IT doesnt matter_group01

8/8/2019 IT doesnt matter_group01

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1968 Ted Hoff circuits onto a tiny piece of silicon

Transformed the business worldBackbone of commerceUnderpins operations of individual companies


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S pending habits of IT

(Capital expenditures)

19655%

198015%

199030%

199950%


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IT functionCore function of IT- Data storage- Data processing

- Data transport

Available & Affordable

Transform : Potentially Strategic ResourcesCommodity Factors of Production


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Reshape industry

Increasing availabilityDecreasing cost

From strategic standpoint Invisible


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The Commoditization

of ITIT a transport mechanism, carries a digitalinformation, more valuable when shared

IT in business increase interconnectivity andinteroperabilityP rogression stage:- Greater standardization of the technology- Greater homogenization of its functionalityApplication customization overwhelmed by thecosts in isolation


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Standardization of theTechnology

IT is highly replicableInfinite scalability of IT functioncombined with technicalstandardization mostproprietary application to

economic obsolescenceGeneric application genericprocessCost savings & interoperabilitybenefits unavoidable

scarification of distinctiveness

H omogenization of ITcapabilities

Internet accelerate thecommoditization of IT byproviding a delivery channel forgeneric applicationsIT requirements by purchasing

fee-based Web ServicesThe business technology vendors

will control the provision of adiverse range of businessapplication (IT utilities)


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IT subject to price deflation

Gordon Moore free fall in the price of computer functionality, the cost of datastorage and transmission

Year 1978 1985 1995

The cost of processingpower (MI PS ) $ 480 $ 50 $ 4


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IT s evolution

Q4 of 20 th century the computational powerincreased by a factor of 66,000

1989 to 2001 internet connection grew from80,000 to more than 125 millionO ver the last ten years World Wide Web hasgrown from 0 to nearly 40 millionS ince 1980s more than 280 million miles of fiber-optic cable has been installed


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A merican H ospital Supply

ASAP (Analytic systems AutomatedP urchasing) was innovate in 1976.

AHS was the only distributor offeringelectronic ordering.

1978-1983, AH S s sales and profits rose atannual rates of 13% and 18%. Above industryaverages.


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1990 s, AHS s had merged with BaxterTravenol to form Baxter International.

Myriad gained important advantages throughinnovative deployment of IT :

American Airlines with S abre reservation system Federal Express with package-tracking system Mobil O il with automated S peedpass payment

system Ebay auctions Etc


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IT Buildout

IT s power is outstripping most of the business needsit fulfills

The price of essential IT functionality

The capacity of the universal distribution network.

IT vendors are rushing to position themselves ascommodity supplier


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The Vendors

IT vendors are adapting to compete in a worldwhere IT hardware and software are largelycommodities.

Microsoft s push to turn its O ffice softwaresuite from a packaged good into an annualsubscription service .


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Transformation of IT

Transformation of IT into a commodity.

The winners will do very well, The losers willbe gone


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INFORMATION TECH NOLOGY

The technologies used for processing, storing, andtransporting information in digital form

Facts:IT is attached to so many business functionsIT has become the dominant capital expense formost businessesIT will be continuously innovative and growingCompanies continue to roll out hardware andsoftware upgrades across-the-board


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Where The Money Went

Average dollar breakdown of IT budgets2002 2003

New product or technology purchases 19.5% $62.2M 17.0% $60.2M

I.T. consulting or outsourcing 18.0% $57.4M 14.7% $51.7M

Research and development 2.5% $7.9M 3.3% $11.7M

Salaries and benefits 27.9% $89.3M 32.1% $113.2M

Applications 21.0% $67.2M 20.0% $70.5M

Everything else 11.1% $35.5M 12.9% $45.7M

Note: In 2002, the average total IT budget was $356.6 million; in 2003, it was $353.0 million.Data: InformationWeek Research survey of InformationWeek 500 executives


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IT still can provides competitive advantages IT continues to be developed IT can help differentiate company in the market, when it

is properly planned Any company that fails to invest in IT is doomed to fall

behind IT investments should be spent to not just to support

company but also can help company innovate

TH E SOURCE OF COMPETITIVEAD VA NTA GE in business ishow companies use the INFORMATION that TECH NOLOGYgives us access to

IT D oes Matter in Competitive A dvantage


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However, even for certain technology that isalready becoming a commodity, IT still canprovide business flexibility

Adopting IT tools for company s informationprocessingS oftware P rocessing power S torage

IT has impacts on business-processimprovement, optimization, and businesssuccess. Those things do matter, and they aren tcommodities

IT D oes Matter even though has BecomeCommoditized


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Businesses grow and changes ITinfrastructure

Business S trategy + IT Infrastructure innovatethe business growth

Investing IT to fit the business plan

E-commerce company company needs tospend expenses to build website

S ales-oriented company investing IT formobile technology to support the sales staff

IT D oes Matter in Productivity


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N ew rule in IT management Focus onvulnerabilities, not opportunitiesCorporations delegate their IT applications and

networks to vendors (outsource) the threats willproliferate: technical glitches, outages, and securitybreaches

P rotective methods: SSL , public key infrastructurew/ certificate authority, etc

P rotective strategies: virus-detection software,multiple logons, passwords, content filters, etc

IT D oes Matter in Company sD ata-Information Security


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IT SECURITY


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THANK

YOU

IT doesnt matter_group01

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