Lecture 1: IT Disrupts Businesses

Slide 1:

Good day! Today we are going to talk about IT disrupting businesses.

What do we mean when we say disruptive? According to Google, in terms of

a company, disruptive means causing radical change in an existing industry
or market through being innovative.

Nowadays, innovation in businesses most likely refer to technology,

particularly information technology (IT), being used to provide products and
services to consumers. Many companies that disrupted their respective
industries do business in the on-demand economy.

Slide 2:

On-demand economy is the economic activity created by technology

companies that fulfill consumer demand through the immediate
provisioning of products and services.

When we say immediate provisioning, this means that consumer desires are
attained with convenience in terms of speed and cognitive ease. With the
greatest advancement in IT, the Internet, you get what you need and want
fast without too much thinking. You need a ride? Just bring out your phone
and book a Grab or Joyride.

The on-demand economy is transforming global business activities, driven by

technology innovation and changing consumer behavior. And as technology
continues to advance, expect that there will be more rapid and significant
changes in doing business in the future.

Mobile communications and technology have brought consumers and

providers of products and services closer than ever, thus creating the on-
demand economy. Consumers get products and services fast and
conveniently whenever they demand it like they are already in front of the
store.

Slide 3:

In the US, the rise of app-driven companies like Uber, Airbnb, and Grubhub
has disrupted traditional industries such as taxis, hotels, and restaurants
much like Amazon and eBay did for retail. Uber quickly became the world's
most valuable private technology company in just six years, while Airbnb
attracted over 60 million customers and became the third most valuable
venture-capital-backed company. Grubhub has also seen success, controlling
over 20% of the $9 billion online food ordering market. In the Philippines,
what companies belong to the on-demand economy? (pause) Grab, Shopee,
GCash?

What is common among all these companies? They all share platform-based
business models. They use hardware, software, and network for connectivity
to conduct various transactions like ordering and payment. This business
model caters to the on-demand economy, focusing on time (quick and on-
demand), convenience (just tap the app), and personalized service (how you
want it) to meet the needs of today's consumers who prefer online payments
and efficiency in all aspects of their lives.

Slide 4:

To take advantage of IT in their business operations, companies should know

how to use and manage mundane to complex IT in addressing the key
strategic and tactical questions, as shown in Figure 1.2, that determine an
organizations profitability and management performance.

Slide 5:

So why did the on-demand economy grow so much in just a few years?
Simple, it is because they focus on providing consumers with convenience,
speed, and simplicity, aligning with their preferences. Also, there can be a
wide range of opportunities for on-demand service such as, in the case of US,
dog walking, laundry services, short-term home rentals, massages, and truck
hauling. How about in the Philippines, what services can already be availed
on-demand? (pause) Courier delivery, transportation service? What other
opportunities can be tapped? (pause)

While simply applying a mobile app to an existing service does not

guarantee success, technology plays a crucial role in on-demand businesses.

The low cost of entry has also contributed to the popularity of the on-
demand economy, making it accessible for entrepreneurs. There is no more
need to invest in infrastructure setup, because technology assists in the
establishment of your business.

Slide 6:

In the on-demand economy, businesses are shifting from traditional business

models to digital ones to meet customer needs and generate revenue.
Companies that adopt digital business models are better positioned to take
advantage of business opportunities and survive in the technology-
transformed industries.

Established corporations, financial institutions, online retailers, and

government agencies are prioritizing digital model design to enhance
customer experience, increase profits, gain market share, and engage
employees. There is an emphasis on customer experience because there is a
strong relationship between the quality of a firm’s customer experience and
loyalty, which, in turn, increases revenue.

Slide 7:

(show slide and pause)

Slide 8:

So, what is IT’s role in on-demand economy? The 2016 survey by SIM found
that highly digitized and interconnected companies are prioritizing strategic
IT use for growth and performance improvement. This shift is reflected in
changing IT priorities and spending patterns. The survey also highlighted the
top 10 IT management priorities, emphasizing the importance of business-IT
alignment, security, innovation, agility, IT delivery speed, and productivity. To
address these priorities, IT leaders must focus on building relationships,
engaging with top management, and collaborating with functional leaders,
customers, and suppliers. Additionally, companies need to invest in
recruiting, retaining, and developing IT talent to enhance business
performance. Ultimately, the key takeaway is that in the on-demand
economy, IT must be geared towards meeting customer needs.

