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Chapter 1



     IT Supports Organizational
           Performance
in Turbulent Business Environments




                                     1
Learning Objectives

• Describe the characteristics of the digital economy and
  e-business.
• Recognize the relationships between business
  pressures, organizational responses, and information
  systems.
• Define computer-based information systems and
  information technology.
• Describe the role of information technology in
  supporting the functional areas.
• List the new technology development in the areas of
  generic and networked computing and Web-based
  systems.
• Understand the importance of learning about
  information technology.
                                                            2
Doing Business in the Digital
Economy
• The digital economy is an economy based on digital
  technologies, including communication networks
  (the Internet, intranets, and extranets), computers,
  software, and other related technologies
   • Nicholas Negroponte (1995) used a metaphor of
     shifting from processing atoms to processing bits. He
     discussed the disadvantages of the former (e.g.,
     mass, materials, transport) and advantages of the
     latter (e.g., weightlessness, virtual, instant global
     movement).

• Also called the Internet economy, the new economy, or
  the Web economy .

• Digital infrastructures provide a global platform over
  which people and organizations interact, communicate,
  collaborate, and search for information.                 3
Electronic Business
• Businesses increasingly perform their basic functions:
  buying and selling goods and services, servicing
  customers, and collaborating with business partners
  (= business process) electronically.

• This process is known as electronic business (E-
  business) or electronic commerce (E-commerce)




                                                           4
New Economy vs. Old Economy
       Example                          Old                           New
Buying and selling textbook Visit the bookstore            Visit web site for publishers
                                                           and retailers
Registering for classes     Walk around campus to          Access campus web site
                            Departments, Registrar’s
                            office, etc.
Photography                 Buy film, use camera, take     Use digital camera
                            picture, take it for
                            processing
Paying for Gasoline         Fill up your car, go inside,   Use speed pass token;
                            pay cash or credit card        wave over the sensor and
                                                           go
Paying for Transportation   Pay cash, metal tokens         Metro cards electronic
                                                           cards
Paying for goods            Visit store, select item,      Use self-service kiosks
                            pay, go
Supplying commercial        Use newspapers, paper,         Use hub-like supply chain
photos                      catalog, or online             with digitized picture    5
구경제 대 신경제:            Photo
       구경제                      신경제
 필름을 구입하여 카메라에        비디오 촬영이 가능한
  넣고 사진을 찍는다.           디지털카메라(digital
                        camera)를 사용하여 사진을
 필름을 전부 사용하고 난
                        찍는다. 필름은 필요 없고
  후에 때로는 몇 주나 몇 달
                        인화과정도 요구되지 않는다.
  후에 카메라에서 필름을          즉시 결과를 볼 수 있고,
  되감고 이를 인화하기 위해        사진을 확대하고 위치를
  사진관으로 가져간다.           변경하여 신속하게 출력할 수
 인화된 사진을 찾아 확인하고       있다.
  좋아하는 사진을 선택한다.       디지털카메라는 컴퓨터 또는
  그리고 사진관을 다시           휴대전화와 같은
  방문하여 사진의 확대와          무선장치들과 연결된다.
  복사비용을 지불한다.
 ‘인원수대로’ ‘무조건 한장씩’
  ‘잘각일(1)’
                                            6
Business in the Information
Age: Pressures
• Global Competition for Market and for Labor
• Need for Real-time Operations;
  RTE(Real-time Enterprise)
• Changing Work Force
• Customer-Oriented Operations (Powerful
  Customers) 고객지식화
• Technological Innovation and Obsolescence
• Information Overload
• Social Responsibility of Organizations
• Government Regulation and Deregulation
• Ethical Issues

                                                7
주요 비즈니스 압력




             8
9
• 강력한 고객

고객이 제품과 서비스의 획득가능성과 품질에 대해
 점점 더 많은 지식을 갖추게 됨에 따라 고객의
 지식화와 기대는 증대한다.

