies that fulfill consumer demand through the immediate provisioning of products and services. The on-demand economy is a...

A. LECTURE 1: IT DISRUPTS BUSINESSES Doing Business in the On-Demand Economy The on-demand economy is the economic activity created by technology companies that fulfill consumer demand through the immediate provisioning of products and services. The on-demand economy is a result of technological innovation and a shift in consumer behavior. Companies are increasingly relying on their IT and data management systems for their operations. Mobile communications and technology stacks enable companies to connect consumers and service providers, creating an on-demand economy. The internet offers convenience through speed and cognitive ease, making human desires more easily attainable. The proliferation of smartphone-connected consumers, secure purchase flows, and location-based services are driving the explosion of on-demand services. App-driven companies like Uber, Airbnb, and Grubhub have disrupted the taxi, hotel, and restaurant markets. Successful technology businesses share platform-based business models that provide connectivity for diverse transactions. These models cater to the on-demand economy's focus on time, convenience, and personalized service. Understanding the capabilities of mundane to complex IT is crucial for an organization's profitability and management performance. Growth of the On-Demand Economy The on-demand economy aligns with consumers' desire for convenience, speed, and simplicity. High interest in on-demand services includes dog walking, laundry services, short-term home rentals, massages, and truck hauling. Low cost of entry is a key factor in the on-demand economy. Digital Business Model The on-demand economy is driving the shift from traditional to digital business models Digital business models define how businesses generate revenue through digital technology. Companies adopting digital models are better positioned to capitalize on business opportunities and survive. Key concerns for corporations, global financial institutions, and government agencies include designing digital business models for exceptional customer experience, profit, market share increase, and employee engagement. There is a strong correlation between a firm's customer experience and loyalty, which in turn increases revenue. IT’s Role in the On-Demand Economy A survey by the Society of Information Management (SIM) shows companies increasingly focusing on strategic IT use for growth and performance improvement. Top 10 IT management priorities include business-IT alignment, security, innovation, IT agility, speed of IT delivery, and business productivity and efficiency. IT leaders recommend focusing on relationships, frequent meetings with top management, and significant time with functional leaders, customers, and suppliers. Emphasis on finding, keeping, and developing IT talent and improving IT for business performance. IT in the on-demand economy is about meeting customer needs. IT Business Objectives IT must adapt to consumer demands for a radical overhaul of business processes. IT should focus on product development, stakeholder integration, process improvement, cost efficiencies, competitive advantage, and globalization. ○ Product development. From innovations in microprocessors to efficient drug-delivery systems, 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 system replaces dozens of legacy systems for finance, human resources, and other functional areas, to increase efficiency and cost-effectiveness of internal business processes. ○ Cost efficiencies. IT allows companies to reduce transaction and implementation costs, such as costs of duplication and postage of email versus snail mail. ○ Competitive advantage. Companies can use agile development, prototyping, and other systems methodologies to being a product to market cost-effectively and quickly. ○ Globalization. Companies can outsource most of their noncore 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. IT innovations can trigger opportunities and threats to business models and strategies. Companies can offer competitive prices due to lower costs, better operational controls, and reduced risk. Business Process Improvement and Competitive Advantage Small improvements in key processes can yield significant benefits. All enterprise functions and departments need to complete tasks for outputs. What Is a Business Process? Business processes are a series of steps by which organizations coordinate and organize tasks to get work done. In the simplest terms, a process consists of activities that convert inputs into outputs by doing work. Business Process Components Overview ○ Involves inputs, activities, and deliverables. ○ Formal: Documented, well-established steps like order taking and credit approval. Examples include standard operating procedures (SOPs). ○ Informal: Undocumented, knowledge-intensive, often unidentified inputs. ○ Range: Slow, rigid to fast-moving, adaptive. ○ Rigid: Structured to resist change, like security or compliance regulations. ○ Adaptive: Designed to respond to change or emerging conditions, especially in marketing and IT. Improving Business Processes Deliverables are the outputs or tangible things that are produced by a business process. Common deliverables are products, services, actions, plans, or decisions, such as to approve or deny a credit application. Deliverables are produced in order to achieve specific objectives. Importance of Effective Process Design ○ Process design requires an understanding of inputs and outputs, potential issues, and prevention strategies. ○ Dell's new process to reduce customer service call length led to decreased quality and increased problem resolution time, aggravating customers. Importance of Efficient Business Processes ○ 100% of an enterprise's performance is attributed to its processes. ○ Maximizing input use for superior performance is a critical success factor. Poorly Designed Business Processes ○ Poorly designed, flawed, or outdated processes waste resources, increase costs, cause delays, and aggravate customers. ○ Inadequate order fulfillment can lead to customer loyalty, increased returns, and increased costs. Revolutionizing Business Processes in an On-Demand Economy Companies need to reinvent entire business processes to meet higher customer expectations. This includes reducing steps, eliminating documents, developing automated decision-making, and addressing regulatory and fraud issues. Operating models, skills, organizational structures, and roles need to be redesigned to match the reinvented processes. Data models should be adjusted and rebuilt for better decision-making, performance tracking, and customer insights.  