Slide 9:
(show slide and pause)

Slide 10:

Today, IT must adapt to the changing demands of consumers who are

pushing for, take note of this, a complete revamp of business processes
in various industries.

Customers now expect intuitive interfaces, 24/7 availability, real-time

service, personalized experiences, global consistency, and flawless
operations. Providing a top-notch user experience not only satisfies
customers but also enables companies to lower costs, improve controls, and
reduce risks, resulting in more competitive pricing.

There are six key business objectives for IT to focus on in order to stay
competitive: product development, stakeholder integration, process
improvement, cost efficiencies, competitive advantage, and globalization.

Slide 11:

By leveraging IT, businesses can respond quickly to customer needs,

communicate effectively with stakeholders, streamline processes, cut costs,
gain a competitive edge, and expand globally through outsourcing and ICT.

Every technological advancement brings both opportunities and threats to

business models, emphasizing the importance of understanding the
potential, requirements, and limitations of IT in driving success.

Slide 12:

I have mentioned earlier the need of companies for complete revamp of

business processes, adapt IT in these processes, in order to provide the best
user-experience to the consumers. Why? As also mentioned earlier, customer
experience is directly linked to loyalty and revenue. Also, a company's
success relies on efficient business processes. Even small improvements can
lead to big rewards. All departments of an organization have specific tasks to
produce deliverables and achieve goals.

Slide 13:
Business processes are series of steps by which organizations coordinate and
organize tasks to get work done. In the simplest terms, a process consists of
activities that convert inputs into outputs by doing work.

Examples of common business processes are as follows:

• Accounting. Invoicing; reconciling accounts; auditing

• Finance. Credit card or loan approval; estimating credit risk and financing
terms

• Human resources (HR). Recruiting and hiring; assessing compliance with

regulations; evaluating job performance

• IT or information systems. Generating and distributing reports and data

visualizations; data analytics; data archiving

• Marketing. Sales; product promotion; design and implementation of sales

campaigns; qualifying a lead

• Production and operations. Shipping; receiving; quality control; inventory

management

• Cross-functional business processes. Involving two or more functions, for

example, order fulfillment and product development

Business processes consist of three key components: inputs, activities, and

deliverables.

For example, from a sales perspective, the input can be the number of calls
made to clients or prospects. The activity is the act of calling the clients. And
the output from that is the number of meetings scheduled from these calls.

These processes can be either formal or informal.

Formal processes are well-documented and follow established steps, like

order taking and credit approval. They are often referred to as standard
operating procedures (SOPs) and are crucial for tasks involving safety,
security, or compliance.

On the other hand, informal processes are typically undocumented and more
knowledge-intensive. Enterprises generally aim to formalize their informal
processes to enhance understanding and optimization.

Processes can also vary in terms of speed and flexibility, with rigid processes
being resistant to change, like security or compliance regulations, and
adaptive processes being responsive to emerging conditions, especially in
marketing and IT.

Understanding and improving these processes is essential for the success of

any business.

Slide 14:

So why again do companies need to revamp their business processes?

Because they need to have an effective and efficient processes.

Effective means "producing a result that is wanted". Efficient means "capable

of producing desired results without wasting materials, time, or energy".

Designing effective processes can be complex due to the need for a thorough
understanding of inputs, outputs (deliverables), potential pitfalls, and
preventative measures.

For instance, Dell implemented a new process to reduce tech support call
handling time, but it backfired as quality dropped, leading to frustrated
customers making multiple calls to resolve issues, thereby increasing
resolution time. This can be due to flawed processes rather than employee
incompetence.

Slide 15:

Meanwhile, efficient business processes and continual improvement are

crucial as an enterprise's performance is heavily reliant on its processes.
Maximizing input use to outperform competitors is a critical success factor.

