Technology Applications In Business

FTMBA – Trim 2
Session 02 IS Stream

Sep-18
 Innovation Theory

Moore’s Law
 He predicted that the growth of semiconductors (electronic
components such as diodes, resistors and transistors, are
made with ‘semiconducting material’ and are referred to as
semiconductors) would be steady for many decades. Known
as Moore’s law, the prediction was that the number of
transistors packed into integrated circuits would double
almost every two years.
 The law was found to be effective in its predictions and the
number of transistors indeed doubled on the integrated
circuit, which later became a computer chip.
 The consequence of Moore’s law is a tremendous growth in
the power and capacity of the basic computing hardware
that drives innovation.

2
 Innovation Theory

Disruptive Innovation
 The idea of disruptive innovation was developed by Clayton
Christensen in 1997.
 An example of this is digital cameras that were introduced in
world markets in the mid- 1990s.

3
 Innovation Theory

Creative Destruction
 Innovative change in the economy is often referred to as
‘creative destruction.’
 This term also refers to the new situations brought forth by
changes in the economy and political landscape where entire
businesses and industries disappear to make way for newer
businesses and models.
 This concept is attributed to the German economist Joseph
Schumpeter who coined this phrase, drawing on the works of
Karl Marx, to explain the constant change and chaos in
capitalist industrial societies.

4
 Innovation Theory

Diffusion of Innovation
The theory of diffusion of innovations, as proposed by Rogers
(1983), states that there are four elements that enable the
process of diffusion. These are:
– An innovation – a new idea.
– Communication channels − which are the media or means by which the information about
the new idea is shared by people.
– Time – the period over which the innovative idea spreads.
– A social system − which is a combination of elements in a society that encourages or
inhibits the innovation.

5
 Innovation Impact

Innovation and Competition

• Research shows that to remain competitive, commercial firms have to innovate with IT and
have to develop new ways of doing business that is superior to that of the competition.
• Two researchers, Brynjolfsson and McAfee, in a study published in 2008, showed that of all
US companies in the period 1960 to 2005, the ones that gained the greatest competitive
advantage did so on the basis of use of IT.
• This phenomena was particularly sharp after the mid-1990s since it was at that time that
companies started using IT extensively, along with the presence of the commercial internet,
and did so for strategic reasons. Competitive advantage here implies that firms are able to
take market share away from rivals, and are thus able to achieve higher growth and better
profits.

6
 Innovation Impact

Innovation Waves
 With the massive scale and pace of innovations in IT, one
challenge managers face is that of deciding which of the
innovations are sound and can be investigated further,
versus innovations that are a flash and may disappear.

 Once an idea breaks the surface, the innovators articulate

an organizing vision for the community.
7
 Types of Business Innovations with IT

 New business models focus on providing value to customers

through different ways of doing business.
 Some types of business innovations using IT are:

1. Industry transformation
2. Diversity and variety
3. Personalization
4. Experimentation
5. Plug-and-play innovations
6. New marketing opportunities
7. Use of smart technologies
8. Natural language interfaces
9. Analytics
[Link] sourcing

8
 Management Issues: Challenges for Managers

With the advent of massive innovation in IT and the

transformations that they are bringing about, many
management challenges emerge:

 Prices and margins

 Talent shortage
 Global presence
 Risk-taking abilities
 Integration of online and offline models

9
 SMAC – An Introduction

 Futuristic enterprise technology

 Pulls together the power of social, mobile, analytics & cloud: single stack
 Enhances the IT architecture of businesses

10
Confidential |
Confidential | 11
 Fifth Wave of Corporate IT

Confidential | 12
 Evolution of Technology

Confidential | 13
 Changing Business Models

Confidential | 14
 Transformation of Value Chain

Confidential | 15
 Tight Coupling in Value Chains

 Communication costs were expensive

 Humans and information had to be co-located
 Coordination costs were high (leading to internal ownership)
 Information was finite and proprietary

16
Confidential |
 SMAC - Advantages

 Break geographical boundaries

 Cost effective marketing
 Operation enhancement: better data gathering and
processing
 More collaborative and productive marketing management
 Real time data management and decision making process

