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Role of IT in Business

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Title: Role of IT in Business


1
Role of IT in Business
By CM Maran . B.Sc.,MS(ITM).,PGDMM.,M.Phil., Facu
lty IT SYSTEMS,VIT Business School E-Mail
cmaran78_at_yahoo.com Session 2
Date 15.12.2006
2
  • 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

3
  • 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

4
  • 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 Worlds 117 SEI CMM Level-5 companies
    are based in India

5
  • Over 100 MNCs have set up RD 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

6
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

7
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
  • Indias 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

8
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.

9
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

10
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

11
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

12
Critical shifts in Information Technology
13
Critical shifts in Information Technology
NETWORK COMPUTING
From traditional semiconductors To
Microprocessor based systems in processing
From host based systems To Network based
systems
14
Critical shifts in Information Technology
OPEN SYSTEMS
From vendor proprietary software to Open
software standards
From separate data, voice, text, image to
Multimedia information forms
From Account control to Computer
vendorcustomer partnerships based on free will
15
Critical shifts in Information Technology
INDUSTRIAL REVOLUTION SOFTWARE
Software development moving from Craft to factory
From alphanumerphic character set To Graphical
user interface
From stand-alone To Integrated software
applications
16
Critical shifts in applications of Information
Technology
17
Critical shifts in application of Information
Technology
From personal to Workgroup computing
From System islands to Integrated systems
From Internal to Inter-enterprise computing
18
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
19
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/
20
Development of IT systems
Proprietary Mainframes Islands EDI
21
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 Rose
ttanet
Proprietary Mainframes Islands
OSI TCP/IP Client-Server HTML
22
COMPETITIVE FORCES MODEL
Threat of New Entrants
Bargaining power of Suppliers
RIVALRY AMONG EXISTING COMPETITORS
Bargaining power of Buyers
Threat of Substitute products/services
23
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

24
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
25
Applications in Business
Business
Growth
Cost Reduction
ORGN
HRM
SCM
Web Channels
CRM
Channel Cost
Contextual Solutions
Data Analysis
MONITORING
CONTROL
RISK.
COMMN.
TIME
COST
26
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
27
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

28
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

29
Proposed classification of information delivery
systems
30
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

31
Summary of OA product types and its vendor
32
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33
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.

34
O2 from O2 technology, Gem Stone from Servio
corporation, Versant
35
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

36
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37
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38
Quadrant 4 Business Intelligence
  • This quadrant consists of data warehouses, OLAP
    tools, data mining and strategic decision support
    systems.

39
BI Products
  • Data warehousing
  • OLAP
  • Data mining
  • SDSS
  • Cognos
  • Hyperion
  • Seagate
  • Oracle
  • Business object
  • EIS systems
  • Pilot Software
  • Comshare

40
Future Implementation of software
software
Future planned
41
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.

42
  • 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.

43
Assessing ROI
  • To make a considered cost/benefit assessment
    you must take into consideration
  • FlexibilityAn investment in a robust,
    simple infrastructure may have modest immediate
    benefits, but a dramatic effect in the longer
    term.
  • Complexity costsThey 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.

44
IT Security issues
  • Cyber crime / Hacking
  • Data control
  • Disaster Recovery
  • Viruses/ worms
  • Legal issues
  • Privacy

45
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.

46
Business Applications - cases
47
C1
C2
C3
C4
C5
C6
48
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
49
Managing Supply Chain
MATERIAL FLOW
INFORMATION FLOW
SUPPLIER PLANT
CUSTOMER PLANT
Finish Goods Inventory at Suppliers Plant
Raw Material Inventory at Customers Plant
Consumption pattern at Customers end
Demand as Perceived by Supplier
50
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
51
Strategic alignment of IT
  • Improve operational efficiency
  • Supply chain Integration
  • Enabling new businesses
  • Improved decision support
  • Customer service
  • Internal communication

Manufacturing
52
IT strategy process
  • Top management driven-Management committee
  • CIO part of the top management team
  • Integrated planning-alignment/impact
  • Formal process-documentation/communication
  • Ownership with steering committee
  • Major portfolios identified
  • High level of resource commitment
  • Organizational IS capability

Manufacturing
53
  Ø      Implement decision support
systems    Ø      Design systems to enhance
operational efficiency at user end    Ø      Use
auto-id tools at high transaction entry
points   Ø Global approach for information
processing-by integrating Dealers, Vendors,
and Offices.  Ø      Merging computer processing
with communications 

