Role of IT in Business

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Role of IT in Business
By CM Maran . B.Sc.,MS(ITM).,PGDMM.,M.Phil., Facu
lty IT SYSTEMS,VIT Business School E-Mail
cmaran78_at_yahoo.com Session 2
Date 15.12.2006
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• Agenda
• About India !
• Indian IT Infrastructure
• Business Determinants
• Proposed classification of Information
  Technologies in Business
• Managing IT
• Security issues in IT
• IT in Business - Cases

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• Five thousand years old civilization
• Worlds largest democracy with population of 1.3
  Billion
• World-class recognition in IT, bio-technology and
  space.
• Largest English speaking nation in the world.
• 3rd largest standing army force, over 1.5Million
  strong.
• 2nd largest pool of scientists and engineers in
  the World.
• 2nd largest tractor manufacturer in the world.
• 5th largest commercial vehicle manufacturer in
  the world.
• 5th Largest watch manufacturer in the world
• India is one of the world's largest diamond
  cutting and polishing centres.
• 15 of the world's major Automobile makers are
  obtaining components from Indian companies

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• India is among six countries that launch
  satellites and do so even for Germany, Belgium,
  South Korea, Singapore and EU countries
• India's INSAT is among the world's largest
  domestic satellite communication systems.
• India is among the 3 countries in the World that
  have built Supercomputers on their own. The
  other two countries being USA and Japan
• The Indian pharmaceutical industry growing at
  8-10 annually, is the 4th largest pharmaceutical
  industry in the world
• 100 of the Fortune 500 are now present in India
  (compared to 33 in China)
• 80 of the Worlds 117 SEI CMM Level-5 companies
  are based in India

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• Over 100 MNCs have set up RD facilities in India
  in the past five years. These include GE, Bell
  Labs, Du Pont, Daimler Chrysler, Eli Lilly,
  Intel, Monsanto, Texas Instruments, Caterpillar,
  Cummins, GM, Microsoft and IBM
• India is a land of a variety of linguistic
  communities, each of which share a common
  language and culture
• 325 languages are spoken 18 languages are
  officially recognized in India of which Sanskrit
  and Tamil share a long history of more than 5,000
  and 3,000 years respectively.
• The vividness can be ascertained by the fact that
  schools in India teach more than 50 different
  languages there are Films in 15 languages,
  Newspapers in 90 or more languages and radio
  programmes in 71 languages

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Some specific changes out of Economic reforms in
India

• Soundness of Banking
• Financial market sophistication
• Venture capital availability
• Access to foreign capital market
• Technological sophistication
• Firm level innovation
• Firm level technology absorption
• FDI technology
• Quality of scientific research institutions
• Tax incentives for firm level R D
• Corporate Governance

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INDIA IT INFRASTRUCTURE

• The Indian telecommunications Network is the
  fifth largest in the world and is the second
  largest among the emerging economies of Asia.
• Today it is the fastest growing market in the
  world. Private operators have made mobile
  telephony the fastest growing (over 164 p.a.) in
  India .
• With more than 33 million users (both CDMA and
  GSM), wireless is the principal growth engine of
  the Indian telecom industry
• Indias telecom infrastructure between Chennai,
  Mumbai and Singapore, provides the largest
  bandwidth capacity in the world, with well over
  8.5 Terabits (8.5Tbs) per second.
• The Government has played a key enabling role by
  deregulating and liberalizing the industry,
  ushering in competition and paving the way for
  growth

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INDIA IT INFRASTRUCTURE

• Regular, reliable, uninterrupted power, a major
  necessity for running IT software and services
  businesses, has also received substantial
  attention from the Government
• The overall roads and highways scenario in India
  has also witnessed major improvements over the
  last few years .
• The Indian Government has understood the
  importance of infrastructure to industries such
  as IT and created a conducive environment for its
  development and expansion
• India has the second largest road network in the
  world totaling more than 3.3 million kilometers .
• The last five years has seen a tremendous growth
  in Tech Parks with intelligent buildings,
  buit-to-suit facilities, large sprawling campuses
  that are geared to meet the requirements of the
  knowledge industry.

