1. Information Technology in the Digital Age Dr Sherif Kamel Department of Management School of Business, Economics and Communication

2. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Outline  Digital economy  From marketplace to marketspace  Business models  Business pressures and drivers of change  Organizational framework and responses  Information systems building blocks  Information systems functional perspectives  Technology trends  Management issues

3. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Digital economy – the new economy  eBusiness: the use of electronic technologies to transact business  Collaboration: people and organizations interact, communicate, collaborate and search for information  Information exchange: storing, processing and transmission of information

4. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Digital economy  The digital economy refers to an economy that is based on digital technologies, including digital communication networks, computers, and software  The digital economy is also sometimes called the Internet economy, the New economy, or the Web economy  Also known as marketspace

5. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Digital economy – more issues  Electronic commerce (EC) is the use of web- based systems to support buying, selling, and customer service  Click-and-mortar companies add some eCommerce activities to their regular business  Networked computing connects several computers and other electronic devices via telecommunication networks  Information technology (IT) refers to the collection of computer systems used by an organization

6. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Digital business Networks Internet Telecommunications Consumer In-office Field Sales

7. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe From marketplace to marketspace Taking a photo – the old way  Buy film in a store  Load your camera  Take pictures  Take roll of film to store for processing  Pickup the film when ready  Select specific photos for enlargement  Mail to family and friends

8. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe From marketplace to marketspace Taking a photo – the new way  1 st generation digital photography o Old economy except 6 and 7 were replaced by using a scanner and emailing  2 nd generation digital photography o Use a digital camera, no film, no processing  3 rd generation digital photography o Your digital camera is now your mobile phone, in your binoculars or a palmtop computer

9. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Business models  Business model is a method of doing business by which a company can generate revenue to sustain itself – how a company adds value to create a product or service “the value chain” o Nokia makes and sells cell phones o TV stations provide free broadcasting (complex mix of advertisers and content providers) o Internet portals (Yahoo) revenue generation mechanisms

10. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Case: Bristol-Myers Squibb (BMS)  Problem o BMS is a leading manufacture of pharmaceutical drugs, beauty and infant-food products o Struggling to stay ahead in the new digital economy  Solution o BMS initiated multiple web-based projects, overhauled its management structure, revamped its procurement and supply chain processes, and expanded its portfolio of websites  Outcome o BMS experienced over 100 million US dollars in annual savings just from eProcurement

11. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe BMS lessons learnt  Global competition drives large corporations to find ways to reduce costs, increase productivity and improve customer service  Achievements could be realized through proper web-based systems  Major initiatives that BMS embarked upon included o Reduce costs by introducing an eProcurement o Increase sales by utilizing the WWW o Improve relationships with employees and customers (CRM)

12. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Digital economy business models  Name-your-own price  Dynamic brokering  Affiliate marketing  eMarketplaces and exchanges

13. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Name your-own price  Pioneered by www.priceline.com – a model that allows customers to state a price they are willing to pay for a product or servicewww.priceline.com

14. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Dynamic brokering  In the digital age customers can specify requirements for a service or a product  Such specifications are broadcast over the Internet “webcasted” to service providers in an automatic invitation to submit bids

15. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Affiliate marketing  An arrangement in which marketing partners place a banner of a company, such as www.amazon.com on their website www.amazon.com

16. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe eMarketplaces and exchanges  Thousands of electronic marketplaces, of different varieties, have sprung up – vertical and horizontal

17. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Model environments  Internet o From about 50 million Internet users in 1997, there could be as many as 750 million by 2007  Intranets utilize information technology to provide organizations with internal communication systems  Extranets combine intranets with the Internet to create a powerful inter-organizational systems for collaboration (groupware)

18. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Business pressures and drivers of change

19. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Business pressures and drivers of change

20. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Market pressures  Global economy and strong competition o Global competition is intensified as governments become involved through the use of subsidies, tax policies, import/export regulations and incentives o Rapid and inexpensive communication and transportation modes increase the magnitude of international trade o Changing nature of the workforce o The workforce is becoming more diversified, with more females, single parents, minorities, and handicapped persons working in all types of positions  Powerful customers o Consumer sophistication and expectations increase as customers become more knowledgeable about the availability and quality of products and services

21. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Technology pressures  Technology innovations and obsolescence o Today’s state-of-the-art products may be obsolete tomorrow – thus technology accelerates the competitive forces  Information overload o The amount of information available on the Internet more than doubles every year o The management of information is critical

22. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Social pressures  Social responsibility o Issues range from the environment to education  Government regulations o Regulation issues involve health, safety, environmental control, and equal opportunity  Government deregulation o Deregulation can be a blessing to one company but a curse to another company  Ethical issues o Business ethics relates to standards of right and wrong in business practices

23. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Organizational framework

24. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Organizational responses  Organizations need to respond to business, societal and technical pressures with critical response activities  A typical industry-level response to the digital economy is disintermediation, or the elimination of intermediary organizations  Organizations can also take proactive measures, to create a change in the market place o Exploiting opportunities created by external pressures

25. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Organizational responses  Strategic systems for competitive advantage o Provide organizations with strategies to increase their market share, better negotiate with suppliers, or stop competitors  Continuous improvement efforts (operational efficiency) o Aim to improve a company’s productivity and quality. Examples include: ­ Improved productivity ­ Managing enterprise data ­ Just-in-time (JIT) ­ Innovation and creativity ­ Total quality management ­ Change management ­ Knowledge management ­ Customer service

26. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Organizational responses  Business process reengineering (BPR) o Refers to the introduction of a major innovation in an organization’s structure and the way it conducts business o Major areas in which IT supports BPR: ­ Reducing cycle time and time to market ­ Empowerment of employees and collaborative work ­ Customer-focused approach and CRM ­ Restructuring and team-based structure

27. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Organizational responses  Business alliances o Many companies realize that alliances with other companies, even competitors, can be very beneficial  Electronic commerce/electronic business o Doing business electronically is the newest and perhaps most promising strategy that many companies can pursue

28. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Organizational response to drivers of change

29. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Information systems (IS)  Information systems (IS) collect, process, store, analyze, and disseminate information for a specific purpose  Information Systems are comprised of o inputs (data, instructions) o outputs (reports, calculations) o feedback mechanisms that controls the operation o an environment that it works within  Computer-based information system (CBIS) is an information system that uses computer technology to perform some or all of its intended tasks

30. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe IS as a system

31. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe IS building blocks  Hardware o devices such as processor, monitor, keyboard, and printer  Software o programs that enable the hardware to process data  Data o collection of related files, tables, relations, and so on, that stores data  Network o connecting system that permits the sharing of resources between computers  Procedures o instructions about how to combine the above components  People o individuals who work with the system or use its output

32. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe mCommerce  mCommerce (mobile commerce) refers to the conduct of eCommerce via wireless devices  Commercial application of mobile computing based on wireless networks  Growing interest in mCommerce because the number of mobile devices is projected to top 1.5 billion by 2005  Location-based commerce (lCommerce) is an application of mCommerce that offers customers the location information of anything they want to purchase

33. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Future devices @ home  Network computer (NC) first introduced in 1997, does not have a hard drive – served by a central computing station, and temporarily receives and can use applications and data stored elsewhere on the network  Integrated home computing (IHC) – home computing, television, telephone, home security systems, and other devices will be integrated and managed in one unit (smart home)

34. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Applications and operations  Marketing  Sales  Manufacturing  Purchasing  Finance  Accounting  Retail operations  Wholesale  Human resources  Content management  …and more…

35. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Information systems  Functional perspective o Marketing ­ Identify customers ­ Determine what they want ­ Planning products ­ Advertising and promoting products ­ Determine prices for products o Sales ­ Contact customers ­ Sell the product ­ Take the order ­ Follow-up on the sale ­ 5 year sales forecast

36. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Information systems  Functional perspective o Manufacturing ­ Control Equipment and machinery ­ Design new products ­ When and quantity of products to produce ­ New production facilities ­ Generate the work order o Purchasing ­ Which vendors ­ Quantity to purchase ­ Coop, rebate tracking ­ Handle delivery discrepancies ­ Generate the purchase order

37. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Information systems  Functional perspective o Finance ­ Financial Assets ­ Investment management ­ Banking ­ Long term budgets o Accounting ­ Accounts Receivable ­ Disbursements ­ Payroll ­ Depreciation ­ Earned Coop and Rebates

38. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Information systems  Functional perspective o Human Resources ­ Employee wages, salaries and benefits ­ Long term labor requirements ­ Tracking vacation, sick, ­ Track employee skills ­ Interview and review employees

39. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Technology trends  Internet  Mobile Computing and mCommerce  Wireless networks  Smart devices  Networked enterprise  Network computer

40. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Why study IS?  You will be more effective in your chosen career if you understand information and comprehend how successful information systems are built, used, and managed  You also will be more effective if you know how to recognize and avoid unsuccessful systems and failures  Developing computer literacy will only enhance your information literacy

41. Copyright © 2005 Sherif Kamel Copyright © 2002 Turban, McLean and Wetherbe Management issues  Recognizing opportunities for using IT and web- based systems  Who will build, operate, and maintain the information systems o Need to minimize the cost of IT while maximizing its benefits o Opt for outsourcing (partial – full-fledged)  Cost-benefit analysis  Ethics and social issues when implementing IT  Organizational transformation