고품질과 저가격의 맟춤형 상품을 원함(dell.com의
 맞춤PC, nike.com의 맞춤운동화)
 Mass Customization(대량고객화)

CRM (Customer Relationship Management:
  고객관계관리) 필요


                                         10
11
Drivers Forcing Changes In
Business Models
  Business Pressures
• Environmental, organizational, and technological
  factors
• React frequently and quickly to both the threats
  and the opportunities resulting from this new
  business environment. 위기(危機) = 위험 + 기회
  Business Critical Response Activities
• A response can be a 1) reaction to a pressure
  already in existence, 2) an initiative intended to
  defend an organization against future pressures,
  or 3) an activity that exploits an opportunity
  created by changing conditions
                                                       12
Business Model (1/2)
           [Wiki] A business model is a
          framework for creating economic, social,
          and/or other forms of value.


 A business model is the method of doing business
by which a company can sustain itself -- that is,
generate revenue.

The business model spells-out how a company makes
money by specifying where it is positioned in the value
chain.
                                                     13
Business Model (2/2)
 [MIT Sloan School] We define a business
model as consisting of two elements:
(a) what the business does, and
(b) how the business makes money doing these
things.
 A method by which a firm uses its resources (cash,
technology and people) to offer its customers better
value than its competitors and make money doing so.


                                                   14
Business Model - 구성요소

•    A business model explains how you
     convert your idea/technology into
     economic value.
    1.   Value Proposition
    2.   Market Segment
    3.   Value Chain Structure
    4.   Revenue Generation & Margins
    5.   Business Environment
    6.   Competitive Strategy & Advantage
                                            15
Digital Age Business Models

• Name-Your-Own Price (고객책정가격)
• Reverse Auctions
• E-Marketplaces and Exchanges
• Electronic aggregation (buying groups) 공동구매
• 구글, 야후, 네이버
• 싸이월드, 프리챌, Facebook …



                                           16
17
조직의 핵심반응활동


              경쟁우위를 위한
               전략시스템
              지속적인 개선 노력

              Business process
               reengineering
               (BPR)
              비즈니스 제휴
              전자상거래
                                  18
조직의 핵심반응활동
• 전략 시스템은 조직의 시장점유율을 증가시키고, 공급자와 더
  나은 협상을 하며, 경쟁업체의 시장진입을 막을 수 있는
  전략적 우위를 조직에게 제공한다. (FedEx의 철야배송시스템)
  • 전략적 우의를 지속적으로 유지하기 어렵다. 대부분의
    경쟁사가 복제.
  • 비즈니스 제휴 = FedEx(항공)+USPS(화물집중센터))

• 지속적인 개선노력. 많은 기업은 생산성과 품질을 개선하기
  위한 프로그램을 지속적으로 실행한다.

   개선된 생산성         전사적 데이터 관리
   적시생산시스템(JIT)    혁신과 창조성
   전사적 품질관리        변화관리


                                   19
조직의 핵심반응활동

• Business Process Reengineering (BPR)은
  조직의 구조와 비즈니스 수행방식에 중요한
  혁신을 도입하는 것을 지칭한다.

   전술한 지속적인 개선노력 이 제한된 효과성을 지님.




                                     20
Reengineering Work:
Don’t Automate, Obliterate
• Michael Hammer
• Ford사례
  • Ford의 Account Payable 담당직원 400명,
    Mazda 는 5명.
  • Old Rule: We pay when we get the invoice.
  • New Rule: We pay when we get the goods.
• Why did we design Inefficient Processes?
  • We didn’t. They just happened. Most of them
    took their present forms in the 1950s!
                                                21
프랑크푸르트 선언
(Kempinski Hotel; 1993년 6월 7일)
        • 2010년 3월 경영복귀 후 ‘신경영의 초심’
          강조 = ‘변해야 산다’ , 질(質)경영
        • 이건희 회장 曰
루이비통
246만원
           "마누라와 자식 빼고는 다 바꾸자"




                                  22
             당시 51세
효율성과 효과성
    Efficiency vs. Effectiveness

• 효율성 = 비교
                       Output
 • 생산성(Productivity) =
                        Input
 • 동일한 Output을 내는 서로 다른 Input을 비교


• 효과성
 • 원하는 Output에 얼마나 근접한 Output을
   산출하는가가 관건
 • Input에 대한 비교는 없음.

