sfi machine age to information age
TRANSCRIPT
-
8/8/2019 SFI Machine Age to Information Age
1/21
Paradigm Shift from
Machine Age to
Information Age
Strategy,Formulation & Implementation
Prepared By: Group 3 & Group 4
33130 Mridula Muraleedharan
33135 Modak Sarda
33137 Varun Sharda
33144 Varenya Vadlamani
33150 Shruti Dadu
33152 Akshay Fomra
33154 Aashish Gupta
33155 Manish Jain
33157 Felix Jesudass
33160 Sanket Karmarkar
33169 Nader Piani
33170 Peush Pillai
-
8/8/2019 SFI Machine Age to Information Age
2/21
Evolution from Machine Age to Information Age
Civilization has completed two life-changing shifts from machine to information age and
so has the world of business. Consumers no longer live or react the way they did in the
machine age. They have different lifestyles, tastes , preferences and better standards ofliving. Considering the external scenario, technology has risen and strengthened manifolds
and everlasting competition has completely changed the markets.
Most of us are familiar with the turmoil of the Industrial Revolution. It took generations
for man to come to terms with the changes brought about by the industrial revolution.
Man went through the turmoil of that revolution and finally came to terms with the
change.People who went through it were not aware that they were going through a
transition that was called the industrial revolution. It was only later that we realized as
hindsight that the pain they went through was due to the turmoil of the transition to the
industrial era.
Similarly, we are all going through the pain and turmoil of the information revolution right
now. Most of us may not be even aware of it.
Turmoil of the Information revolution?, you may therefore ask. What turmoil? The
computerization scenario looks very euphoric. Computers are proliferating business
organizations and entering every walk of our life. So where is the turmoil?
Just as man did not realize he was going through the turmoil of the industrial revolution
till it was all over, we are not aware of the turmoil we are passing through. If we look
more closely at what is happening in most of the companies trying to automate processes
using computers, it will be evident that deep inside, this technology is still foreign to us.Man is still not at ease with this device. He is perplexed, foxed, fidgety and sometimes
angry when dealing with this animal. This leads to considerable friction, frustration and
conflicts between departments as companies go through the transition to computerized
processes.
In this insightful article we will try to see the change from business and str ategy point of
view.
Adapting to the new driver
News flash to Information Age businesses:Youre not in the drivers seat anymore. There
has beena drastic power shift that will either
make you or break you, depending on how well
you adapt.Unlike the past, you cant steer
people where you want them to go using
interruptive, intrusivemarketing and sales
tactics. Now, your job is to build the car (i.e.
The rules have changed and
consumers now hold all the power.They can screen the calls, sign up
for the Do Not Call Registry, edit
out commercials with DVRs,
unsubscribe from emails and toss
mailers unopened.
-Scott S. Smith
PARADIGM SHIFT FROM MACHINE AGE TO INFORMATION AGE
-
8/8/2019 SFI Machine Age to Information Age
3/21
provide the products and services)that your customers want to drive. If you grab the
steering wheel and force the direction, theyllhop out and leave you in the dust.Its
becoming increasingly difficult to catch the eyes of the consumer. Once you have them
youhave to keep them. Technology has transformed relationships between businesses
and customers.Now, your job isnt just to transact sales. Your job is to cultivate trust,
build community, andinteract with your customers on an ongoing basis.
What is the new power?
In the Machine Age, money and size were power. The 20th Century business model was
based on injecting large amounts of cash into advertising campaigns that promoted and
sold products to cold contacts. Traditional advertising models were based on buying
eyeballsin other words, the goal was to interrupt consumers.
Newspapers produced much of their revenue through ad space. Television, if you had the
budget for it, was also a proven way toward success, given the right products and services.
Mass mailings, advertising in magazines, tradeshows and events, and telemarketing werealso effective. Reaching the masses, or quantity, was the goal, rather than quality
relationships. Mass production, rather than customization, was the methodology.In the
Information Age, relevant, engaging information is power.
A small business that provides relevant information along with incredible products and
services to solve the problems of its customers wields more power than the large
corporation that throws big bucks into interruptive ad cam paigns that dont speak
tocustomer desires. The market has been transformed and it demands a new kind of
business, one that markets and communicates differently.
-
8/8/2019 SFI Machine Age to Information Age
4/21
Who has the power?
