Managing the digital firm
MBAG-404 MANAGING THE DIGITAL FIRM (2 Credits, IE2)
• Course Objectives
1.
2.
To introduce students to the current digital business trends and
how technology is playing a major role in creating value and
competitiveness for the enterprise.
To prepare students of management, the skills needed to develop
and deploy digital infrastructure successfully, in support of business
goals, by providing them with approaches that will remain relevant
even as the suite of available technologies change over time.
• Course Outcome
•
•
•
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explain the various types of Information systems and how they help
transform the business and competitive landscape.
understand the hardware, software and networking trends and how
they are delivering value to enterprise IT Investments.
understand the traditional and agile approaches to building digital
systems.
appreciate the importance and value of security control for
enterprise systems.
1. Managing Digital Business Infrastructure - Digital Business
Infrastructure stack and its components - Hardware, Network
and Software including web services, Cloud computing,
Software as a service, Intranets and extranets (6 Hours)
•
Chapter 1.3
2. Digital Applications– Overview of ERP, SCM, CRM and
e-Procurement system and how each of them impact and
deliver business value (6 Hours)
•
Chapter 2.6, 2.7, 2.8, 2.9
3. Emerging Technologies – Overview of emerging technologies
such as Social Media, Mobile, Analytics, IoT and AI and how
each of these are redefining the digital enterprise for
competitiveness (6 hours)
•
Chapter 2.9, 2.6
4. Implementation – Alternatives for acquiring digital business
systems, Change management, Traditional and Agile
approaches to developing and deploying digital systems in the
digital firm era, Web Analytics
•
Chapter 3.10,
5. Security design for digital business
•
Chapter 3.11
6. Case Studies Presentations / Assignments
Outlook
The global digital transformation market size was evaluated at USD 608.72
billion in 2021 and is expected to expand at a compound annual growth
rate (CAGR) of 23.1% from 2022 to 2030 as per the Grandview Research.
Digital transformation encompasses all spheres of
business
Digital transformation is changing business models, value chains,
communication strategies, and how people work and exchange ideas to
seamlessly pursue business goals.
In simple terms, it is the integration of digital technology into all spheres of
a business that fundamentally changes how you operate and deliver value
to your customers for good. From delivering a better customer experience
to impeccable digital integration, digital transformation is changing how
businesses function.
In today’s world, going digital is a necessity
With more than 70% of businesses considering digital transformation as
the required arm, it speaks tons about its importance to a business.
From systems to workflow, it changes the way a business operates, which
directly initiates transformation across all levels of the organisation.
Impacts all business units - HR, Finance, Operations, Sales, Marketing,
Manufacturing, Supply Chain, etc.
It helps the business to better engage its customers and gain value for the
business.
• as per IDC estimates, 40% of all technology spending will go toward digital
transformations if an enterprise simply wants to remain competitive in today’s market.
Enablers of Digital
Internet
Wireless communication – 2G, 3G, 4G, 5G
Search Engine
Social Media
Power of Connections
Digital Biz Vs ECommerce
Evolution of Web Tech
Ecommerce Transactions in business
Data is the main driver for Digital Transformation
the world witnessed numerous developments that took place in the field of
technology, for instance:
• predictive analysis, blockchain, quantum computing, Artificial Intelligence (AI), and
Machine Learning (ML), among others.
Organizations are producing a tremendous amount of data for which they
require technological support, such as machine learning algorithms and
powerful analysis tools to develop insights.
This is one of the key factors promoting the adoption of technologies, and
additionally, it makes the workflow more systematic for daily operations.
And to do all of it rightly, an organisation steers its wheel with the right
understanding of technology to achieve a winning position in today’s
marketplace.
Digital Business Environment
A layered model of digital business infrastructure
Intelligence. Additional computer-based logic that
transforms information to knowledge
Processing. Computation and logic provided by the processor
Infrastructure. This refers to the human and external interfaces
and also the network, referred to as ‘extrastructure’.
Storage/physical. Memory and disk hardware components
Application/content. This is the data processed by the application
into information
Physical and network infrastructure components of the
Internet (Levels iv and iii)
Domain names, URLs,
URL Structure
http://video.google.co.uk:80/videoplay?docid=-7246927612831078230&hl=en#00 h02m30s
Here are some of the components of the URL:
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The protocol is http. Other protocols include https, ftp, etc.
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The host or hostname is video.google.co.uk.
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The subdomain is video.
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The domain name is google.co.uk.
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The top-level domain or TLD is uk (also known as gTLD).
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The uk domain is also referred to as a country-code top-level domain or ccTLD.
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For google.com, the TLD would be com.