                                    23
Why You Need to Learn About
Information Technology

IT is Generally Interesting
IT Facilitates Work in Organizations
IT Offers Career Opportunities
IT is Used by All Departments
   Locating real estate at nations bank
   Using IT to strategic advantage at McDonald’s
    Canada
   Using IT to manage human resources at the
    City of Winnipeg in Manitoba, Canada            24
정보기술(IT)과 정보시스템

 • 정보기술(Information Technology)은
  정보자원을 관리하기 위한 모든 수단.

 • 정보시스템(information system: IS)은
   특정한 목적을 위해서 정보를 수집,
   처리, 저장, 분석, 유포하는 것이다.




                                    25
Components of Computer-
based Information System

    HARDWARE             SOFTWARE



                PEOPLE
DATABASE                   PROCEDURES



               NETWORK

                                    26
Capabilities of Information
Systems
 • Provide Fast and Accurate Transaction
 • Provide Large Capacity,
   Fast Access Storage
 • Provide Fast Communications
   (machine to machine, human to human)
 • Reduce Information Overload
 • Provide Support for Decision Making
 • Provide a Competitive Weapon

                                       27
28
Strategic Questions and
Information Technology Answer
• Information Technology and organizational
  strategy are inseparable.
• Porter’s strategic analysis model (5 forces
  models)
  • the relative power of buyers and suppliers,
    threats from substitute products and services,
    and the ease or difficulty with which new
    competitors can enter the industry
• Value chain
  • the discrete steps involved in the manufacturing
    of a product or the provision of a service    29
Porter’s Competitive Force
Model




                             30
Trends in Technology
• Cost-performance ratio of chips keeps improving. Moore’s
  Law, his prediction was that the processing power of
  silicon chips would double every 18 months.
• According to McGarvey & tenornetworks.com, states that
  the performance of optical communication networks is
  growing by a factor of 10 every three years.
• Several new devices and methods to increase storage
  capacity price performance [KB-MB-GB-TB(Tera)-PB(Peta)-
  EB(Exa)]
• Network Storage devices
• Networked and distributed computing is emerging rapidly
  Metcalfe’s Law.
                                                       31
Trends in Technology       (continued)

  • The Internet, Intranets & Extranets
  • Mobile Computing and M-Commerce
    Ubiquitous Computing
  • Wireless networks
  • Pervasive Computing
  • Smart Devices
  • Green Technology
  • Social Computing and Virtual Worlds

"The Network is The Computer”
                                          32
Social Networks