17
Confidential |
AI

AI is Not Magical or
Mysterious
• Mathematical algorithms
in existence for decades
• Enabled by technology
and fueled by data
explosion
• Proliferation of embedded
and point solutions
• Pervasive across many
parts of our lives today
Cross-enterprise
capabilities are emerging
 How We got Here

1990 2000 2015

Enterprise Artificial
Traditional BI Advanced Analytics
Intelligence
Dynamic Big Data
Data Complexity Structured Data (RDB) Data Marts/ OLAP
(Structured and Unstructured)
Inferential NLP, Pattern
Algorithm Dashboards and Custom Modelling with
Recognition, Machine
Sophistication Visualizations Standard Statistical Tools
Learning
Goal Achievement &
Use Cases Reporting History Insight and Prediction
Automated Action

Explosion Of Data ● Need For Automated Action ● Driving Commercialisation of AI for Business
 The Era of the Enterprise AI

ADOPTION
“The most important
general-purpose
technology of our era
is artificial intelligence,
particularly machine
learning”
Erik Brynjolffson and Andrew McAfee,
Harvard Business Review, July 2017

Sources: MIT, Boston Consulting Group, Harvard Business Review, McKinsey &
Co., World Economic Forum
 The AI Enterprise

Delivers Optimization Within Function and Cross Enterprise

ai EXPERIENCE ai PROMOTION ai MERCHANDISING

CONSUMER PERSONALIZED VALUE PERSONALIZED OPTIMAL LOCALIZED SMARTER PRODUCT OUTLET

PORTFOLIO RECOMMENDATIONS INNOVATION PROMOTION PRICING PROMOTION SUPPLY ASSORTMENT PORTOLIO

 Share of Wallet  Avoid Price Discounting  Forecast Accuracy

 Lifetime Value  New Purchase Occasions and  Comp Store Sales
 New Category Product Trial  Inventory Turns
Growth  Margin Improvement  Real Estate ROI
 Manufacturing Revolution – From Industry 1.0 to Industry 4.0

Industry 1.0 Industry 2.0 Industry 3.0 Industry 4.0

FIRST SECOND THIRD FOURTH
Industrial Revolution Industrial Revolution Industrial Revolution Industrial Revolution
Key Change:
Key Change: Introduction of IoT and
Introduction of Cyber-Physical Systems
Key Change: Electronics, PLC driven by Augmented
Key Change: Introduction of mass Devices, Robots and IT Reality & Real Time
Introduction of Manufacturing to automate Intelligence
Mechanical Production Production lines Production
Equipment driven by powered by Electric
Water and Stream Energy
Power

Level Of Complexity
Augmented Reality Driven
CPS
PLC Driven Robots

Vintage Electric Conveyor

Belt
18th Century Mechanical
Loom

End of 18th Century End of 19th Century Q4 of 20th Century Start of 21st Century
Leveraging Industry 4.0-Challenges & Opportunities

1) An organization can
drive both revenue &
margin by leveraging
Industry 4.0
2) Transformation
opportunity: both biz.
models and biz.
processes
3) Digital maturity-
digital intensity &
transformation
management
4) Enablement on ‘new
skills’ fundamental
5) Digital-niche to ‘must
have’ skills
 IoT Adoption trends

US manufacturers are beginning to implement IoT solutions and

believe IoT is required for future growth
 35% are currently collecting and using data generated by
smart sensors to enhance manufacturing/operating processes
 70% believe it is extremely or moderately important that US
manufacturers adopt an IoT strategy in their operations
 38% currently embed sensors in products that enable end-
users/customers to collect sensor-generated data
 The North American market for IoT will reach to $599B with
a CAGR of 13.1% by 2021
 Manufacturing Revolution is shaping SMART
Factories….

 Smart factories are connected in a

network through the use of cyber-
physical production systems which
lets factories and manufacturing
plants react quickly to variables,
such as demand levels, stock levels,
machine defects, and unforeseen
delays
 This networking also involves the
smart logistics and smart services
 The whole value chain in such
integrated network is subjected to
through-engineering, where the
complete lifecycle of the product
is traced from production to
retirement through the use of IoT
technologies
Thank you