Not only has power itself changed, but also who controls it has shifted. In the past, it was
business that wielded power to achieve its ends. Now, the power lies with customers. It is
customers who dictate the creation and disposition of information. It is customers whodetermine not only what things get produced, but also how they get produced (note the
rise in social-oriented and environmentally friendly businesses).Customers are firmly
planted on the new throne; businesses are their servants. Those that understand and
adapt will survive and thrive. Those who dont will disapp ear, leaving only a memory.
Why the power shift?
Why has the proliferation of information changed everything? Because it delivers choiceto customers and makes business transparent. Furthermore, the new technologies give
consumers the ability to enjoy media content without ads.
Choice
The web is to blame for all this chaotic change. Innovation in communication has given
consumers a virtually limitless menu of information and choice. They can get what they
-
8/8/2019 SFI Machine Age to Information Age
5/21
want, when they want it, how they want it and from
whom they want it. Choice is killing the old business
model. Telemarketing has died. Newspapers and TV
are less effective and more expensive for their return
on investment. Mass mailings are tossed by
consumers who dont even open them. Consumers
dont have to rely on tradeshows and events for their basic information. They go to the
web. Product and customer reviews and consumer reports/alerts make it increasingly
difficult to secure loyalty from consumers. You could hard-sell a car buyer twenty years
ago when you had them on the lot, but today, buyers explore hundreds of cars with their
fingers in the comfort of their own home, before ever setting foot on a car lot. Consumers
are swimming in choice, theyre fully aware of it, and they exploit it to the fullest. Which
product are you inclined to buythe one that is shoved in your face with a one -time-must
buy- now special offer, or the product that you can research on the Internet and choose to
buy from thirty providers?
Transparency
Customers want to know exactly whom theyre dealing with. They dont want hype,
posturing, and sales devices. They want to do business with the authentic youthe you
that cannot be taught or faked.In the digital age, there is nowhere to hide. Every
interaction a customer has with your company leaves a mark, an impression, a brand that
they will most likely share. This experience may or may not be the brand that you are
promoting through your various marketing initiatives. This has always been the case. But
now, the power is in the hands of the customer more so than ever before. You cant hide
your mistakes when they spread like a virus through word-of-mouth, email, and blogging
networks. You cant cover up incompetence under thick layers of advertising make-up.
You cant run from negative publicity. The Information Age has stripped you naked and
left you exposed, flaws and all. You cant bury customer feedbackall you can do is
manage how you respond to it. Search engines keep a record for all to read of your
business practices. If you leave a trail of destruction, the crumbs are not hard to find.
Customers are firmly
planted on the new throne;
businesses are their
servants.
-
8/8/2019 SFI Machine Age to Information Age
6/21
Hunters Vs Farmers
Business hunters are nomadicthey track down their prey, make the sale, then move
on. They have superficial relationships with their customers at best. Their focus is on what
they want to take from customers, not on what they have to give. They have to close hard
and fast or they starve. At best, hunters sell good products with the hope that the
customer will buy more, simply because of the product merits. At worst, they employ one
of two approaches, if not both: either they attack viciously through pressure, or they
sneak up and pounce through deceit. Business farmers, on the other hand, settle down
and cultivate long-term relationships. They understand that one seed of trust planted in
the heart of a customer will result in an abundant, ongoing harvest of profit. Theyunderstand the natural law that giving value first is what results in receiving profit. Where
hunters see dollar signs, farmers see relationships. Where hunters are hard and closed,
farmers are soft and open. Where hunters manipulate and try to hide flaws, farmers are
authentic and down-to-earth. Customers are wary around hunters, yet they feel secure
and trusting with farmers. If you want to survive Information Age business, you must
dispense with the short-term approach of making a killing. Instead, sow seeds of trust
and goodwill through interaction to reap a long -term harvest.
-
8/8/2019 SFI Machine Age to Information Age
7/21
Level of Engagement
Machine Age Information Age
Various levels of loyalty- move to where the
most value for the least price was located
Extreme loyalty become ravings fan and
evangelists for the cause
Willing to lose some- cost of doing business All efforts go to help customers succeed
Client as long as the value and price are
right
Client for life
Not focussed on the needs of the client Meet clients at their level
Short term experience Long term relationship with company and
brand
The primary goal of the old, transactional model was to make a profit by advertising to a
cold market. The primary goals of building community are to facilitate interactivity by
capturing data, cultivating trust, and providing continuous value to keep cust omers
-
8/8/2019 SFI Machine Age to Information Age
8/21
en
ed
ofit beco
es
n
tu
l b poduct of this p
ocess
ou can
t affod to be
tansactional an lon
er. You
e got to cling to indi idual custo
ers as if your life
depended on it
as indeed it does. Getting the attention of potential custo
ers is the
most expensi e partofmarketing. Once youhave it you can
t affordtolose it. You must
institute systems andprocessesthat capture customersthen continually offer them value,
keeping them engagedon a constantbasis. Customers want a sense ofbelonging. Theyll
be loyalto you aslong as youre relevant andserviceable tothem. Ifnot, they willquietly
move on.
