ch01.pptx

IT for Management: Driving Digital Transformation to Increase Local and Global Performance, Growth and Sustainability Twelfth Edition (International Adaptation) Turban, Pollard, Wood Chapter 1 Digital Transformation Disrupts Companies, Competit...

IT for Management: Driving Digital Transformation to Increase Local and Global Performance, Growth and Sustainability Twelfth Edition (International Adaptation) Turban, Pollard, Wood Chapter 1 Digital Transformation Disrupts Companies, Competition, and Careers Copyright ©2021 John Wiley & Sons, Inc. Doing Business in the On-Demand Economy On-demand Economy is the economic activity created by technology companies that fulfill consumer demand through the immediate provisioning of products and services. Propelled by proliferation of o Smartphone-connected consumers o Simple and secure purchase flows o Location-based services Growth of app-driven companies like Airbnb, Uber, GrubHub have disrupted markets. 2 Doing Business in the On- demand Economy: Airbnb, Uber On-demand business models of Airbnb and Uber have been extremely successful. 3 Key Strategic and Tactical Questions 4 Doing Business in the On- demand Economy: Digital Business Models Digital business models refer to how companies engage their customers digitally to create value via websites, social channels, and mobile devices. 5 Doing Business in the On-Demand Economy: Terminology Business Model is how an enterprise generates revenue or sustains itself. Digital Business Model is defined by how a business makes money via digital technology. Customer Experience (CX) is about building the digital infrastructure that allows customers to do whatever they want to do, through whatever channel they choose to do it. 6 Doing Business in the On-demand Economy: Digital Business Models Why develop digital business models? o Deliver an incredible customer experience o Turn a profit o Increase market share o Engage their employees How does the customer experience (CX) measure up? o There is a strong relationship between the quality of a firm’s CX and brand loyalty, which in turn increases revenue. 7 Top IT Management Issues 1. Technology Alignment with the Business 2. Security, Cybersecurity, & Privacy 3. Innovation 4. IT Agility & Flexibility 5. Business Cost Reduction & Controls 6. IT Cost Reduction & Controls 7. Speed of IT Delivery & IT Time to Market 8. Speed of IT Delivery & IT Time to Market 9. Business Strategic Planning 10.Business Productivity & Efficiency Comparison of Top 10 Management Priorities (Adapted from Kappelman, McLean, Johnson, and Gerhart 2017) 8 Doing Business in the On-Demand Economy: Business Objectives (1 of 2) 1. Product Development—IT helps businesses respond quickly to changing customer demands 2. Stakeholder Integration—companies use their investor relations websites to communicate with shareholders, research analysts, and others in the market 3. Process Improvement—An ERP systems replaces dozens of legacy systems for finance, human resources, and other functional areas, to increase efficiency and cost-effectiveness of internal business processes 9 Doing Business in the On-Demand Economy: Business Objectives (2 of 2) 4. Cost Efficiencies—IT allows companies to reduce transaction and implementation costs, such as costs of duplication and postage of email vs snail mail. 5. Competitive Advantage—Companies can use agile development, prototyping, and other systems methodologies to bring a product to market cost effectively and quickly. 6. Globalization—companies can outsource most of their non-core 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 10 Doing Business in the On-Demand Economy: Questions (1 of 2) 1. What precipitated the on-demand economy? 2. How is IT contributing to the success of the on- demand economy? 3. List the six IT business objectives 4. What are the key strategic and tactical questions that determine an organization’s profitability and management performance? 11 Doing Business in the On-Demand Economy: Questions (2 of 2) 5. What is a business model? 6. What is a digital business model? 7. Give two examples of how companies are transitioning to digital business models. 8. What factors are driving the move to digital business models? 12 Business Process Improvement: Terminology (1 of 2) Business Process is a series of steps by which an organization coordinates and organizes tasks to get work done. Process is comprised of the activities that convert inputs into outputs by doing work. Deliverables are outputs created through work toward a desired benefit or expected performance improvement. Performance is a result of processes where maximizing efficiency over one’s competitors is a critical success factor. 