The enablers of innovation

Business Processes

What is a BUSINESS PROCESS ?

From Wikipedia.com, the free encyklopedia:

A BUSINESS PROCESS (BP) or BUSINESS METHOD - is a collection of related, structured activities or tasks that produce a specific service or product (serve a particular goal) for a particular customer or customers. It often can be visualized with a flowchart as a sequence of activities.

In a brief: There are 3 types of BP’s : Managment processes (Assoc. With Strategic

Managment), Operational processes (Assoc. With Manufacturing, Marketing, Sales and Purchasing) and Supporting processes (Assoc. With core values of firm activity, whitch includes Accounting, HR, Technical Support)

More informations at: http://www.wikipedia.com/wiki/Business_process ;)

21st Century Innovation and BP

Innovation Successful application of an invention Complex processes of change characterized by co-evolution

of scientific technological, society and economics systems Creative work translated to useable outcome

21st Century requirements of innovation: Open Collaborative Multi-disciplinary Global

Why we need to innovate at all?

With the advent of digitization, ubiquitous connectivity and globalization, Transforamtion will need to be radically altered, to change the very nature of the firm and how it creates value,

Competitive advantage in 21st century can be gained through a combination of cost leadership and differentiation, specialization and the best information management systems,

To compete, companies will need to improve managment systems and focus on implementing new innovational ideas (It will be visible in the need of flexibility and scalablity with will favourable survival).

The N=1 & R=G rules

N = 1 Value will increasingly be co-created with consumers Every consumer is unique

R = G No single firm the complete knowledge, skills and resources

it needs to co-create value with consumers Every company has a gap between the strategic intent and

its capacity to act from within the organization.

Why we need to think different ?

…because, the Reality by 2015 will probably look like these:

5 Billion people are connected through Mobiles and Internet 1 Billion people are active in using Social networks Easy access to Internet and Infrastructure Ever increasing competition Easy to use and cheaper cost of technologies coming through Future consumers are here, very young today

Informations from: „The New Age of Innovation: Driving Cocreated Value Through

Global Networks” by C. K. Prahalad, M. S. Krishnan, 2008

How to improve our bp – ict idea

From Wikipedia.com, the free encyklopedia:

Information and communication technologies (ICT) is an umbrella term that includes all technologies for the manipulation and communication of information. The term is sometimes used in preference to Information Technology (IT), particularly in two communities: education and government. In the common usage it is often assumed that ICT is synonymous with IT.

ICT in fact encompasses any medium to record information (magnetic disk/tape, optical disks (CD/DVD), flash memory etc. and arguably also paper records); technology for broadcasting information - radio, television; and technology for communicating through voice and sound or images - microphone, camera, loudspeaker, telephone to cellular phones.

How ict impact on business ?

The spread of computing power has reduced radically the costs for companies of collecting, analysing, retrieving and re-using information. The growth of voice and data communications means companies are increasingly able to share and spread this information at great speed, over large distances.

As computers become cheaper and more powerful, the business value of computers is limited less by computational capability and more by the ability of managers to invent new processes, procedures and organisational structures that leverage this capability.

Just as electricity enabled development of the continuous production line processes, the decentralised availability of information through IT allows the reduction of hierarchical structures within firms and greater empowerment and capabilities for work teams and individual workers.

Ict impact on innovation

The ict simple architecure

Propiertary and standard analytics

Ict applications

Private architecure, e.g. software and hardware platforms

Public architecture, e.g. telecommunications

Layer 1

Layer 2

Layer 3

Layer 4

Layer architecure of ict (1/2)Layer 4 : Lowest layer, it comprises of physical connectivity – telephones,

cables, wired and wireless connections, server farms, hosting architecture and routers, all of that enable connection to data network and public telecom.

Layer 3 : Comprises of the firm’s privet IT architecture – computers and

servers, software such as: operating systems, databases, middleware platforms..

Those layers (3 and 4) are not source of competitive advantage but can contribute to simplify firm’s operations and logistics, for example Cisco and Dow Corning standardized their computers through company to several models of IBM and Toshiba hardware.

Layer architecure of ict (2/2)Layer 2 : Focuses on business-specific applications and attendant business

processes. Since there is rising pressure for quarterly business measurement, senior managers focus more on different change levers such as performance measurements, organization structure, etc. ICT are now viewed as cost and necessary evil. Business processes that influence both managerial process and ICT architecture evolve in haphazard fashion. It is uncommon that senior managers are responsible for business processes.