Profit Engine ofthe New InformationAge
Ec c Engine
(P it Cente s)
-
8/8/2019 SFI Machine Age to Information Age
9/21
Scientific Management Theories of Machine Age
Taylorism
Frederick Taylor and Scientific Management
In 1911, Frederick Winslow Taylor published his work, The Principles of Scientific
Management, in which he described how the application of the scientific method to the
management of workers greatly could improve productivity. Scientific management
methods called for optimizing the way that tasks were performed and simplifying the jobs
enough so that workers could be trained to perform their specialized sequence of motions
in the one "best" way.
Prior to scientific management, work was performed by skilled craftsmen who had
learned their jobs in lengthy apprenticeships. They made their own decisions about howtheir job was to be performed. Scientific management took away much of this autonomy
and converted skilled crafts into a series of simplified jobs that could be performed by
unskilled workers who easily could be trained for the tasks.
Taylor became interested in improving worker productivity early in his career when he
observed gross inefficiencies during his contact with steel workers.
Taylor's 4 Principles of Scientific Management
After years of various experiments to determine optimal work methods, Taylor proposed
the following four principles of scientific management:
1. Replace rule-of-thumb work methods with methods based on a scientific study ofthe tasks.
2. Scientifically select, train, and develop each worker rather than passively leavingthem to train themselves.
3. Cooperate with the workers to ensure that the scientifically developed methodsare being followed.
4. Divide work nearly equally between managers and workers, so that the managersapply scientific management principles to planning the work and the workers
actually perform the tasks.
These principles were implemented in many factories, often increasing productivity by a
factor of three or more. Henry Ford applied Taylor's principles in his automobile factories,
and families even began to perform their household tasks based on the results of time and
motion studies.
-
8/8/2019 SFI Machine Age to Information Age
10/21
Drawbacks of Scientific Management
While scientific management principles improved productivity and had a substantial
impact on industry, they also increased the monotony of work. The core job dimensions of
skill variety, task identity, task significance, autonomy, and feedback all were missing
from the picture of scientific management.
While in many cases the new ways of working were accepted by the workers, in some
cases they were not. The use of stopwatches often was a protested issue and led to a
strike at one factory where "Taylorism" was being tested. Complaints that Taylorism was
dehumanizing led to an investigation by the United States Congress. Despite its
controversy, scientific management changed the way that work was done, and forms of it
continue to be used today.
Fayolism
While American manufacturing processes were being revolutionised by Frederick Winslow
Taylor, Frances were being overturned by Fayolism, a system devised by an engineer,
Henri Fayol (1841-1925), who became something of a hero for rescuing a troubled mining
company and turning it into one of Frances most successful businesses.
Though he was born in Istanbul, Fayol spent all his working life as a manager at
Compagnie de Commentry-Fourchambeau-Decazeville, a big French mining conglomerate.
For the last 30 years of his working life (18881918) he was managing director of the
company. He is the founding father of what has become known as the administration
school of management. At its heart was Fayols five-point breakdown of managerial
responsibility into planning, organizing, coordinating, commanding and controlling, adivision which has pervaded much management thinking since.
Command and control became the slogan for the authoritative style of management
fashionable through the 1950s and 1960s, though Fayols method was more nuanced than
this. His commanding, for instance, included energising employees, while controlling
included adapting the overall plan to changing circumstances.
Fayol was the first to identify the four function s of management: planning, organizing,
directing, and controlling, as known today.
His original definition of management comprised of five elements: forecast & plan,
organise, command, coordinate, and control.
His 14 principles are:
1) Division of work - specialisation provides the individual to build up experience,continuous improvement in skills, and thereby be more productive.
-
8/8/2019 SFI Machine Age to Information Age
11/21
2) Authority - the right to issue commands, along with which must go thebalanced responsibility for its function
3) Discipline - which is two-sided, for employees only obey orders if managementplay their part by providing good leadership.
4) Unity of Command - each worker should have only one boss with no otherconflicting lines of command.
5) Unity of direction - people engaged in the same kind of activities must have thesame objectives in a single plan
6) Subordination of individual interest to general interest - management must seethat the goals of the firms are always paramount.