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The second-level domain (SLD) is co.uk.
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The port is 80, which is the default port for web servers (not usually used in URLs when it is the default, although all web servers broadcast on ports).
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The path is /videoplay. Path typically refers to a file or location on the web server, e.g. /directory/file.html.
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The URL parameter is docid and its value is -7246927612831078230.
• These are often called the ‘name, value’ pair.
• URLs often have lots of parameters.
• Parameters start with a question mark (?) and are separated with an ampersand (&).
•
The anchor or fragment is ‘#00h02m30s’
Going back a bit in time…ERP in 1990s aimed to solve these…
Silos -> Integration
1990s | ERP | Supply Chain | Platforms
Capital Expense Vs Operational Expense | Cloud | SaaS
Web Services | SOA | API | Multi Tenant
To avoid the problems of a fragmented applications infrastructure, companies attempted throughout the 1990s to
achieve the more integrated position shown in Figure 3.5(b). Many companies turned to enterprise resource
planning (ERP) vendors such as SAP, Baan, PeopleSoft and Oracle.
Integrating processes within the Company | Outside the company -> Supply chain | Industry | Country
Given the enterprise digital infra, there is a need for multiple
infrastructures to support
The difficulty for those managing digital business infrastructure is that there is not, and probably never can be, a
single solution of components from a single supplier. For example, to gain competitive edge, companies may need to
turn to solutions from innovators who, for example, support new channels such as WAP, or provide knowledge
management solutions or sales management solutions.
Thus managers are faced with a precarious balancing act between standardisation or core product and integrating
innovative systems where applicable.
ERP
Finance
• Accounting | Finance Operations | Cost management | Risk | Compliance
Sales
• Order / Contracts | Sales Performance
Sourcing
• Operational Procurement | Contract Management | Invoice | SRM |
Manufacturing
• Production Engg. | Production Planning | Kanban | Quality | Safety
HR
Supply Chain
Building products, the right way Vs Building the right products
Intelligence – the missing part in ERP
Introducing the Supply Chain
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Matching demand and supply
Optimizing Supply – SRM
Marketing & Sales
CRM
Bringing these concepts to reality – Cloud…
• Cloud computing
• In 1997, Professor Ramnath Chellapa of
Emory University defined cloud computing
as the new “computing paradigm, where
the boundaries of computing will be
determined by economic rationale, rather
than technical limits alone.”
• The rise of the Internet | Virtual
Computers | Distributed Computing
• Capital Vs Operational
• Hosting models – SaaS, IaaS, PaaS
• Containers
• The cloud referred to is the combination of
networking and data storage hardware and
software hosted externally to a company, typically
shared between many separate or ‘distributed’
servers accessed via the Internet
• Traditionally, companies had their own
information systems, and support staff to manage
business applications like email & ERP.
• Costs for installing, upgrading and configuring
new software on users’ client computers and
servers are very high & capital-intensive
About virtualization
Conceptually it allows you to operate far more than the constraints of a machine.
In a different field consider the concept from Airbnb and Uber
In IT, Virtualization is a technology that lets you create useful IT services. It
enables to create virtual representations of servers, storage, networks, and
other physical machines.
Virtual software mimics the functions of physical hardware to run multiple
virtual machines simultaneously on a single physical machine
OS | Server/Storage | Network Virtualizations
An early example
In 1999, Salesforce became a popular example of using cloud computing
successfully. They used it to pioneer the idea of using the Internet to deliver
software programs to the end users.
Cloud - summary
cloud computing is the delivery of computing services—including servers,
storage, databases, networking, software, analytics, and intelligence—over the
Internet (“the cloud”) to offer faster innovation, flexible resources, and
economies of scale. You typically pay only for cloud services you use, helping you
lower your operating costs, run your infrastructure more efficiently, and scale as
your business needs change.
Cloud benefits
Cost
eliminates capital expense of buying hardware / software and setting up / running on-site data centers—the server
racks, Electricity for power and cooling, and the IT experts for managing the infrastructure.
Speed
self-service & on-demand | Provision computing resources in minutes | offers businesses a lot of flexibility and
capacity planning
Global scale
computing power | storage | bandwidth | geographic location | Scale up/down | Scale In/Out
Productivity
No hardware setup | No software patching, and other time-consuming IT management chores.
Performance
latest generation of fast and efficient computing hardware
Reliability
data backup | disaster recovery | business continuity
Security
offer a broad set of policies, technologies, and controls to strengthen security, helping protect data, apps, and infra
from potential threats.
Bringing these concepts to reality – API…
Application programming interfaces (API)
• Traditionally, organisations have sought to keep proprietary information within their firewalls for security
reasons and to protect their intellectual property.