Layer 1 : Represents the primary interfaces of a business with its customers,

suppliers partners or investors.

Layer 1 and 2 are source of competitive advantage. However, it is inappropriate to describe ICT as such a source without understanding of layers and the relative contribution

ict in bp’es

Examples of usage

Examples of usage ict in bp’es

First of all is Wal-Mart. It uses its logistic capabilities to manage its global supply chains. IT is able to stock their stores from USA to China to supply local needs. It has largest commercial database. Wal-Mart today creates value by managing the underlying information flows in a global supply chains. Its senior management knows that ability to translate business model into business processes and importance of ICT is crucial for its success.

Examples of usage ict in bp’es

FedEx. This company allows invidual customers track their package at every event or allow large customers to reroute a package. FedEx together with its partners abroad, allows package tracking in over 150 countries as well as dealing with different customs rules firmly.

Examples of usage ict in bp’es

UPS spun off a new business, a logistic business based on its internally developed capability. It handles reverse logistic, spare parts inventory and customer services for Toshiba. UPS works with several local PC repair shops but the UPS is responsible for final customer experience It manage the whole process – from customer call to getting the machine serviced.

Examples of usage ict in bp’es

eBay goes one step further. It allows key customers (sellers and buyers) to participate in designing their platform and thus be more and more user-friendly and transparent.

Ebay’s CEO and top managers meet with customers groups through their eBay Voices and read their emails daily.Most companies, seeking cost reduction, outsource IT

operation. However, outsourcing some ICT layer are correct, indiscriminate outsourcing may jeopardize firms’ ability to get R=G, much less N=1. Moving in both directions is important but senior management should asses current capabilities and assign priority to their migration in these directions.

Erp systems – part of ICTEnterprise resource planning (ERP) is a

company-wide computer software system used to manage and coordinate all the resources, information, and functions of a business from shared data stores.

An ERP system has a service-oriented architecture with modular hardware and software units or "services" that communicate on a local area network. The modular design allows a business to add or reconfigure modules (perhaps from different vendors) while preserving data integrity in one shared database that may be centralized or distributed.

A simple list of world’s known ERP systems :http://en.wikipedia.org/wiki/

List_of_ERP_software_packages

Case study – icici bank

ICICI Bank - is India's largest private sector bank by market capitalization and second largest overall in terms of assets. Bank has total assets of about USD 77 billion (at the end of December 2008), a network of over 1,400 branches, 22 regional offices and 49 regional processing centers, about 4,644 ATMs (at the end of December 2008), and 24 million customers (at the end of July 2007). ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and specialised subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. ICICI Bank is also the largest issuer of credit cards in India.

Icici bank - Industrial Credit and Investment Corporation of India

icici bank, the numbers

Over the last decade, ICICI focused on strategy business models, business process = the technical and social infrastructure to rapidly grow and become global. Their business results are impressive by any standards.

Thy moved from a few thousand in 2001 to almost 10 million banking customers by 2006. The total number of customers they no touch through all their products exceeds 20 million.

Total assets managed by them has multiplied 250 times in the last decade, starting with an asset base of araound U.S. $250 million in 1996 to nearly U.S. $80 billion in 2007.

Their net profts also significat rise, from U.S. $4 million in 1996 to U.S. $620 million in 2006.

A fact that is underlying this phenomenal growth is that they made a reduction of their nonperforming assets from 4.7% in 2002 to 0.71% in 2006

2nd Case study – gibson

Case Study of implementing an ERP system of Microsoft Dynamics

Film 03:11 length

Conclusions… In conclusion, the cited examples clearly show that a company

success depends on reasonable evolving expanding process and unique business models. Their robustness is achieved due to underlying business processes, the ICT infrastructure, the analytics, application the social infrastructure.

Thus, this contradicts the argument that the ICT capabilities will become akin to utilities which are indispensable to conduct business but does not influence their development or competitiveness on the market.

The examples show that the argument only can go as far as the hardware, communication links, system software and database utilities.

The business processes and the analytics provide siginficant competitive advantages to the firm.

Managers must recognise the differences and implications of firm’s ICT foundation.

The end