7) Remuneration - payment is an important motivator although by analysing anumber of possibilities, Fayol points out that there is no such thing as a perfect
system
8) Centralisation or decentralisation - this is a matter of degree depending on thecondition of the business and the quality of its personnel
9) Scalar chain (line of Authority) - a hierarchy is necessary for unity of directionbut lateral communication is also fundamental as long as superiors know that
such communication is taking place.
10)Order- both material order and social order are necessary. The formerminimises lost time and useless handling of materials. The latter is achieved
through organisation and selection.
11)Equity - in running a business a 'combination of kindliness and justice' isneeded in treating employees if equity is to be achieved.
12)Stability of tenure - this is essential due to the time and expense involved intraining good management.
13)Initiative - allowing all personnel to show their initiative in some way is asource of strength for the organisation even though it may well involve a
sacrifice of 'personal vanity' on the part of many managers
14)Esprit de corps - management must foster the morale of its employees. Hefurther suggests that, "real talent is needed to coordinate effort, encouragekeenness, use each person's abilities, and reward each one's merit without
arousing possible jealousies and disturbing harmonious relations." Harmony
and pulling together among personnel.
-
8/8/2019 SFI Machine Age to Information Age
12/21
Parkinsons Law
Parkinson's Law is the adage first articulated by Cyril Northcote Parkinson as the first
sentence of a humorous essay published in The Economist in 1955.
His basic premise -- "work expands to fill the time available" -- became a very powerful
tool in understanding the never -ending needs and wants of human beings.
Prof. C. Northcote Parkinson authored about sixty books, and the most popular was the
Parkinson's Law: The Pursuit of Progress (1957) which became a bestseller upon its
publication. He first presented his essay in the University of Singapore in 1955, and
received novelty as a satirical critique on how government bureaucracies get to bloat over
time. His book became one of the foundational texts in public administration,
management theory, human behavior and organizational management among others. The
Parkinson's Law evolved into other eponymous laws, which are based on the first premise
(also known as the First Law):
Parkinson's Law: Work expands or contracts in order to fill the time available.
The simple definition: "work expands to fill the time available" does not fully explore the
concerns expressed in C. Northcote Parkinson's Book. An example is provided of two
people writing a postcard. An elderly retired person may consume an entire day for this
task: carefully choosing the card, contemplating the word choice, followed by a long,
leisurely walk to the post office. A busy person will pick the first appropriate card, write it
and mail it on the way home.
Many other examples were given by Parkinson. One of his most alarming relates tobureaucracies. For example, most of the population assumes that a growing civil service
reflects a growing workload. Parkinson believes otherwise and provides this argument:
Civil servant A is overworked (this may be illusory or the result of reaching their level of
incompetence). The worker has only a few options; he may leave, share his work with
colleagues at the same level or appoint two juniors. It is important to note that he has to
appoint two juniors. A single subordinate would very quickly assume almost equal status
with A in their own minds as well as others and would therefore be a rival. This is also the
reason against sharing the work with someone on the same level. So now, assuming A
didn't leave, we have A and two subordinates B and C. Very soon either B or C will
complain about being overworked and two more subordinates to them will be appointed.Another two will have to be appointed to keep the other original subordinate happy.
Seven are now doing the work of one. All will be busy shuffling paperwork, holding
meetings, and passing e-mails amongst themselves, correcting grammar, passing decisions
down the line and back up again, and plotting or defending themselves from coworker
backstabbing. Person A is now reduced to management, something he may not be happy
with, in fact he may have had his level of incompetence enforced on him.
-
8/8/2019 SFI Machine Age to Information Age
13/21
Mintzbergs Model
Traditionally, the relationship between strategy formulation, strategy implementation,
and organizational performance has been depicted. In this model, organizations begin
strategy formulation by carefully specifying their mission, goals, and objectives, and then
they engage in SWOTanalysis to choose appropriate strategies. Henry Mintzberg suggests
that the traditional way of thinking about strategy implementation focuses only on
deliberate strategies. Minztberg claims that some organizations begin implementing
strategies before they clearly articulate mission, goals, or objectives. In this case strategy
implementation actually precedes strategy formulation.
Minztberg calls strategies that unfold in this way emergent strategies. Implementation of
emergent strategies involves the allocation of resources even though an organization has
not explicitly chosen its strategies. Most organizations make use of both deliberate and
emergent strategies. Whether deliberate or emergent, however, a strategy has little
effect on an organization's performance until it is implemented.
