Lec3_DigitalBiz2

Lec3_DigitalBiz2 - Digital Economy (II): Putting the...

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Unformatted text preview: Digital Economy (II): Putting the “D” into “E” ISOM 101, Spring 2011 Lecture 3 HKUST Business School Recap: “IS” is… Information Systems = “Information” + “Systems” The use of technology (“systems”) to: Acquire… Organize… Process… Analyze… Create… Distribute… Store… information Raymond G. Sin © 2 HKUST Business School The World is Changing… FAST Technology progresses at a faster pace than any of us at any point in time can image 3 Current rate of technological advancements has exceeded Moore’s Law by HUGE margins For the last 20 years, the power of PC increased by more than 10 thousand times. HKUST Business School Still, nobody’s happy – WHY? Raymond G. Sin © 4 HKUST Business School Overview How will IT transform the business world in the near future? What are the defining characteristics of the “digital world”? Raymond G. Sin © 5 HKUST Business School The Future of Business (1) How will more sophisticated systems/technologies affect the future of “business”? By industry: Accounting Balancing assets with liabilities Finance Making everybody wealthy Marketing Promoting products and services, creating new markets Management Optimizing subordinates’ performance, enhance productivity and profitability of the company Raymond G. Sin © 6 HKUST Business School The Future of Business (2) Accounting Suppose a (very efficient) certified accountant (CPA) can handle approx. 20 clients on a 10-hour work day with simple tax-filing Monthly salary: $17,000-$22,000 Hold that thought… Raymond G. Sin © 7 Raymond G. Sin © 8 HKUST Business School HKUST Business School The Future of Business (3) Finance The only difference between me and my financial advisor? he has the software that I don’t Waste of my time to meet with him (2hr per month?) Everything could have been done automatically Monthly earning, monthly expenses, risk management, expected return/loss from investment… any and all changes can be accounted for and my financial portfolio can be adjusted accurately and immediately (even by-the-minute!) Some customers still appreciate that “someone” is “working for them” (What about you?) Who/what is actually doing the “work”? What if you could save yourself $500 of commission a month? Raymond G. Sin © 9 Raymond G. Sin © 10 HKUST Business School HKUST Business School The Future of Business (4) Marketing What does it rely on? Knowledge (information) on consumers Their “likes” and “nikes” How can we guess? Credit cards, octopus, smartID, etc. etc. Knowledge (information) on market trends Knowledge (information) on competitors’ offers Raymond G. Sin © 11 HKUST Business School The “Ultimate Marketing” Raymond G. Sin © 12 HKUST Business School Too Futuristic (again)? Raymond G. Sin © 13 HKUST Business School The Future of Business (5) Marketing (cont’d) Any human intervention? With the speed our technologies are moving forward today, it’s not hard to imagine completely automated marketing efforts in the next 5-10 yrs What about Economics? E.g. HSBC? There are about a handful of senior economists in the entire Asia-Pacific region Build forecasting models; rely on simulations on financial and sociological data What about Management? We’ll come to that in just a minute Raymond G. Sin © 14 HKUST Business School Optimistic or Pessimistic? Notice – I’m not saying these fields have no future; on the contrary, they have a BRIGHT future Profit = Price * Quantity – Cost Putting “IT” into the equation: Quantity ; Cost (ceteris paribus) Profit $$ increases At the expense of… whom? Raymond G. Sin © 15 HKUST Business School The costs of “Bright Future” (1) Going back to our CPA example (no offense): Monthly benefit: 20 clients (assuming 10-hr work days)*24days = 480 files (*price, say $200) = $96,000 Monthly cost: $17,000 Net Margin: $79,000 Off-the-shelf software: Monthly benefit: 48 clients (24-hr work days)* 30 days = 1440 files (*price, assumed to be the same) = $288,000 Monthly cost: (US$ 75 ~ HK$ 600, 1-yr license)/12 = $50 Net Margin: $287,950 Raymond G. Sin © 16 As a rational (a.k.a. $$ oriented) boss, what would YOU do? HKUST Business School The costs of “Bright Future” (2) Of course, that was an over-simplified example Still need “human hands” to key-in the data (or do we really?) Still need a public relation officer – some sort of human interactions Do we really? What about next generation? Salary -> tax withheld -> IRS (automatic) Remainder -> bank (direct deposit) Year-end tax filing -> form generated by IRS (automatic) Very much like “autopay” from our banks to credit card accounts Accountant…? Raymond G. Sin © 18 HKUST Business School The costs of “Bright Future” (3) Any job that performs services or functions that computer systems can do more efficiently and accurately (and increasingly so) – Such as: acquiring/organizing/processing/analyzing/ storing information will be “revolutionarized” Raymond G. Sin © 19 HKUST Business School The costs of “Bright Future” (4) Oh yes, I promised to talk about management… To recap, the (inevitable) trend is this: Faster and cheaper computers, storage media, and ever-increasing clock speed -> automation ->acquiring/organizing/processing/analyzing/ storing information is best done by computer systems -> MAJOR replacement of old skills with new ones There will be less management of people, more management of (IT) systems (and people who work with those systems). Raymond G. Sin © 20 HKUST Business School Bottom Line This is NOT to suggest that you will lose your job were only pointers – so that you can make better investments in yourself to prepare for the future They Based on the pace at which technology is advancing, how can you keep up and be valuable 5 years from today? What new skills/knowledge should you be acquiring? This is NOT to suggest that you should not get a college degree what once was “sufficient” has become merely “necessary” But In this “information age”, your client can easily be as knowledgeable as you are – what makes you irreplaceable? Raymond G. Sin © 21 HKUST Business School A Hint: Scarcity, and Lesson from History Scarce resources are always valuable In the same way that industrial revolution had changed the global economy and wealth distribution, information technology will also change our world – only bigger in magnitude and farther in reach “Experience” is hard to codify (hence, by definition, is less prone to replacement by machines – not yet, at least) Where you invest your time today dictates what experience you will accumulate, which in turn determines your wellbeing tomorrow Raymond G. Sin © 22 HKUST Business School When the “unlimited” meets the limit (1) (relatively) unlimited computing power and data processing capabilities What is limited? Attention TIME!! How do we counter the forces and retain balance? E.g. Email filters; phone-screening Or sometimes, we don’t Deadly consequences: 2-5 teenagers die from exhaustion due to excessive gaming in Korea each year Raymond G. Sin © 23 HKUST Business School When the “unlimited” meets the limit (2) Ironically, the solution to counter the forces of “too much” technology is to use more technology… More automation You can’t read all the junk emails, screen all files, catch all viruses and spywares swarming into your systems by manual forces And regrettably, no one will be willing to go back to good old days of searching for coins when we’re so used to the Octopus path of technology is one-way – there’s no “going back” the Anyone who fails to embrace changes or tries to stop the progress will be washed out of its way… Raymond G. Sin © 24 HKUST Business School The Bright Side? More sophisticated, secured, and efficient information systems could lead to… Safer food Better epidemic controls Projects with HA/CHP/FEHD Better resource allocation/distribution (theoretically) Raymond G. Sin © 25 HKUST Business School Nature of the Digital World Digitization of Goods Globalization NEW MARKETS E-Commerce Merger of Products and Services Speed Role of Ideas Raymond G. Sin © 26 HKUST Business School Nature of the Digital World Digitization of Goods Globalization NEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETSNEW MARKETS Merger of Products and Services Role of Ideas Raymond G. Sin © 27 HKUST Business School Globalization (1) A system of interconnected economies Enablers of globalization? Silk road East India Company Today, IT IT plays a critical role Generally speaking, technology has enabled faster and more robust connectivity among people Raymond G. Sin © 28 HKUST Business School Globalization (2) Companies conduct business in a global market Leaders in industry: – divisions in 43 countries Fedex – serving 215 countries JPMorgan – offices in 50 countries Toyota – manufacturing plants in 20+ countries 7-11 – grew from 15 stores in 1974 to … Dell Raymond G. Sin © 29 Source: www.sej.co.jp/english/company/g_stores.html Raymond G. Sin © 30 Raymond G. Sin © 31 HKUST Business School HKUST Business School Globalization (3) Why? Fedex 7-11 Toyota JP Morgan Nature of industry More customers Lower costs More customers /Diversification of risks Raymond G. Sin © 32 HKUST Business School Globalization (4) Implications: Local markets Even More are opened to the entire global economy the smallest firms can have customers world-wide business opportunities, but more challenges as well: Understanding of local customs, laws, regulations Conducting business in different languages, time zones, and currencies Culture and language can be particularly challenging for new products and services Coka-Cola: 可口可樂 vs. 口渴口辣 “Tasty and Enjoyable” vs. “Thirsty & Spicy” Raymond G. Sin © 33 HKUST Business School A Short Story This is a story about an English gentleman setting up a franchise in China… His name is Mr. Beans Raymond G. Sin © 34 HKUST Business School Lost in Translations Source: engrishfunny.com 36 HKUST Business School Lost in Translations Source: www.squidoo.com/funnychinesesigns 37 HKUST Business School Lost in Translations Courtesy of Prof. Sulin Ba 38 HKUST Business School Lost in Translations Source: www.failads.com 39 HKUST Business School Lost in Translations Source: www.epochhk.com 40 HKUST Business School Video: The World is Flat Alternative version available at: http://mitworld.mit.edu/video/266 Remember to take notes and prepare to discuss Raymond G. Sin © 42 ...
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This note was uploaded on 01/10/2012 for the course ISOM 101 taught by Professor Chanriki during the Spring '10 term at HKUST.

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