Why do companies want effective and efficient processes? This is because

poorly designed, flawed, or outdated processes waste resources, hike costs,
cause delays, and upset customers, damaging loyalty and increasing returns
and costs.

Slide 16:

So how can companies revolutionize their business processes, particularly in

the on-demand economy? The answer, “Don’t automate! Obliterate!”
In the current on-demand economy, businesses need to make radical
changes to meet rising customer expectations, rather than just making
incremental improvements. This involves redesigning entire business
processes, automating decision-making, and tackling regulatory and fraud
issues. Companies must go beyond just automating existing processes to
stay competitive. This includes streamlining steps, eliminating paperwork,
and reorganizing skills and roles to match the new processes.

Data models also need to be revamped to support better decision-making

and performance tracking. Instead of traditional large-scale digital migration
projects, successful companies are now focusing on reinventing processes
completely using cutting-edge digital technology. For instance, they are
creating self-service options for customers to input their own complaints,
rather than having employees type them in. This innovative approach yields
quicker results and better customer satisfaction.

Slide 17:

As mentioned, businesses need to make radical changes.

Business process reengineering (BPR) is a radical approach aimed at

changing processes, not just automating them.

It consists of eight stages (show slide 18, pause and back) where
unnecessary processes are identified and eliminated before redesigning and
automating the remaining ones. The ultimate goal of BPR is to simplify and
automate processes to reduce cycle time, labor, and costs significantly. For
example, simplifying the credit approval process can reduce time from days
to minutes, leading to fewer errors.

Technology plays a crucial role in enhancing processes by automating

manual tasks, expanding data flows, and creating innovative business
models. For instance, UnionBank now has this service where the customers
can deposit a check by simply taking a photo of it and uploading it using the
company app. This customer-centric approach gives convenience to the
customer as he/she does not have to wait in line and adhere to bank hours.
On the side of the bank, by automating the deposit through a mobile app,
the need for human resources in check processing is reduced, freeing up
staff for other tasks. The process also reduces the need for paper records,
contributing to a more efficient and environmentally friendly operation. The
bank can also manage digital records more easily than physical ones,
reducing storage and administrative costs. The deposit can also be
processed more quickly than traditional methods, as the image of the check
can be transmitted instantly to the bank’s systems, leading to quicker
verification and clearing of funds. Lastly, the automated system used by the
bank can be more accurate in reading check information, reducing the
potential for errors that could occur with manual entry, such as misreading
the amount or account numbers.

Slide 19:

Understanding current trends in business and adapting to them through

changes in processes gives organizations a competitive advantage.

IT plays a crucial role in helping companies achieve and maintain this

advantage by anticipating market opportunities, enhancing customer
experiences, and differentiating themselves from competitors.

Companies who disrupt the industry with their innovation create a “new
competition” that plays around the new technology, and they often become
the industry leaders. For instance, when Apple introduced the iPhone, they
created a “new competition” involving touch-screen smartphones that can be
connected to the Internet, ousting Nokia as industry leader in mobile phones
who were not able to adapt with the new technology. Industry leaders
consider "new competition" as a major challenge, necessitating a continuous
effort to innovate and stay ahead. This requires monitoring industry trends,
competitor actions, and responding proactively to maintain competitiveness.

Slide 20:

Competitiveness depends heavily on IT agility and responsiveness. The

benefit of IT agility is that it enables organizations to take advantage of
opportunities faster or more effectively.

Closely related to IT agility is flexibility. For example, mobile networks (as

made possible by mobile data technology) are flexible—able to be set up,
moved, or removed easily, without dealing with cables and other physical
requirements of wired networks. Mass migration to mobile devices from PCs
has expanded the scope of IT beyond traditional organizational boundaries—
making location practically irrelevant.
Slide 21:

The rise of mobile devices, applications, platforms, and social media in the
workplace, along with more employees working from home, has led to the
rapid consumerization of IT. This involves the integration of consumer
technology into enterprise IT environments due to its capability and cost-
effectiveness.

