ch01.pdf

IT for Management: On-Demand Strategies for
Performance, Growth, and Sustainability
Eleventh Edition
Turban, Pollard, Wood
Chapter 1
Disruptive IT Impacts Companies,
Competition, and Careers

Learning Objectives (1 of 4)
2
Copyright ©2018 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.
3

Doing Business in the On-demand
Economy: Airbnb, Uber
On-demand business models of Airbnb and Uber have been extremely successful.
4

Key Strategic and Tactical Questions
5

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.
6

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.
7

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.
8

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)
9

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
10

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
11

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?
12

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?
13

14

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.
15

Business Process Improvement:
Components of a Business Process
INPUTS
Raw
materials,
data,
knowledge,
expertise
ACTIVITIES
Work that
transforms
input &
acts on
data and
knowledge
DELIVERABLES
Products,
services,
plans, or
actions
Copyright ©2018 John Wiley & Sons, Inc. 16

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.
17

Eight Phases of Business Process Reengineering
18

Eight Phases of Business Process Reengineering
1. Develop
Vision &
Objectives
2. Understand
Existing
Processes
3. Identify
Process for
Redesign
4. Identify
Change Levers
5. Implement
New Process
6. Make New
Process
Operational
7. Evaluate
New Process
8. Perform
Continuous
Improvement
Copyright ©2018 John Wiley & Sons, Inc. 19

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.
20

Gaining a Competitive Advantage: Components
21

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.
22

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.
23

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.
24

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?
8. Explain IT consumerization.
9. Define competitive advantage.
25

26

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.
27

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.
28

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
29

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.
30

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
31

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
32

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
33

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
34

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?
35

36

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)
37

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
38

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. They coordinate such projects from
development through implementation.
39

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.
40

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
41

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?
42

Copyright
Copyright © 2018 John Wiley & Sons, Inc.
All rights reserved. Reproduction or translation of this work beyond that permitted in
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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.
43

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