Role of IT in Business By CM Maran . B.Sc.,MS(IT&M).,PGDMM.,M.Phil., Faculty – IT & SYSTEMS,VIT Business School E-Mail : email@example.com Session : 2 Date : 15.12.2006
Agenda • About India ! • Indian IT Infrastructure • Business Determinants • Proposed classification of Information Technologies in Business • Managing IT • Security issues in IT • IT in Business - Cases
Five thousand years old civilization • Worlds largest democracy with population of 1.3 Billion • World-class recognition in IT, bio-technology and space. • Largest English speaking nation in the world. • 3rd largest standing army force, over 1.5Million strong. • 2nd largest pool of scientists and engineers in the World. • 2nd largest tractor manufacturer in the world. • 5th largest commercial vehicle manufacturer in the world. • 5th Largest watch manufacturer in the world • India is one of the world's largest diamond cutting and polishing centres. • 15 of the world's major Automobile makers are obtaining components from Indian companies
India is among six countries that launch satellites and do so even for Germany, Belgium, South Korea, Singapore and EU countries • India's INSAT is among the world's largest domestic satellite communication systems. • India is among the 3 countries in the World that have built Supercomputers on their own. The other two countries being USA and Japan • The Indian pharmaceutical industry growing at 8-10% annually, is the 4th largest pharmaceutical industry in the world • 100 of the Fortune 500 are now present in India (compared to 33 in China) • 80 of the World’s 117 SEI CMM Level-5 companies are based in India
Over 100 MNCs have set up R&D facilities in India in the past five years. These include GE, Bell Labs, Du Pont, Daimler Chrysler, Eli Lilly, Intel, Monsanto, Texas Instruments, Caterpillar, Cummins, GM, Microsoft and IBM • India is a land of a variety of linguistic communities, each of which share a common language and culture • 325 languages are spoken; 18 languages are officially recognized in India of which Sanskrit and Tamil share a long history of more than 5,000 and 3,000 years respectively. • The vividness can be ascertained by the fact that schools in India teach more than 50 different languages; there are Films in 15 languages, Newspapers in 90 or more languages and radio programmes in 71 languages
Some specific changes out of Economic reforms in India • Soundness of Banking • Financial market sophistication • Venture capital availability • Access to foreign capital market • Technological sophistication • Firm level innovation • Firm level technology absorption • FDI & technology • Quality of scientific research institutions • Tax incentives for firm level R & D • Corporate Governance
INDIA: IT & INFRASTRUCTURE • The Indian telecommunications Network is the fifth largest in the world and is the second largest among the emerging economies of Asia. • Today it is the fastest growing market in the world. Private operators have made mobile telephony the fastest growing (over 164% p.a.) in India . • With more than 33 million users (both CDMA and GSM), wireless is the principal growth engine of the Indian telecom industry • India’s telecom infrastructure between Chennai, Mumbai and Singapore, provides the largest bandwidth capacity in the world, with well over 8.5 Terabits (8.5Tbs) per second. • The Government has played a key enabling role by deregulating and liberalizing the industry, ushering in competition and paving the way for growth
INDIA: IT & INFRASTRUCTURE • Regular, reliable, uninterrupted power, a major necessity for running IT software and services businesses, has also received substantial attention from the Government • The overall roads and highways scenario in India has also witnessed major improvements over the last few years . • The Indian Government has understood the importance of infrastructure to industries such as IT and created a conducive environment for its development and expansion • India has the second largest road network in the world totaling more than 3.3 million kilometers . • The last five years has seen a tremendous growth in Tech Parks with intelligent buildings, buit-to-suit facilities, large sprawling campuses that are geared to meet the requirements of the knowledge industry.