• But this strategy may limit opportunities to add value to their services or share information via other online
companies and their web services to increase their potential reach
Examples
• Amazon Web Services (http://aws.amazon.com). One example of AWS allows affiliates, developers and
website publishers to use Amazon Product Discovery which enables other sites to incorporate data about
Amazon products and pricing.
• Facebook and Twitter use their APIs to help other sites embed social content into their sites.
• Google APIs exist for a number of its services, most notably Google Maps which, is one of the most
popular mashups created through an API.
• The Google Analytics API has enabled many businesses and third-party application developers to
visualise web performance data in a more tailored way.
• Record financial transactions in real time, and report on financial results
and company position
• Automate financial and managerial accounting processes such as revenue
recognition to ensure compliance
• Close the books in real time with a high degree of automation – and much
less effort
• Orchestrate closing processes across multiple entities to improve
governance and compliance, drive efficiency, and gain transparency
Combine actuals, plan, and predictive data for the entity and the group into
one universal general ledger
Digital Applications
ERP and Supply Chain
Refresh: key digital business strategic decisions
right mix of bricks and clicks | mobile/web
Product | B2B & B2C
Product performance | Pricing | Relationship
Market and product
development
Positioning and
differentiation
strategies
Business and
revenue models
Marketplace
restructuring
Supply-chain
management
capabilities
Internal knowledge
management
capabilities
Organisational
resourcing and
capabilities
Digital business
channel priorities
SaaS | Platform play
Digital business strategy implementation success
factors
1 Content. The effective presentation of products or services.
2 Convenience. The usability of the website.
3 Control. The extent to which organizations have defined processes that they can manage.
4 Interaction. The means of relationship building with individual customers.
5 Community. The means of relationship building with groups of like-minded individuals or organizations.
6 Price sensitivity. The sensitivity of a product or service to price competition on the Internet.
7 Brand image. The ability to build up a credible brand name for e-commerce.
8 Commitment. A strong motivation for using the Internet and the will to innovate.
9 Partnership. The extent to which an e-commerce venture uses partnerships (value chain relationships) to leverage its Internet
presence and expand its business.
10 Process improvement. The extent to which companies can change and automate business processes.
11 Integration. The provision of links between underlying IT systems in support of partnership and process improvement.
What happens where there is no digital business
strategy?
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Poor customer experience from poorly integrated channels
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Missed opportunities from lack of evaluation of opportunities or insufficient resourcing of digital business initiatives.
❖ Fall-behind competitors in delivering online services – may become difficult to catch-up, for example, Tesco, Dell
❖ Missed opportunities for additional sales on the sell-side and more efficient purchasing on the buy-side
❖ These will result in more savvy competitors gaining a competitive advantage.
❖
Inappropriate direction of digital business strategy (poorly defined objectives, for example, with the wrong emphasis on
buy-side, sell-side or internal process support).
❖
Limited integration of digital business at a technical level, resulting in silos of information in different systems.
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Resource wastage through duplication of digital business development in different functions and limited sharing of best
practice.
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Digital business strategy should support corporate strategy objectives and it should also support functional marketing
and supply chain management strategies.
Supply Chain
Supply chain management is the management of the flow of goods and services
and includes all processes that transform raw materials into final products.
It involves the active streamlining of a business's supply-side activities to
maximize customer value and gain a competitive advantage in the marketplace
Typical SC opportunities
reduce costs of manufacturing
Demand forecasting
Reduce Out of stock
Reduce Inventory Costs
New Product development
Intelligent pricing
Optimise procurement expense
Demand Planning
Demand forecasting to improve sustainability and meet increasing customer
service expectations
• https://blueyonder.com/solutions/demand-planning#
Consensus demand planning
• communication and collaboration to improve forecast accuracy and reduce inventory
Benefits
• Reduce OOS
• Increase accuracy in forecast
• Reduce waste
Digital Transformation is not just about tech its about people
https://youtu.be/zZVkUfg6at8
Current tools and trends
every innovation leverages existing strengths – assets and capabilities
An example of business capability map
Porter’s value
chain
•Marketing and sales.
•These are the processes you use
to persuade clients to purchase
from you instead of your
competitors.
•The benefits you offer, and how
well you communicate them,
are sources of value here.
Enterprise AI
Fundamental level
• Financial Health
• Accounting, Stock trading, Investments, processes
Department level optimization
• Manufacturing, SCM
• Transportation
• Risks
Intelligent Automation
• Digitization of enterprises, Big Data
• Digitization of consumer environments
• Advancements in Stats, Computing