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INDIA IT INFRASTRUCTURE CAPABILITIES

• With more than 250 universities, 1,500 research
  institutions and 10,428 higher-education
  institutes, India produces 200,000 engineering
  graduates and another 300,000 technically trained
  graduates every year.
• Besides, another 2 million other graduates
  qualify out in India annually
• The Indian Institute of Technology (IIT) is among
  the top three universities from which McKinsey
  Company, the world's biggest consulting firm,
  hires most

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Business Determinants

• Global business opportunities

• Competition

• Reduced cycle/response time

• Borderless world

• Partnering and outsourcing

• Reengineering of Processes

• Information is power

• Productivity of Knowledge workers

• Social /Environmental responsibility

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INFORMATION TECHNOLOGY

• Information Technology (IT) consists of the
• increasingly convergent and linked computer and
• communication technologies which are used to
  collect, store, transfer and disseminate
  information

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Critical shifts in Information Technology
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Critical shifts in Information Technology
NETWORK COMPUTING
From traditional semiconductors To
Microprocessor based systems in processing
From host based systems To Network based
systems
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Critical shifts in Information Technology
OPEN SYSTEMS
From vendor proprietary software to Open
software standards
From separate data, voice, text, image to
Multimedia information forms
From Account control to Computer
vendorcustomer partnerships based on free will
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Critical shifts in Information Technology
INDUSTRIAL REVOLUTION SOFTWARE
Software development moving from Craft to factory
From alphanumerphic character set To Graphical
user interface
From stand-alone To Integrated software
applications
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Critical shifts in applications of Information
Technology
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Critical shifts in application of Information
Technology
From personal to Workgroup computing
From System islands to Integrated systems
From Internal to Inter-enterprise computing
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Strategic roles of IT
Lower Costs
Other Strategies
Using IT to Implement Competitive Strategies
Build IT Platform
Differentiate
Improve Quality
Innovate
Develop Alliances
Promote Growth
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Technology Paradigms
1853
1913
1969
2025
2061
2081
Rapid Adoption
Railway
Auto
Computer
Nanotech
Textile
Bio Tech
1800
1853
1913
1969
2005
2025
Introduction of Technology
1771
1825
1886
1939
1977
1997
Information Technology
Industrial Revolution
Information Evolution
Source Norman Poire, Economist Merril
Lynch http//www.smalltimes.com/
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Development of IT systems
Proprietary Mainframes Islands EDI
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Development of Business with IT
E-Biz II Agents Product Standardisation PML
Desktops Common OS Commn Stds
Internet ERP EDI
Auto ID ePC PML,ONS
E-Business XML Exchanges GroupWare C-Commerce Rose
ttanet
Proprietary Mainframes Islands
OSI TCP/IP Client-Server HTML
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COMPETITIVE FORCES MODEL
Threat of New Entrants
Bargaining power of Suppliers
RIVALRY AMONG EXISTING COMPETITORS
Bargaining power of Buyers
Threat of Substitute products/services
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Mgmt. Issues and How IT could solve them (?)

• Inventory Issues
• Variability
• Collaborative Commerce
• VMI
• JIT MIS (DSS)
• Forecasting
• Databases
• Computationally complex Models (GA ANN)
• Collaborative Models
• Uncertainty Handling
• Seamless integration
• Risk Based Production Scheduling
• SKU Proliferation
• Delayed Differentiation
• Mass Customisation

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Mgmt. Issues and How IT could solve them (?)

• Cost of production
• Macquiladoras and virtual integration
• Customer Responsiveness
• Tracking systems
• LTL and eaches management (4 PL)
• Order Processing systems
• Losses and transit issues
• Product Standardisation
• Transportation monitoring

These look impressive BUT ARE THEY EASY TO
IMPLEMENT
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Applications in Business
Business
Growth
Cost Reduction
ORGN
HRM
SCM
Web Channels
CRM
Channel Cost
Contextual Solutions
Data Analysis
MONITORING
CONTROL
RISK.
COMMN.
TIME
COST
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The I in IT

• Data ? information ?business intelligence /
  knowledge

Data
Supply of Information
Demand for information
Information / Business
Information economics highlighting the value
chain of information
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Proposed technologies of IT

• According to Riel, the costs and benefits of IT
  within an organization
• There are three broad categories of cost
  associated by IT projects
• Technological costs
• System costs
• Support costs

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Classification of information delivery systems

• Information delivery may be defined as the end to
  end process of converting data , which large
  organizations have in abundance , into meaningful
  organization

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Proposed classification of information delivery
systems
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Quadrant 1 office Automation

• The applications of computers and communication
  technology to improve the productivity of
  clerical and managerial workers
• The backbone of office automation is Local Area
  Network (LAN), which serves the pathway between
  users and computers
• OA is one of the categories of software that has
  to do with data capturing , time saving and the
  achievement of day-to-day efficiencies

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Summary of OA product types and its vendor
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Quadrant 2 Data Base Applications

• A database is defined a collection of data
  organized to serve several applications by
  centralizing the data and minimizing redundant
  data
• DBMS can be viewed as the software that
• Permits an organization to centralize data
• Manages them efficiently
• Provides access to the stored data via
  applications programs.