INDIA: IT INFRASTRUCTURE & CAPABILITIES • With more than 250 universities, 1,500 research institutions and 10,428 higher-education institutes, India produces 200,000 engineering graduates and another 300,000 technically trained graduates every year. • Besides, another 2 million other graduates qualify out in India annually • The Indian Institute of Technology (IIT) is among the top three universities from which McKinsey & Company, the world's biggest consulting firm, hires most
Business Determinants… • Global business opportunities • Competition • Reduced cycle/response time • Borderless world • Partnering and outsourcing • Reengineering of Processes • Information is power • Productivity of Knowledge workers • Social /Environmental responsibility
INFORMATION TECHNOLOGY Information Technology (IT) consists of the increasingly convergent and linked computer and communication technologies which are used to collect, store, transfer and disseminate information
Critical shifts in Information Technology
Critical shifts in Information Technology NETWORK COMPUTING From traditional semiconductors To Microprocessor based systems inprocessing From host –based systems To Network basedsystems
Critical shifts in Information Technology OPEN SYSTEMS From vendor proprietary software to Opensoftware standards From separate data, voice, text, image to Multimediainformation forms From Account control to Computervendor–customer partnershipsbased on free will
Critical shifts in Information Technology INDUSTRIAL REVOLUTION SOFTWARE Software development moving fromCraft to factory From alphanumerphic character set To Graphicaluser interface From stand-alone To Integrated software applications
Critical shifts in applications of Information Technology
Critical shifts in application of Information Technology From personal to Workgroup computing From System islands to Integrated systems From Internal to Inter-enterprise computing
Strategic roles of IT Lower Costs Other Strategies Using IT to Implement Competitive Strategies Build IT Platform Differentiate Improve Quality Innovate Develop Alliances Promote Growth
Technology Paradigms 1853 1913 1969 2025 2061 2081 Rapid Adoption Railway Auto Computer Nanotech Textile Bio Tech 1800 1853 1913 1969 2005 2025 Introduction of Technology 1771 1825 1886 1939 1977 1997 Information Technology Industrial Revolution Information Evolution Source: Norman Poire, Economist; Merril Lynch http://www.smalltimes.com/
E-Biz II Agents Product Standardisation PML Desktops Common OS Commn Stds Internet ERP Internet EDI UML 60-80 80-90 90-95 95-97 97-00 00-03 04- Auto ID ePC PML,ONS E-Business XML Exchanges GroupWare C-Commerce Rosettanet OSI & TCP/IP Client-Server HTML Development of IT systems Proprietary Mainframes Islands EDI
Loss Prevention Transportation Collaborative Models Demand Pipes BPR VMI Mass customisation Optimisation MRP-II UPC Prod. Cost 00-02 97-00 95-97 03- 80-90 60-80 90-95 Tracking Systems Virtual Integration Cross-docking Virtual/ Dispersed Manufacturing Direct Models CPFR Database Forecasting Logistics Communication EDI Development of Business with IT E-Biz II Agents Product Standardisation PML Desktops Common OS Commn Stds Internet ERP EDI Auto ID ePC PML,ONS E-Business XML Exchanges GroupWare C-Commerce Rosettanet Proprietary Mainframes Islands OSI & TCP/IP Client-Server HTML
COMPETITIVE FORCES MODEL Threat of New Entrants Bargaining power of Suppliers RIVALRY AMONG EXISTING COMPETITORS Bargaining power of Buyers Threat of Substitute products/services
Mgmt. Issues and How IT could solve them (?) • Inventory Issues • Variability • Collaborative Commerce • VMI • JIT & MIS (DSS) • Forecasting • Databases • Computationally complex Models (GA & ANN) • Collaborative Models • Uncertainty Handling • Seamless integration • Risk Based Production Scheduling • SKU Proliferation • Delayed Differentiation • Mass Customisation
Mgmt. Issues and How IT could solve them (?) • Cost of production • Macquiladoras and virtual integration • Customer Responsiveness • Tracking systems • LTL and eaches management (4 PL) • Order Processing systems • Losses and transit issues • Product Standardisation • Transportation monitoring These look impressive BUT ARE THEY EASY TO IMPLEMENT
BPR Applications in Business Business ORGN Growth HRM Cost Reduction SCM Web Channels CRM Channel Cost Contextual Solutions Data Analysis MONITORING CONTROL RISK. COMMN. TIME COST
The “I” in IT • Data information business intelligence / knowledge Data Supply of Information Demand for information Information / Business Information economics highlighting the value chain of information
Proposed technologies of IT • According to Riel, the costs and benefits of IT within an organization • There are three broad categories of cost associated by IT projects • Technological costs • System costs • Support costs
Classification of information delivery systems • Information delivery may be defined as the end to end process of converting data , which large organizations have in abundance , into meaningful organization
Quadrant 1 : office Automation • The applications of computers and communication technology to improve the productivity of clerical and managerial workers • The backbone of office automation is Local Area Network (LAN), which serves the pathway between users and computers • OA is one of the categories of software that has to do with data capturing , time saving and the achievement of day-to-day efficiencies
Quadrant 2: Data Base Applications • A database is defined “ a collection of data organized to serve several applications by centralizing the data and minimizing redundant data • DBMS can be viewed as the software that • Permits an organization to centralize data • Manages them efficiently • Provides access to the stored data via applications programs.