According to Mintzberg organisations are formed of five main parts:
Operating core: Those who perform the basic work related directly to the production of
products and services
Strategic apex :Charged with ensuring that the organisation serve its mission in an
effective way, and also that it serve the needs of those people who control or otherwise
have power over the organisation
Middle line managers :Form a chain joining the strategic apex to the operating core by theuse of delegated formal authority
Technostructure :The analysts who serve the organisation by affecting the work of others.
They may design it, plan it, change it, or train the people who do it, but they do not do it
themselves
Support staff :Composed of specialised units that exist to provide support to the
organisation outside the operating work flow
-
8/8/2019 SFI Machine Age to Information Age
14/21
Mi
tz
er
Modelon ManagerialRole
Mint berg's empirical researchinvolvedobserving and analysing the activitiesofthe CEOs
offive private andsemi-public organisations. Previous managementbehaviour studies
had concentratedonteam andsubordinate behaviour or organisationalstructure rather
thanonthe day-to-day reality ofmanagerialbehaviour.
Todescribe the work life ofa CEO, Mint berg firstidentifiedsix characteristicsofthejob:
1. Managersprocesslarge, open-ended workloadsunder tighttime pressure- amanager'sjobisnever done.
2. Managerial activities are relatively shortinduration, varied andfragmented andoftenself-initiated.3. CEOsprefer action and actiondriven activities anddislike mail andpaperwork.
4. They prefer verbal communicationthrough meetings andphone conversations.5. They maintain relationshipsprimarily withtheir subordinates and externalparties
andleast withtheir superiors.
6. Their involvementinthe executionofthe work islimited althoughthey initiatemany ofthe decisions.
Mint
berg's study on the 'nature ofmanagerial work' exposed many managerial myths
requiring change such as replacing the aura ofreflective strategists carefully planning their
firm'snext move withone of fallible humans who are continuously interrupted. Indeed,
half of the managerial activities studied lasted less than nine minutes. Mint berg also
foundthat althoughindividual capabilitiesinfluence the implementationofa role, itisthe
organisationthatdeterminesthe needfor a particular role, addressing the commonbelief
that it predominantly a manager's skill set that determines success. Effective managers
develop protocols for action given their job description and personal preference, and
matchthese withthe situation athand.
-
8/8/2019 SFI Machine Age to Information Age
15/21
Value System Redesign and Business Process Re-Engineering
Business process re-engineering (BPR) is a methodologythat originates from implementing
enhanced informationtechnology to streamline business performance. Not only can the
efficiency of existing business processesbe improved, but also have entirely new business
processes and even entirely new business come into reach through informationtechnology. Thus, BPR hasbecome a major organizational and strategic challenge. Here we
will address the questions- how enterprises can benefit and how they can create
valuefrom the emerging information society by enhanced BPR. For this purpose we will
set the scene by describing thecompetitive background. We will then focus on the
spanningof boundaries, synergy among management functions and the idea of platforms
as three important implicationsof the process concept. Value System Redesign (VSR)
ispresented as a methodology that builds on theseimplications of the process concept and
provides systematicalsupport to gain competitive advantage new inbusiness
opportunities. We will present VSR as an approachthat is under development in the
TELEflow project.
A Competitive Scenario
Competition in the information age will no longer take place among single companies, but
among clusters of companies that come together to exploit the value of a business
opportunity. We call such clusters Value Systems (VS) and understand that VS are
organized actions and interactions which bring together processes from different
companies, different sites, suppliers, OEMs, distributors, service providers, etc. that co -
operate to provide the customer service . Most popular examples of this kind of co-
operations are Nike or Diesel
With the emerging information society, co-operation on a global scale can be expected to
become more intense. This might turn into a competitive advantage for large
multinationals that already today provide the organizational structure of global presence.
To share the benefits of the information society, it is therefore often necessary for them
to engage in co-operative strategies to achieve global presence. As smaller companies lack
the power of large multinationals, they have to seize the opportunity to substantially
improve their competitiveness by creating, leadingand sharing win-win constellations
with their partners. This in turn requires advanced management competence,or at least
the broadening of the domain of interest for managers. They have to leave their turf and
actively reengineer inter-company processes. The link between the use of information
technology and the hereby possible improvement of business performance have been
categorized in a range from efficiency gains in single functions to the strategic definition of
new businesses. Generally speaking, the impact on business performance is predicted to
increase with the degree of networking information technology from standalone
computers to worldwide networks.