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O2 from O2 technology, Gem Stone from Servio
corporation, Versant
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Quadrant 3 System Application

• This quadrant consists of Online Transaction
  processing (OLTP) of all aspects business
  information provided within one integrated
  solution especially ERP (Enterprise Resource
  Planning) systems.
• ERP is defined as many IS that work together with
  the aim of coordinating through out the
  organization in order to share the information,
  automate process

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Quadrant 4 Business Intelligence

• This quadrant consists of data warehouses, OLAP
  tools, data mining and strategic decision support
  systems.

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BI Products

• Data warehousing
• OLAP
• Data mining
• SDSS

• Cognos
• Hyperion
• Seagate
• Oracle
• Business object
• EIS systems
• Pilot Software
• Comshare

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Future Implementation of software
software
Future planned
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Managing IT

• Today, hardware and software cost less, but
  support and maintenance costs, business costs
  associated with the transition to a new system,
  and other hidden costs are considerable.

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• Best practices.
• No matter what type of technology is at issue,
  there are a number of associated practices that
  are widely accepted to be optimal. Many CIOs
  solicit best practices from their peers - both
  inside and outside their industry. Benchmarking
  is the process of gathering best practices in a
  particular technology or functional area (e.g.,
  customer service, project management or wireless
  security).
• Project portfolio management.
• Companies spend the majority of their IT budgets
  keeping the existing IT systems and the
  department itself running. Many CIOs believe they
  can better help their company gain competitive
  advantage if they add some higher-risk,
  higher-potential-reward projects to the mix. Many
  consider 80 percent run-the-business projects to
  20 percent grow-the-business projects a good mix.

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Assessing ROI

• To make a considered cost/benefit assessment
  you must take into consideration
• FlexibilityAn investment in a robust,
  simple infrastructure may have modest immediate
  benefits, but a dramatic effect in the longer
  term.
• Complexity costsThey include the ongoing
  increases in operating costs that arise when a
  company supports multiple technologies or
  standards.
• Commercial factors When choosing a
  technology or a vendor, it is vital to consider
  whether that technology or that vendor will be
  around for the entire life of the system.
• Contingency plans One must have some
  backup in case key project deliverables are
  delayed.

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IT Security issues

• Cyber crime / Hacking
• Data control
• Disaster Recovery
• Viruses/ worms
• Legal issues
• Privacy

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Top 10 data protection TIPS for SMBs

• Setup to RAID
• Take advantage of shared storage
• Be sure your storage can scale up your future
  needs
• Choose SCSI or fiber channel
• Protect everything
• Select software that makes backup and recover
  easy
• Utilize disk for fast backups
• Enable users to restore there files
• Use backup tapes
• Protect with Encryption.

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Business Applications - cases
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C1
C2
C3
C4
C5
C6
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Achieving An Integrated Supply Chain
Stage One Islands Within Organization Stores
Material Flow
Customer service
Stage 1
Distribution
Purchasing
Stores
Production
Sales
Stage Two Internal Integration Material Flow
Customer service
Stage 2
Materials management
Manufacturing management
Distribution
Stage Three external integration Material Flow
Customer service
Stage 3
Suppliers
Internal Supply Chain
Customers
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Managing Supply Chain
MATERIAL FLOW
INFORMATION FLOW
SUPPLIER PLANT
CUSTOMER PLANT
Finish Goods Inventory at Suppliers Plant
Raw Material Inventory at Customers Plant
Consumption pattern at Customers end
Demand as Perceived by Supplier
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Maruti udyog

• Market leader- exporting to 25 countries
• Competitive market
• Changing customer preferences
• Market leadership with 55 market share
• Enters into new businesses
• 500 Dealers 650 suppliers
• Annual production 500,000
• Turnover 2.2 B
• Need for changing business model

Manufacturing
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Strategic alignment of IT

• Improve operational efficiency
• Supply chain Integration
• Enabling new businesses
• Improved decision support
• Customer service
• Internal communication

Manufacturing
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IT strategy process

• Top management driven-Management committee
• CIO part of the top management team
• Integrated planning-alignment/impact
• Formal process-documentation/communication
• Ownership with steering committee
• Major portfolios identified
• High level of resource commitment
• Organizational IS capability