Quadrant 3 : System Application • This quadrant consists of Online Transaction processing (OLTP) of all aspects business information provided within one integrated solution especially ERP (Enterprise Resource Planning) systems. • ERP is defined as many IS that work together with the aim of coordinating through out the organization in order to share the information, automate process
Quadrant 4 : Business Intelligence • This quadrant consists of data warehouses, OLAP tools, data mining and strategic decision support systems.
Data warehousing OLAP Data mining SDSS Cognos Hyperion Seagate Oracle Business object EIS systems Pilot Software Comshare BI Products
Future Implementation of software software Future planned
Managing IT • Today, hardware and software cost less, but support and maintenance costs, business costs associated with the transition to a new system, and other hidden costs are considerable.
Best practices. No matter what type of technology is at issue, there are a number of associated practices that are widely accepted to be optimal. Many CIOs solicit best practices from their peers - both inside and outside their industry. Benchmarking is the process of gathering best practices in a particular technology or functional area (e.g., customer service, project management or wireless security). • Project portfolio management. Companies spend the majority of their IT budgets keeping the existing IT systems and the department itself running. Many CIOs believe they can better help their company gain competitive advantage if they add some higher-risk, higher-potential-reward projects to the mix. Many consider 80 percent run-the-business projects to 20 percent grow-the-business projects a good mix.
Assessing ROI To make a considered cost/benefit assessment you must take into consideration: Flexibility:An investment in a robust, simple infrastructure may have modest immediate benefits, but a dramatic effect in the longer term. Complexity costs:They include the ongoing increases in operating costs that arise when a company supports multiple technologies or standards. Commercial factors: When choosing a technology or a vendor, it is vital to consider whether that technology or that vendor will be around for the entire life of the system. Contingency plans: One must have some backup in case key project deliverables are delayed.
IT Security issues • Cyber crime / Hacking • Data control • Disaster Recovery • Viruses/ worms • Legal issues • Privacy
Top 10 data protection TIPS for SMBs • Setup to RAID • Take advantage of shared storage • Be sure your storage can scale up your future needs • Choose SCSI or fiber channel • Protect everything • Select software that makes backup and recover easy • Utilize disk for fast backups • Enable users to restore there files • Use backup tapes • Protect with Encryption.
C1 C2 C3 C4 C5 C6
Achieving An Integrated Supply Chain Stage One: Islands Within Organization Stores Material Flow Customer service Stage 1 Distribution Purchasing Stores Production Sales Stage Two : Internal Integration Material Flow Customer service Stage 2 Materials management Manufacturing management Distribution Stage Three: external integration Material Flow Customer service Stage 3 Suppliers Internal Supply Chain Customers
Managing Supply Chain MATERIAL FLOW INFORMATION FLOW SUPPLIER PLANT CUSTOMER PLANT Finish Goods Inventory at Supplier’s Plant Raw Material Inventory at Customer’s Plant Consumption pattern at Customer’s end Demand as Perceived by Supplier
Maruti udyog Market leader- exporting to 25 countries Competitive market Changing customer preferences Market leadership with 55% market share Enters into new businesses 500 Dealers & 650 suppliers Annual production 500,000 Turnover $ 2.2 B Need for changing business model Manufacturing