Processes in Business Innovation
'Don't automate, obliterate' is the motto that Hammer gave to BPR to point out that
business processesshould be designed to create customer value and to free BPR from
-
8/8/2019 SFI Machine Age to Information Age
16/21
constraints of the organization in place. And indeed, for any business opportunity a
'natural' business process can be imagined, which only consists of the activities that are
vital to create value. As in the case of the Internet bookshop amazon.com, this can lead to
completely new ways to work, here for example without physical bookshops. This
innovation obviously requires two things. First, the vision of how to do business must not
be restricted by existing organizational boundaries and second, in order to work, the
business design must cover all necessary activities, regardless of the supplying firm. The
business process concept meets both requirements, because processes are independent
of organizational boundaries and processes can be checked for consistency in the creation
of any given product or service.
Processes Effect Synergies between Workflow, Logistics, and ICT
Processes are coordinated activities or tasks, which are linked thro ugh different types of
flows . A coordinatedprocess can be perceived as a system of at least five types of flows,
the material flow, the formal information or dataflow, the workflow and the informal
information flow. In today's hierarchical organizations highly specialized management
functions typically take care of systematic coordination for each of the flows, and as a
result mostly operate their management systems independently. In that manner, material
flow is managed by the logistics department, workflow by the organizational development
department and the formal information flow by the ITdepartment.However, when
changes are required to serve a new market opportunity with a different organization,
additional coordination between the different departments cannot be avoided. As long as
changes are not numerous this does not create difficulties. However, when change
becomes frequent, which is the case for exploiting short-term business opportunities the
co-ordination between isolated functional departments leads to an increase in total
complexity. Reduced complexity can in such situations be achieved through total
management systems aiming at totally optimized coordination of all flows thus creating
synergy.
'Platforms' for Business Processes
Today much work in BPR has to be dedicated to the implementation of operative systems
that ensure seamless flows of material, information and work. Because many of these
investments are highly process specific, they have to be replaced for re -engineered
processes. That limits the flexibility to change processes. A trend is however conceivable
towards the establishment of more process independent infrastructures as platforms,
which would release process innovation from investments and thus allow for more
flexibility. The Internet, for example, is rapidly emerging as a globally accessible network,
which can be expected to replace much of the more process specific EDI implementation.Examples from logistics show that networks of hubs and transportation platforms are
designed by major logistics providers like UPS, Fed-Ex, or Danzas, which allow free routing
of goods and replace point-to-point transportation. Technical constraints, of course do
not immediately and totally disappear, however the 'breathing space' for business value
driven re-design of processes can be expected to increase.
-
8/8/2019 SFI Machine Age to Information Age
17/21
Value System Redesign
To approach each business opportunity with adapted business processes requires
continuous restructuring (Figure 1). Indeed, value system redesign is based on the
Schumpeterian assumption that sustainable competitive advantage can only be achieved
with organizational agility to exploit change. In other words, the source of value changes
for dynamic competition. In mass production value has been added to raw material in
form of labour when it wastransformed into products. Avoiding the waste of labo ur and
thus creating efficiency was the approach to increase the value added. Under the changing
conditions of the information society and its global markets, less andless value stems from
the manufacturing of physical products. Instead, services and knowledge that satisfy the
needs of a short-term business opportunity 'on demand' become important sources to
create value.
Figure 1 : The Essence of Value System Redesign is Perpetual restructuring
10 Products and Services where Information Technology is fast replacing
traditional methods
1. Bank Tellers: The proliferation of online banking means that the brick and mortarbank is soon on its way to fossilization and a place in a museum. If the Automated
Transaction Machine (ATM) had not already given the personal teller a clear signal
that he or she was no longer an entirely necessary service, the now ubiquitous
online banking services offered by all major and minor banks across the nation will
certainly spell the end for redundant tellers.
-
8/8/2019 SFI Machine Age to Information Age
18/21
2. Paper is resource that has cost the earth heavily when it comes to carbon sinkssuch as the South American rainforest and soil stabilizers such as the evergreen
forests of the northwest United States. So it is with a happy countenance that we
predict the redundancy of paper within the next decade or so, as electronic
documents take over the niche formerly filled by blank sheets.
3. Insurance Agents: Door to door insurance agents, thankfully, will soon become adistant past memory, as more and more insurance companies realize the
advantages of peddling their insurance packages online and making themselves
available to customers actually seeking their services for a fraction of the cost of
face to face solicitation. In this process, saving much of the paper based
transaction involved.
4. Travel Agents: Fewer and fewer travel consumers are going to brick and mortartravel agents as the majority of travel plans are being made online. Travel agents
will still operate, but their range of service will be greatly expanded as fewer and
wider geographic barriers will exist. Whats more, efficiency will be greatly
enhanced, as agents will no longer wait for customers to come to the agencylocation, but will serve a much larger online market.