13 Business Process Improvement: Components of a Business Process Raw Work Products, DELIVERABL INPUTS ACTIVITIES ES materials that services, , data, transfor plans, or knowled ms input actions ge, & acts on expertise data and knowled ge 14 Business Process Improvement: Characteristics Business Process Characteristics o Formal Processes or Standard Operating Procedures (SOP): documented and have well- established steps. o Informal Processes: typically undocumented, undefined, or are knowledge-intensive. o Range from slow, rigid to fast-moving, adaptive. o Can be rigid, resistant to change, or adaptive, responding to change. 15 Eight Phases of Business Process Reengineering 16  1. Develop Vision & Objective 8. Perform s 2. Continuous Understand Improveme Existing nt Processes 7. Evaluate 3. Identify New Process for Process Redesign 6. Make 4. Identify New Change Process Levers Operational 5. Implement New Process Eight Phases of Business Process Reengineering 17 Business Process Improvement: BPR Process Improvement o Continuous examination to determine whether processes are still necessary or operating at peak efficiency by eliminating wasted steps called Business Process Reengineering (BPR). o Digital technology enhances processes by: Automating manual procedures Expanding data flows to reach more functions and parallel sequential activities Creating innovative business processes to create new models. 18 Gaining a Competitive Advantage: Components 19 Business Process Improvement: Terminology (2 of 2) Agility is the ability to respond quickly. Responsiveness is IT capacity that can be easily scaled up or down as needed. Flexibility is the ability to quickly integrate new business functions or to easily reconfigure software or applications. IT agility, flexibility, and mobility are tightly interrelated and fully dependent on an organization’s IT infrastructure and architecture. 20 Business Process Improvement: IT Consumerization IT Consumerization is the migration of consumer technology into enterprise IT environments. It’s caused by personally owned IT becoming a capable and cost-effective solution for expensive enterprise equivalents. 21 Software Support for BPM Process Management o Consists of methods, tools, and technology to support and continuously improve business processes also known as Business Process Management (BPM). o BPM software is used to map processes performed manually, by computers, or to design new processes. o BPM requires buy-in from a broad cross section of the business, the right technology selection, and highly effective change management to be successful. 22 Business Process Improvement and Competitive Advantage 1. What is a business process? Give three examples. 2. What is the difference between business deliverables and objectives? 3. List and give examples of the three components of a business process. 4. Explain the differences between formal and informal processes. 5. What is the standard operating procedure (SOP)? 6. What is the purpose of business process management (BPM)? 7. What are the characteristics of an agile organization? 23 8. Explain IT consumerization. IT Innovation and Disruption: Intro SMAC Model Social-Mobile-Analytics-Cloud (SMAC) Model o Huge data centers accessible via the Internet form the fore for the cloud by providing 24/7 access to storage, apps, and services. o Handheld and wearable devices and their users form the edge of the cloud. o Social channels connect the core and edge. o The SMAC integration creates the technical and services infrastructure needed to digital business. 24 IT Innovation and Disruption: Social-Mobile-Analytics-Cloud (SMAC) Model of the integration of cloud, mobile, and social technologies. The cloud forms the core. Mobile devices are the endpoints. Social networks create the connection. 25 IT Innovation and Disruption: SMAC Influence Social-Mobile-Analytics-Cloud (SMAC) o Powerful social influences impact advertising and marketing. o Consumer devices go digital and offer new services. o eBay’s move to cloud technology improves sellers’ and buyers’ experiences 26 IT Innovation and Disruption: Mega Trends (1 of 4) Mega Trends are forces that shape or create the future of business, the economy, and society. Connectivity o Need to connect across multiple channels and platforms o Cloud Services are any computing resource provided over the Internet on demand, rather than run applications from software stored on company-owned server or computer. o Digital resources no longer dependent on buying/owning that resource. 