Manufacturing
54
  Leverage the Web and related technologies to
integrate the supply chain and to facilitate CRM
for the present and future businesses    Provide
Application Services and Collaboration for
Business Partners to enable new businesses
   Use IT for ensuring a Demand Driven
Production System through Vehicle tracking system
Build Intellectual Assets Repository (Knowledge
Management) using Intranet

Manufacturing
55
Materials Management
  • Marutis experience
  • Average inventory is 2 days
  • In-house Integrated IS Implementation
  • Better practices than standard ERP Products
  • Integrated Supply-chain solution
  • Better asset utilization

Manufacturing
56
Production planning Control
  • Marutis experience
  • On-line order taking and linkage with PPS
  • Extranet application connecting dealers
  • Annual cost saving is 100 crores
  • BOM generated for each cycle and schedules
  • are sent to suppliers through extranets
  • Shared databases

Manufacturing
57
Labour reduction
  • Marutis experience
  • 3 personnel for all payments
  • 80 Personnel in Finance function
  • Annual closing by 31 March
  • Better practices in productivity

Manufacturing
58
Overheads reduction
  • Marutis experience
  • Low overheads on Document distribution
  • I-Net based order taking system for NRIs
  • Paperless workflow using Intranet

Manufacturing
59
Customer Service
  • Marutis experience
  • Auto-id tools for component tracking
  • I-Net based Customer clubs

Manufacturing
60
  • Change in business model
  • Produce to stock
  • Produce to sale

61
Titan Watches
Market leader- exporting to 40 countries Severe
competition Market dynamics changed to variety of
offering Market leadership with 50 market
share Enters into new businesses 1300 towns and
5000 Retails outlets Annual production 6.7
M Turnover 5 B Change in Business Model
Manufacturing
62
Key IT applications
Internal integration through ERP Wed based
dealer/supplier portal Knowledge Management
system
Manufacturing
63
Strategic alignment of IT
Improve operational efficiency Supply chain
Integration Improved decision support Customer
service Internal communication
Manufacturing
64
IT performance
Retail portal to manage down stream Order
taking system linked with PPS BOM generated
automatically Supplier portal to manage all
supplier operations Seamless integration of
external and internal processes Average
inventory two weeks
Manufacturing
65
The Hindu
  • 125 year old newspaper
  • Circulation 1 M with readership 3 M
  • Mixed Product portfolio
  • Competitive marketplace-print/TV/Internet
  • Entry of other media-leading convergence
  • Changing preferences of young generation
  • Market leadership in south India
  • 30 market share
  • Centrally designed / distributed printing
  • 13 Printing centers
  • Turnover 50 M

Media Publishing
66
Key IT applications
Critical support for news gathering Automated
page-making Synchronized with circulation On-line
edition On-Linkage with Ad agencies Integration
of franchises Internal communication Decision
support/Knowledge Management
Media Publishing
67
Managing Advertisements and revenue
Hindu Experience On-line booking-franchise Billi
ng using SW-based on page and position
(TCS) Amendments and information sharing
(Agencies) Revenue/collection Management Centrali
zed billing
Media Publishing
68
Apollo Hospitals
First and Largest corporate hospital group 26
hospitals and 14 clients hospitals Management
consultancy service Pharmaceutical chain with
100 large stores Telemedicine centers in 50
locations Family Medical insurance Serving
patients in 20 countries Medical tourism as a
stream of business Turnover USD 55 M
Healthcare
69
Key IT applications
Internal integration - Specially developed ERP
system Pharmacy Linkage systems On-line Linkage
with Insurance companies Support for
Telemedicine Web based supply chain support
Healthcare
70
Product differentiation
  • Citibank
  • On-line Banking
  • Credit card management
  • Interoperability in services

Banking
71
Security Management
  • Citibank
  • Data mining for credit worthiness
  • ATM and Internet application
  • Management of Credit card frauds

Banking
72
Cost Management
  • Citibank
  • Billing and collection
  • International communication
  • Manpower reduction-change in concept of banking

Banking
73
Patient Registration-Patient History
  • Apollo Experience
  • Volume and emergencies
  • Accurate and fast patient history retrieval
  • Medical transcription

Healthcare
74
Why Computer based Business?
Capability
Greater Processing speed Increased volume Faster
Information Retrieval
Control
Accuracy Consistency Security
Communication
YOU ARE HERE
Enhance communication Integration of business
areas
75
Cost
Cost monitoring Cost reduction
Competitive Advantage
Lock in customers Lockout competitors Linking
Suppliers New Product development
76
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77
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