5. Real Estate Agents: Buying and selling homes and property has become an almostentirely online experience. From perusing the real estate news to scanning lists of
available for sale homes to the communication between agents and clients, the
process is rarely completed on a face to face level. Moreover, real estat e agents
are becoming redundant service, as sellers are able to get in touch with buyers
directly and cut out the expense of a flesh and blood agent.
6. Music Stores: Virgin Records and HMV will very shortly be closing their doors inmany locations as the demand for brick and mortar music stores decreases to
nothing and more and more of the total percentage of music sales occurs online. I -
Tunes has already paved the way for music to be distributed entirely online and, in
doing so, cutting out large amounts of overhead cost while not passing that saving
on to the consumer who seems happy to continue paying the same rate online as
he or she would in a conventional music store.
7. Cable Television: With cable consumers less and less satisfied with the rates andpackages available through conventional cable providers, and with digital and
satellite services often outside an average consumers budget, online television will
be become ever more prevalent as the millennium progresses. For instance, for
fifty dollars, a consumer can usually purchase twenty eight channels. Some of
those channels broadcast the same content, sometimes at the same time, whilealmost eighty per cent of the content will have no interest to the consumer
whatsoever. It seems only logical that a pay per channel or even per program
service online would attract a substantial proportion of the television
entertainment dollar.
8. Movie Theatres: Movie theatres across the country are haemorrhaging money asfewer and fewer consumers choose the traditional venu es of entertainment and
-
8/8/2019 SFI Machine Age to Information Age
19/21
their attention is ever increasingly split between film, television, music, and other
forms of entertainment. As a result, Hollywood and other worldwide film
production and distribution centres will have to explore new routes to get their
products to the consumer. For films, the obvious route is online distribution.
Movies, both released and unreleased are already widely illegally distributed
online, so it only makes good business sense to make clean and easy to work down
loadable copies of films available online to compete with bootleggers and provide
a new alternative revenue stream. Like music, similar fees could be charged for
downloads as for more costly distribution methods such as theatres and stores.
9. AM/FM Radio: The AM and FM channels are quickly being replaced by satelliteradio and by live streaming over the internet. Live streaming in particular is a
virtual twin to a on-air broadcast, except the signal quality of live streaming is
easier to control and can be received anywhere with the proper connection.
10.Ticket Agents: High street ticket agents are a thing of the past now that theinternet has revolutionized the way we buy tickets. In years to come there will be
no high street ticket agents what-so-ever, all tickets will be purchased on theinternet with ease and without the hassle of all that queuing malarkey.
Dell and Cloud Computing
Dell is one of the most trustworthy names in the field of personal computing.When a
company such as this, has begun moving towards an IT centric technological service, it
shows the importance of the information age when compared to machines.
Cloud computing is Internet-based computing, whereby shared servers provide resources,
software, and data to computers and other devices on demand, as with the electricity
grid. Cloud computing is a natural evolution of the widespread adoptionofvirtualization, service-oriented architecture and utility computing. Details are
abstracted from consumers, who no longer have need for expertise in, or control over, the
technology infrastructure "in the cloud" that supports them.
When Dell scooped up IT services giant Perot Systems for $3.9 billion last year, many
assumed the deal was all about IT outsourcing.Perot does know how to outsource. But
one of its most important contributions to Dells big services business these days is in the
cloud.
But Perot does have some very specific cloud capabilities that are making Dell Services
customers more efficient and competitive capabilities that range from moreevolutionary virtualization services that help customers create their own so -called
"private clouds," to more revolutionary, "-as-a-Service" models standardized offers
that are completely hosted and managed from a Dell data centre and consumed on a per -
month, per-unit basis.
Before the acquisition, "Dell had the hardware: servers, storage, networking and
desktops. It also had great consulting and deployment capabilities. It did a great job
helping customers virtualize any kind of infrastructure," Packer explains. "Perot made
-
8/8/2019 SFI Machine Age to Information Age
20/21
those existing services deeper, and provided additional breadth by helping customers
change their applications to fully take advantage of virtualized environments, as well as
hosting and managing those environments or providing all these bundled together into a
comprehensive solution." Perot provides services for any vendors products, further
expanding the Dell capabilities.