                  33
Web 2.0




          34
Social Computing




                   35

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MIS Chapter 1 KIC

  • 1. Chapter 1 IT Supports Organizational Performance in Turbulent Business Environments 1
  • 2. Learning Objectives • Describe the characteristics of the digital economy and e-business. • Recognize the relationships between business pressures, organizational responses, and information systems. • Define computer-based information systems and information technology. • Describe the role of information technology in supporting the functional areas. • List the new technology development in the areas of generic and networked computing and Web-based systems. • Understand the importance of learning about information technology. 2
  • 3. Doing Business in the Digital Economy • The digital economy is an economy based on digital technologies, including communication networks (the Internet, intranets, and extranets), computers, software, and other related technologies • Nicholas Negroponte (1995) used a metaphor of shifting from processing atoms to processing bits. He discussed the disadvantages of the former (e.g., mass, materials, transport) and advantages of the latter (e.g., weightlessness, virtual, instant global movement). • Also called the Internet economy, the new economy, or the Web economy . • Digital infrastructures provide a global platform over which people and organizations interact, communicate, collaborate, and search for information. 3
  • 4. Electronic Business • Businesses increasingly perform their basic functions: buying and selling goods and services, servicing customers, and collaborating with business partners (= business process) electronically. • This process is known as electronic business (E- business) or electronic commerce (E-commerce) 4
  • 5. New Economy vs. Old Economy Example Old New Buying and selling textbook Visit the bookstore Visit web site for publishers and retailers Registering for classes Walk around campus to Access campus web site Departments, Registrar’s office, etc. Photography Buy film, use camera, take Use digital camera picture, take it for processing Paying for Gasoline Fill up your car, go inside, Use speed pass token; pay cash or credit card wave over the sensor and go Paying for Transportation Pay cash, metal tokens Metro cards electronic cards Paying for goods Visit store, select item, Use self-service kiosks pay, go Supplying commercial Use newspapers, paper, Use hub-like supply chain photos catalog, or online with digitized picture 5
  • 6. 구경제 대 신경제: Photo 구경제 신경제  필름을 구입하여 카메라에  비디오 촬영이 가능한 넣고 사진을 찍는다. 디지털카메라(digital camera)를 사용하여 사진을  필름을 전부 사용하고 난 찍는다. 필름은 필요 없고 후에 때로는 몇 주나 몇 달 인화과정도 요구되지 않는다. 후에 카메라에서 필름을 즉시 결과를 볼 수 있고, 되감고 이를 인화하기 위해 사진을 확대하고 위치를 사진관으로 가져간다. 변경하여 신속하게 출력할 수  인화된 사진을 찾아 확인하고 있다. 좋아하는 사진을 선택한다.  디지털카메라는 컴퓨터 또는 그리고 사진관을 다시 휴대전화와 같은 방문하여 사진의 확대와 무선장치들과 연결된다. 복사비용을 지불한다.  ‘인원수대로’ ‘무조건 한장씩’ ‘잘각일(1)’ 6
  • 7. Business in the Information Age: Pressures • Global Competition for Market and for Labor • Need for Real-time Operations; RTE(Real-time Enterprise) • Changing Work Force • Customer-Oriented Operations (Powerful Customers) 고객지식화 • Technological Innovation and Obsolescence • Information Overload • Social Responsibility of Organizations • Government Regulation and Deregulation • Ethical Issues 7
  • 9. 9
  • 10. • 강력한 고객 고객이 제품과 서비스의 획득가능성과 품질에 대해 점점 더 많은 지식을 갖추게 됨에 따라 고객의 지식화와 기대는 증대한다. 고품질과 저가격의 맟춤형 상품을 원함(dell.com의 맞춤PC, nike.com의 맞춤운동화) Mass Customization(대량고객화) CRM (Customer Relationship Management: 고객관계관리) 필요 10
  • 11. 11
  • 12. Drivers Forcing Changes In Business Models Business Pressures • Environmental, organizational, and technological factors • React frequently and quickly to both the threats and the opportunities resulting from this new business environment. 위기(危機) = 위험 + 기회 Business Critical Response Activities • A response can be a 1) reaction to a pressure already in existence, 2) an initiative intended to defend an organization against future pressures, or 3) an activity that exploits an opportunity created by changing conditions 12
  • 13. Business Model (1/2)  [Wiki] A business model is a framework for creating economic, social, and/or other forms of value.  A business model is the method of doing business by which a company can sustain itself -- that is, generate revenue. The business model spells-out how a company makes money by specifying where it is positioned in the value chain. 13