Successful companies are reinventing processes using cutting-edge digital technology, challenging everything related to an existing process. For instance, leading organizations create self-serve options for customers to type in their own complaints. Business Process Reengineering (BPR) BPR is a radical process change process that involves: ○ Identifying and eliminating unnecessary processes. ○ Redesigning or reengineering remaining processes to automate or streamline them. ○ Implementing and evaluating the new process. ○ Continuously reassessing the process for improvement. The goal is to eliminate unnecessary, non-value-added processes and simplify the remaining ones to reduce cycle time, labor, and costs. Technology can enhance processes by automating manual processes, expanding data flows, and creating innovative business processes. Gaining a Competitive Advantage IT plays a crucial role in gaining, maintaining, and sustaining a competitive advantage in the market. Competitive advantage is an edge that enables a company to outperform its average competitor. Companies aim to win customers, market share, and position in the industry by gaining an edge over competitors. The largest business challenge is "new competition," which requires continuous pursuit of new and better ways to compete. IT agility and responsiveness are vital for competitiveness, enabling organizations to take advantage of opportunities faster or more effectively. Agility means being able to respond quickly. Responsiveness means that IT capacity can be easily scaled up or down as needed, which essentially requires cloud computing. Flexibility means having the ability to quickly integrate new business functions or to easily reconfigure software or applications. IT agility, flexibility, and mobility are closely interrelated and dependent on an organization’s IT infrastructure and architecture. Rapid consumerization of IT is a result of the integration of mobile devices, applications, platforms, and social media into work life and corporate collaboration. The mergers of Grubhub/Seamless in food delivery and Handybook/Exec in-home services demonstrate the acceleration of consolidation as competition grows. Collaboration of complementary, noncompetitive businesses will become commonplace to educate consumers about the benefits of on-demand services. Legacy providers in hospitality, transportation, and other Fortune 500s will partner with or acquire more innovative on-demand companies. Design will increasingly become a significant form of competitive advantage as on-demand businesses solve technological and logistical challenges. IT Innovation and Disruption Create new markets, businesses, products, and careers. Changes consumer and retailer buying/selling. Companies must adapt and innovate. Product offerings, platforms, technologies, search options must adapt. Social–Mobile–Analytics–Cloud (SMAC) Model SMAC computing, combining cloud (core), handhelds and wearables (edge), and social channels , is reshaping business strategies and operations. The cloud provides 24/7 access to storage, applications, and services. Handhelds and wearables, such as FitBit, Pebble, and the Apple Watch, provide data from the users. The edge is connected to the core by social channels. SMAC integration creates the necessary technical and services infrastructure for digital business, meeting the expectations of employees, customers, and business partners. Examples of SMAC's influence: (The shift in power is driven by individuals using mobiles as an extension of their body and mind, requiring unique customer experiences.) Influence on advertising and marketing through social networks and feedback. Digitalization of consumer devices, like the Nike+ FuelBand wristband, offering new services. eBay's move to cloud technology improves sellers' and buyers' experiences. Technology Mega Trends Mega trends are forces that shape or create the future of business, the economy, and society. The most influential IT mega trends Connectivity Companies use digital platforms including hardware, software, networks, embedded sensors, and cloud computing. Cloud computing allows access to applications through the internet, with major providers including AWS, Cisco Powered, Dell Cloud Solutions, Google Cloud, IBM Cloud Solutions, and Teradata Cloud. Cloud service is any computing resource that is provided over the Internet on demand. Cloud provides flexibility to acquire or expand connectivity and computing power for operations, business transactions, and communication. Expanded connectivity supports smart products, such as smart clothing, watches, phones, buildings, and cities. Internet of Things (IoT) refers to a set of capabilities enabled when physical things are connected to the Internet via sensors.  Connectivity pushes sub-trends like big data, creating market opportunities for new products and services. Big Data and Data Analytics Big data, primarily text data, is generated from various sources including mobile devices, social content, web searches, video data, and business transactions. Unstructured data, 80% to 90% of big data, is too large for traditional technology to process quickly. Big data is more time-sensitive than traditional data and is analyzed for insights and smart decisions. Machine-generated data from sensors and social media texts are the main sources of big data. Big data can be a disruptive force for businesses, but when harnessed and acted upon, it can turn challenges into opportunities. Digitization Companies are transforming their approaches to customers, products, services, and operating models to an information-rich marketplace. Some leaders are redesigning capabilities and operating models to fully leverage digital technologies. Others are creating new business models around disruptive digital opportunities. 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. Digitization often requires combining old wisdom with new skills, such as training a merchandising manager to program a pricing algorithm. Benefits of digitizing processes include cost reduction by up to 90% and improved turnaround times. Examples span multiple industries, including a bank digitizing mortgage applications, a telecommunications company creating a self-serve service, a shoe retailer managing inventory, and an insurance company automating claims adjudication. The software replaces paper and manual processes, collecting data for a better understanding of process performance, cost drivers, and risk causes. Machine-to-Machine Technology Sensors embedded in products like cars, heart monitors, stoplights, and appliances connect to the internet. Ford's rain-sensing front wipers use advanced optical sensors to adjust wiper speed. Machine-to-machine (M2M) technology allows real-time data sharing via radio signals. M2M and IoT are used to automate business processes in various industries. Sensors embedded in products allow remote tracking and management of products. Businesses can adjust business models based on behavioral data. For instance, insurance companies can price policies based on how a car is driven and where it travels. Lessons Learned from Companies Using Disruptive Technologies Companies that leverage digital technology and software are outperforming their peers. A survey by CA Associates shows that companies that use technology as a competitive differentiator double their revenue growth, increase profit by 2.5, and increase new business-based revenue by 1.5. Key lessons learned include: Exploit the power of software by becoming "app-centric" and extending core business functions. Develop, deliver, and disrupt quickly with agile development techniques and DevOps. Boost speed and efficiency with automated programming interfaces (APIs). Leverage third-party innovation by managing API use and enabling external development access. Maximize returns with smarter IT investments. The unprecedented scale of technological innovations presents both opportunities and challenges.