Some companies are still resistant to putting mission-critical or production applications in
the cloud. Executives worry about security; whether theyll really achieve cost savings by
moving to the cloud; and whether theyll be forced into a standardized menu of options,
instead of having all the flexibility of customizing their IT as they long have done. Thats
why many companies are taking baby steps into cloud computing, typically by
experimenting with their test-and-development environments before moving to
production systems, Packer says.
But he stresses that Dell does have customers trusting the cloud with core applications. In
addition, Dell offers cloud services on a continuum: not all companies need to outsource
to an offsite "public cloud." They might design a more modest private cloud for certain
applications, or even create a hybrid setup through which applications are run in their
buildings, on their servers, but managed remotely. In that scenario, "they dont have to
have a single person on their staffs who knows how to run a cloud," Packer says. "But the
actual infrastructure is sitting in their facility. "
Dell also provides meta-cloud environments that combine all these scenarios with other
public-cloud offers to create a more comprehensive solution.
Dell executives see the cloud as something most companies will eventually come to
embrace in some form. "Everyones on a journey to the cloud," says Janet Bartleson, a
senior marketing consultant at Dell. "And no matter where you are, we can help you get
there."
The Wal-Mart Story
Wal-Mart is now moving towards the RFID technology that makes the bar code reader
look like a prehistoric tool.
Wal-Mart Stores is an American public corporation that runs a chain of large, discount
department stores. It is the world's largest public corporation by revenue, according to
the 2008 Fortune Global 500, founded by Sam Walton in 1962. Wal -Mart's international
operations currently comprise 2,980 stores in 14 countries outside the United States withits 7,390 stores and club locations (Yahoo Finance). Wal-Mart also participates
internationally, there are wholly owned operations in Argentina, Brazil, Canada, Puerto
Rico and the U.K. About 40% of products sold in Wal -Mart are private label store brands,
or products offered by Wal-Mart and produced through contracts with manufacturers.
Wal-Mart has more than 3,300 diverse suppliers who provide products and services to
customers. Since the beginning the company has been providing retail merchandising and
services to lower and middle class income consumers. Wal-Mart currently uses SMART
-
8/8/2019 SFI Machine Age to Information Age
21/21
system which is basically a tracking system, it keeps track of all inventory, the on-hand
counts, and can automatically reorder product that is low or empty.
It operates in three different formats in United States which includes supercenters of
approximately 187000 square feet in size and offers general merchandise; discount stores
of approximately 108000 square feet in size and offers general merchandise and variety of
food products; and Neighborhood markets approximately 42000 square feet in size. The
company focuses on saving customers money and providing them lower prices every day.
Companys major share of its sales approximately three fifth is being dominated by its
Wal-Mart store segment whereas rest two fifth has been shared with around 24.2% and
11.8 by Sams Club and International respectively. Total revenue generated by Wal-Mart
is over $350 billion with average inventory for 2007 $34 billion (Annual Report). Although
average inventory was $34 billion their inventory turnover ratio was 8.32, and inventory
days was a mere 43.86*. This amazing turnover for the worlds largest retailer is one of
the reasons we decided to investigate further into Wal -Marts technological use.
*Figures calculated based on the annual report filed on Jan 31 2008.
y Wal-Mart use of RFIDWal-Mart was one of the early players who jumped on the RFID technology to facilitate
the use of electronic product codes ( EPCs). Wal-Mart started using RFID back in 2004
when its rivals were still using the old traditional bar code system for tracking. Initially
Wal-Mart used RFID tags in its retail stores to reduce the stock-outs and to provide better
customer service. Lately, Wal-Mart started using RFID tags in its distribution centers also,
but its ability to improve the supply chain is limited by business partners willingness to
participate in this initiative.
According to Wal-Marts executives, RFID can help Wal-Mart in fixing a small portion of its
inventory problems and it could increase sales by $287 million. Currently, 2% of the lost
sales account for the simple fact that a store has run out of inventory, but 41% of lost
sales are due to other inventory problems. Therefore, RFID can play a very important role
in fixing those inventory problems. Additionally, like mentioned before, if RFID can f ix 10%
of those inventory problems it will gain $287 million per year by avoiding lost sales. The
company also thinks that RFID will have a much bigger impact on inventory management
than the bar code technology had when it was first introduced into the ma rket.
Also, in near future, Wal-Mart plans to work more closely with suppliers on RFID. But
RFIDs ability to improve the supply chain is limited by the business partners willingnessto participate. So far, Wal-Mart has managed to work with its top 600 suppliers to
incorporate RFID technology. Some of these suppliers have found their own inventory cost
savings but others havent. Wal-Mart is taking the initiative to work with suppliers to help
them cut costs.