27 IT Innovation and Disruption: Mega Trends (2 of 4) Big Data and Data Analytics o Commonly defined as high-volume, mostly text data o 80-90% consists of Unstructured data, having no predictable format o Multiple channels and sources: Machine-generated data from sensors and mobile devices Social media content from clicks, tweets, blogs Clickstream data from Internet searches 28 IT Innovation and Disruption: Mega Trends (3 of 4) 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. o Banks digitizing mortgage application/decision process cut costs per new mortgage by 70% o Telecomm company created self-serve, prepaid service to order and activate phones o Shoe retailer using in-store inventory system to know immediately if item was in stock 29 IT Innovation and Disruption: Mega Trends (4 of 4) Machine-to-machine (M2M) Technology o Enables sensor-embedded products to share reliable real time data via radio signals o Internet of Things (IoT) refers to a set of capabilities enabled when physical things are connected to the internet via sensors o M2M and IoT are widely used to automate businesses ranging from transportation to healthcare 30 IT Innovation and Disruption: Lessons Learned Companies using technology as a genuine competitive differentiator can reap these benefits: 1. Exploit the power of software 2. Develop, deliver, disrupt—quickly! 3. Boost speed and efficiency with Automated Programming Interfaces (AIPs) 4. Leverage third-party innovation 5. Maximize returns with smarter IT investments 31 IT Innovation and Disruption 1. What are the benefits of cloud computing? 2. What is machine-to-machine (M2M) technology? Give an example of a business process that could be automated with M2M. 3. Describe the relationships in the SMAC model. 4. What impacts are the SMAC model having on business? 5. Why have mobile devices given consumers more power in the marketplace? 6. Explain why connectivity is important in today’s on- demand economy. 7. In what ways is IT disrupting business? 32 IT and You: On-Demand Workers Profile of U.S. On-Demand Workers (45 million) Expected their financial situation to improve over the coming year—28.8 million Under 35 years of age—23 million Live in urban areas—18.45 million 63% are motivated to work in the on- demand economy to earn supplemental income Survey (Chriss, 2016) 33 IT and You: IT as a Career IT job growth is estimated at 12% from 2014 to 2024, faster than the average for all other occupations. This means about 488,500 new jobs. The median annual wage for computer and IT occupations was $81,430 in May 2015, which was considerably higher than the median annual wage of $36,200 for all other occupations In 2017 only 2% of all IT workers were unemployed 34 IT and You: IT as a Career (1 of 2) IT Managers—play a vital role in the implementation and administration of digital technology. They plan, coordinate, and direct research on the computer-related activities of firms. Chief Technology Officers (CTOs)— evaluate the newest and most innovative technologies and determine how they can be applied for competitive advantage. IT Project Managers—develop requirements, budgets, and schedules for their firm’s information technology projects. 35 They coordinate such projects from IT and You: IT as a Career (2 of 2) Data Scientists manage and analyze massive sets of data for purposes such as target marketing, trend analysis, and the creation of individually tailored products and services. o Enterprises that want to take advantage of big data use real time data from tweets, sensors, and their big data sources to gain insights into their customers’ interests and preference, to create new products and services, and to respond to changes in usage patterns as they occur. o Big data analytics has increased the demand for data scientists. 36 IT and You: Become an Informed IT User Understand how using IT can improve organizational performance, benefit organizational growth, facilitate teamwork, and improve individual productivity Understand how businesses can use IT to enhance the customer experience Be able to offer input into the development and use of IT Know how to find emerging technologies to make radical improvement in business processes Foster your entrepreneurial tendencies to start your own on-demand business 37 IT and You 1. Why is IT a major enabler of business performance and success? 2. Explain why it is beneficial to study IT today. 3. Why are IT job prospects strong? 38 Copyright Copyright © 2021 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Act without the express written permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein. 39