  • 14. Business Model (2/2)  [MIT Sloan School] We define a business model as consisting of two elements: (a) what the business does, and (b) how the business makes money doing these things.  A method by which a firm uses its resources (cash, technology and people) to offer its customers better value than its competitors and make money doing so. 14
  • 15. Business Model - 구성요소 • A business model explains how you convert your idea/technology into economic value. 1. Value Proposition 2. Market Segment 3. Value Chain Structure 4. Revenue Generation & Margins 5. Business Environment 6. Competitive Strategy & Advantage 15
  • 16. Digital Age Business Models • Name-Your-Own Price (고객책정가격) • Reverse Auctions • E-Marketplaces and Exchanges • Electronic aggregation (buying groups) 공동구매 • 구글, 야후, 네이버 • 싸이월드, 프리챌, Facebook … 16
  • 17. 17
  • 18. 조직의 핵심반응활동  경쟁우위를 위한 전략시스템  지속적인 개선 노력  Business process reengineering (BPR)  비즈니스 제휴  전자상거래 18
  • 19. 조직의 핵심반응활동 • 전략 시스템은 조직의 시장점유율을 증가시키고, 공급자와 더 나은 협상을 하며, 경쟁업체의 시장진입을 막을 수 있는 전략적 우위를 조직에게 제공한다. (FedEx의 철야배송시스템) • 전략적 우의를 지속적으로 유지하기 어렵다. 대부분의 경쟁사가 복제. • 비즈니스 제휴 = FedEx(항공)+USPS(화물집중센터)) • 지속적인 개선노력. 많은 기업은 생산성과 품질을 개선하기 위한 프로그램을 지속적으로 실행한다.  개선된 생산성  전사적 데이터 관리  적시생산시스템(JIT)  혁신과 창조성  전사적 품질관리  변화관리 19
  • 20. 조직의 핵심반응활동 • Business Process Reengineering (BPR)은 조직의 구조와 비즈니스 수행방식에 중요한 혁신을 도입하는 것을 지칭한다.  전술한 지속적인 개선노력 이 제한된 효과성을 지님. 20
  • 21. Reengineering Work: Don’t Automate, Obliterate • Michael Hammer • Ford사례 • Ford의 Account Payable 담당직원 400명, Mazda 는 5명. • Old Rule: We pay when we get the invoice. • New Rule: We pay when we get the goods. • Why did we design Inefficient Processes? • We didn’t. They just happened. Most of them took their present forms in the 1950s! 21
  • 22. 프랑크푸르트 선언 (Kempinski Hotel; 1993년 6월 7일) • 2010년 3월 경영복귀 후 ‘신경영의 초심’ 강조 = ‘변해야 산다’ , 질(質)경영 • 이건희 회장 曰 루이비통 246만원 "마누라와 자식 빼고는 다 바꾸자" 22 당시 51세
  • 23. 효율성과 효과성 Efficiency vs. Effectiveness • 효율성 = 비교 Output • 생산성(Productivity) = Input • 동일한 Output을 내는 서로 다른 Input을 비교 • 효과성 • 원하는 Output에 얼마나 근접한 Output을 산출하는가가 관건 • Input에 대한 비교는 없음. 23
  • 24. Why You Need to Learn About Information Technology IT is Generally Interesting IT Facilitates Work in Organizations IT Offers Career Opportunities IT is Used by All Departments  Locating real estate at nations bank  Using IT to strategic advantage at McDonald’s Canada  Using IT to manage human resources at the City of Winnipeg in Manitoba, Canada 24
  • 25. 정보기술(IT)과 정보시스템 • 정보기술(Information Technology)은 정보자원을 관리하기 위한 모든 수단. • 정보시스템(information system: IS)은 특정한 목적을 위해서 정보를 수집, 처리, 저장, 분석, 유포하는 것이다. 25
  • 26. Components of Computer- based Information System HARDWARE SOFTWARE PEOPLE DATABASE PROCEDURES NETWORK 26
  • 27. Capabilities of Information Systems • Provide Fast and Accurate Transaction • Provide Large Capacity, Fast Access Storage • Provide Fast Communications (machine to machine, human to human) • Reduce Information Overload • Provide Support for Decision Making • Provide a Competitive Weapon 27
  • 28. 28
  • 29. Strategic Questions and Information Technology Answer • Information Technology and organizational strategy are inseparable. • Porter’s strategic analysis model (5 forces models) • the relative power of buyers and suppliers, threats from substitute products and services, and the ease or difficulty with which new competitors can enter the industry • Value chain • the discrete steps involved in the manufacturing of a product or the provision of a service 29
  • 31. Trends in Technology • Cost-performance ratio of chips keeps improving. Moore’s Law, his prediction was that the processing power of silicon chips would double every 18 months. • According to McGarvey & tenornetworks.com, states that the performance of optical communication networks is growing by a factor of 10 every three years. • Several new devices and methods to increase storage capacity price performance [KB-MB-GB-TB(Tera)-PB(Peta)- EB(Exa)] • Network Storage devices • Networked and distributed computing is emerging rapidly Metcalfe’s Law. 31
  • 32. Trends in Technology (continued) • The Internet, Intranets & Extranets • Mobile Computing and M-Commerce Ubiquitous Computing • Wireless networks • Pervasive Computing • Smart Devices • Green Technology • Social Computing and Virtual Worlds "The Network is The Computer” 32
  • 34. Web 2.0 34