FitBit has maintained a competitive edge with its fitness tracker, showcasing
the impact of IT in the industry. One of FitBit’s competitive strengths is the
app that is accessible from a smartphone. Users can sync FitBit devices and
view their online profile, activity levels, and sleep patterns on dashboards
that display on more than 150 mobile devices, including iOS, Android, and
Windows Phone products. This compatibility maximizes the number of friends
and family in each user’s network to share performance stats. It also
motivates and increases user retention.

Mergers like Grubhub/Seamless and Handybook/Exec are becoming more

common as competition increases in various sectors. Collaboration among
businesses (such as the integration of e-wallets with on-demand service
apps) to educate consumers about on-demand services is on the rise, with
partnerships and acquisitions between traditional and innovative companies
becoming more prevalent. Design is seen as a key competitive advantage as
on-demand services address technological challenges and prioritize user
experience for greater simplicity and convenience.

Slide 22:

Digital technology creates new markets, businesses, products, and careers.

As digital changes the way consumers and retailers buy and sell products,
companies must adapt and innovate to ensure their product offerings,
platforms, technologies, and search options cater to these changing needs.

Slide 23:

We are in the era of social–mobile–analytics–cloud (SMAC) computing that is

reshaping business strategies and day-to-day operations. SMAC computing,
combines cloud, handhelds, wearables, and social channels.

The cloud consists of huge data centers accessible via the Internet and forms
the core by providing 24/7 access to storage, applications, and services.
Handhelds and wearables, such as FitBit, Pebble, and the Apple Watch, and
their users form the edge. Social channels connect the core and edge. The
SMAC integration creates the technical and services infrastructure needed
for digital business. This infrastructure makes it possible to meet the
expectations of employees, customers, and business partners given that
almost everyone is connected (social), everywhere they go (mobile), gets the
information they need (analytics), and has 24/7 access to products and
services (cloud).

Slide 24:

SMAC has influenced various aspects of business, such as:

 Social impacts on advertising and marketing, where consumer trust in

social network recommendations has surpassed celebrity
endorsements.
 Consumer devices becoming digital and offering new services, like
Nike+ FuelBand helping customers track exercise activities and share
progress on social media.
 eBay's shift to cloud technology enhancing user experiences by
introducing new features without delays.

Business power now lies with individuals who demand seamless access to
location-aware services, apps, and social networks both at work and leisure.
Customer loyalty and revenue growth are increasingly tied to offering
exceptional customer experiences. Mobile devices have become an
extension of individuals, shaping the way businesses operate and connect
with consumers.

Slide 25

(show slide and pause)

Slide 26

Mega trends are forces that shape or create the future of business, the
economy, and society. Business breakthroughs and innovation would be
impossible without them. They also mark the difference between outdated
20th-century business models and practices and those of today’s on-demand
economy.

The most influential IT mega trends driving digital transformation of

companies in the on-demand economy are

- Connectivity

- Big Data and Data Analytics

- Digitization

- Machine-to-Machine Technology

Slide 27:

Companies today must engage with consumers and business partners

through various digital platforms, encompassing hardware, software (mobile
apps), networks (social media), embedded sensors, and cloud computing.

Cloud computing, in particular, enables businesses to access applications via

the Internet rather than from internal servers, with major providers including
Amazon Web Services, Google Cloud, and IBM Cloud. Cloud provides
flexibility to acquire or expand connectivity and computing power for
operations, business transactions, and communication.

Slide 28:

The rise of smart products linked to expanded connectivity, such as smart

clothing and buildings, is being driven by the Internet of Things (IoT), which
is revolutionizing the on-demand economy.

Internet of Things (IoT) refers to a set of capabilities enabled when physical

things are connected to the Internet via sensors (e.g., Smart TV, Smart Cars,
Smart Watches).

Additionally, connectivity is fueling trends like big data, opening up new

market opportunities for services like social sentiment analysis, open
innovation, and personalized marketing and medicine. Ultimately, big data
and other disruptive technologies are reshaping the way businesses operate
and interact with customers.
Slide 29:

The increasing volume of data is valuable only if processed and available

when needed.