Manufacturing
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  Ø      Implement decision support
systems    Ø      Design systems to enhance
operational efficiency at user end    Ø      Use
auto-id tools at high transaction entry
points   Ø Global approach for information
processing-by integrating Dealers, Vendors,
and Offices.  Ø      Merging computer processing
with communications 

Manufacturing
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  Leverage the Web and related technologies to
integrate the supply chain and to facilitate CRM
for the present and future businesses    Provide
Application Services and Collaboration for
Business Partners to enable new businesses
   Use IT for ensuring a Demand Driven
Production System through Vehicle tracking system
Build Intellectual Assets Repository (Knowledge
Management) using Intranet

Manufacturing
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Materials Management

• Marutis experience
• Average inventory is 2 days
• In-house Integrated IS Implementation
• Better practices than standard ERP Products
• Integrated Supply-chain solution
• Better asset utilization

Manufacturing
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Production planning Control

• Marutis experience
• On-line order taking and linkage with PPS
• Extranet application connecting dealers
• Annual cost saving is 100 crores
• BOM generated for each cycle and schedules
• are sent to suppliers through extranets
• Shared databases

Manufacturing
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Labour reduction

• Marutis experience
• 3 personnel for all payments
• 80 Personnel in Finance function
• Annual closing by 31 March
• Better practices in productivity

Manufacturing
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Overheads reduction

• Marutis experience
• Low overheads on Document distribution
• I-Net based order taking system for NRIs
• Paperless workflow using Intranet

Manufacturing
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Customer Service

• Marutis experience
• Auto-id tools for component tracking
• I-Net based Customer clubs

Manufacturing
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• Change in business model
• Produce to stock
• Produce to sale

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Titan Watches
Market leader- exporting to 40 countries Severe
competition Market dynamics changed to variety of
offering Market leadership with 50 market
share Enters into new businesses 1300 towns and
5000 Retails outlets Annual production 6.7
M Turnover 5 B Change in Business Model
Manufacturing
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Key IT applications
Internal integration through ERP Wed based
dealer/supplier portal Knowledge Management
system
Manufacturing
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Strategic alignment of IT
Improve operational efficiency Supply chain
Integration Improved decision support Customer
service Internal communication
Manufacturing
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IT performance
Retail portal to manage down stream Order
taking system linked with PPS BOM generated
automatically Supplier portal to manage all
supplier operations Seamless integration of
external and internal processes Average
inventory two weeks
Manufacturing
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The Hindu

• 125 year old newspaper
• Circulation 1 M with readership 3 M
• Mixed Product portfolio
• Competitive marketplace-print/TV/Internet
• Entry of other media-leading convergence
• Changing preferences of young generation
• Market leadership in south India
• 30 market share
• Centrally designed / distributed printing
• 13 Printing centers
• Turnover 50 M

Media Publishing
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Key IT applications
Critical support for news gathering Automated
page-making Synchronized with circulation On-line
edition On-Linkage with Ad agencies Integration
of franchises Internal communication Decision
support/Knowledge Management
Media Publishing
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Managing Advertisements and revenue
Hindu Experience On-line booking-franchise Billi
ng using SW-based on page and position
(TCS) Amendments and information sharing
(Agencies) Revenue/collection Management Centrali
zed billing
Media Publishing
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Apollo Hospitals
First and Largest corporate hospital group 26
hospitals and 14 clients hospitals Management
consultancy service Pharmaceutical chain with
100 large stores Telemedicine centers in 50
locations Family Medical insurance Serving
patients in 20 countries Medical tourism as a
stream of business Turnover USD 55 M
Healthcare
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Key IT applications
Internal integration - Specially developed ERP
system Pharmacy Linkage systems On-line Linkage
with Insurance companies Support for
Telemedicine Web based supply chain support
Healthcare
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Product differentiation

• Citibank
• On-line Banking
• Credit card management
• Interoperability in services

Banking
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Security Management

• Citibank
• Data mining for credit worthiness
• ATM and Internet application
• Management of Credit card frauds

Banking
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Cost Management

• Citibank
• Billing and collection
• International communication
• Manpower reduction-change in concept of banking

Banking
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Patient Registration-Patient History

• Apollo Experience
• Volume and emergencies
• Accurate and fast patient history retrieval
• Medical transcription

Healthcare
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Why Computer based Business?
Capability
Greater Processing speed Increased volume Faster
Information Retrieval
Control
Accuracy Consistency Security
Communication
YOU ARE HERE
Enhance communication Integration of business
areas
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Cost
Cost monitoring Cost reduction
Competitive Advantage
Lock in customers Lockout competitors Linking
Suppliers New Product development
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Thank U