Big data, mainly unstructured high-volume text data, come from various
sources like mobile devices, social content, clickstream data, video, and
financial transactions.

• Mobile devices and machine-to-machine sensors embedded in everything

from airport runways to casino chips

• Social content from texts, tweets, posts, blogs

• Clickstream data from the Web and Internet searches

• Video data and photos from retail and user-generated content

• Financial, medical, research, customer, and business-to-business

transactions."

80% to 90% of big data are unstructured, making it challenging for

traditional technology to process quickly. These data are time-sensitive and
used to gain insights for smart decisions, driving business growth.

Machine-generated data and social media texts are key sources of big data,
which have disrupted businesses but also brought opportunities when
analyzed effectively. Enterprises need to harness their data and act on
analytical insights to turn challenges into advantages. Data collected from
various channels need to be managed efficiently to make the most of the big
data trend.

Slide 30:

Companies in various industries are working to shift their disconnected

approaches to a more always-on, real-time, and information-rich
marketplace. Some are revamping their capabilities to leverage digital
technologies and cater to the connected consumer, while others are creating
new business models around digital opportunities, driving value and
relevance.

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.
Slide 31:

Digitization involves blending old wisdom with new skills, like training
merchandising managers in programming or creating roles like user-
experience designers. The benefits are significant: digitizing processes can
cut costs by up to 90% and improve turnaround times drastically.

Examples of digitization success stories can be seen across industries.

 A bank significantly reduced costs and approval times by digitizing its

mortgage processes, a telecom company streamlined customer service
with a self-serve prepaid service, and a shoe retailer improved
inventory management to enhance customer experience.
 An insurance company automated claims adjudication, saving time and
resources.
 Replacing paper and manual processes with software allows businesses
to collect data for better process understanding, cost analysis, and risk
identification.
 Real-time reports enable managers to address issues promptly, such as
identifying quality problems in the supply chain through digital
monitoring of customer behavior.
 The UnionBank example earlier was also an example of digitization.

Slide 32:

Sensors are found in many products that connect to the internet, such as
cars, heart monitors, stoplights, and appliances. These sensors are designed
to detect and respond to stimuli, like Ford's rain sensing front wipers which
adjust their speed based on the intensity of rain or snowfall.

Through machine-to-machine (M2M) technology, sensor-embedded products

can share real-time data using radio signals. M2M and the Internet of Things
(IoT) are widely used across industries to automate processes, from
transportation to healthcare.

By adding sensors to various equipment, companies can remotely track and

manage their products. Embedded sensors allow companies to monitor
interactions with their products, enabling them to adjust their business
models based on behavioral data.
For instance, an insurance company can use location sensors in cars to price
policies based on how and where the car is driven, rather than general
characteristics like age or gender.

This approach offers opportunities for improvement and customization in

various industries.

Slide 33:

Table 1.2 shows other example of how embedded sensors help across
industries.

Slide 34:

Companies that have embraced digital technology and software are

outperforming their peers, with many reporting significant revenue growth
and profit increases. According to a survey by CA Associates, companies that
view technology as a competitive differentiator rather than just a cost center
are reaping the benefits.

The key factors contributing to their success can be summarized in five

Lessons Learned:

1. Focus on software development and become "app-centric."

2. Embrace agile development and DevOps to innovate quickly.
3. Use automated programming interfaces (APIs) to enhance speed and
efficiency.
4. Incorporate third-party innovation to enhance application functionality.
5. Make smarter IT investments to maximize returns and prioritize
portfolio management.

Businesses are facing unprecedented opportunities and challenges due to

technological advancements such as cloud services, big data, mobility,
digitization, and the Internet of Things. Innovation is crucial for staying
relevant in today's competitive business environment, where global markets
and empowered customers drive demand. Embracing technology and
adapting to change is key to long-term success in the rapidly evolving
business landscape.

Slide 35:
To end, I would like to share with you this quote. (Read the quote).

Thank you for listening. See you next lecture!