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It innovations, impressions & implications-23-jan-2013 at mpste-mumbai


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Information Technology is a platform for Innovation. We see many innovations around us wherein IT acts as an enabler. This presentation highlights some of the characteristics of IT, its desirable feature for enabling innovations and in general, its implications for society. Web 2.0 has revolutionized our world view and in turn this has a multiplier effect !

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It innovations, impressions & implications-23-jan-2013 at mpste-mumbai

  1. 1. IT : Innovations,Impressions & ImplicationsDr S G DeshmukhDirectorABV-Indian Institute of InformationTechnology & Management, 2013Mukesh Patel School of Technology Management &Engineering23 Jan 2013
  2. 2. About my InstituteSetup by Ministry of Human Resource and Development,Government of India in 1997 for excellence in IT andManagementFirst IIIT in the country which started an integrated postgraduate (IPG) program in IT and Management catering tothe industry needsGrowing collaboration with industry and research institutesin emerging areas and Cutting edge researchPredominantly a Research-led post graduate instituteMaximum number of Ph Ds (31) produced in IIIT family tilldate
  3. 3. Speaking points1. Dimensions of Information Technology2. Various impressions3. Implications for real life applications4. Soft computing5. Application to Supply Chain Coordinationproblem6. Endthoughts
  4. 4. Motivation Lot of debate on use/utility of IT IT has become all pervading in almost everywalk of life Soft Computing : As a powerful tool IT aided by Soft Computing ? Relevance of IT in Management of Business ?4
  5. 5. Part 1 Information Technology :Innovations, Impressions
  6. 6. Information Technology (IT) A term used to refer to a wide variety of itemsand abilities used in the creation, storage, anddispersal of data and information. Its three main components: Computers, communications networks, and know-how.6
  7. 7. Characteristics of IT Ubiquitous Mobility Lighter and Smaller High speed Smartness Multiple functions Mix with Non-IT applications
  8. 8. Dimensions of IT Smart Fast Small & slick Affordable Convenient Flexible Friendly Accessible ConnectivityCulturally acceptable,economically feasibleand technologicallyaccessible !
  9. 9. All pervading IT Internet Mobile Multi-Media Notebook Ipod,MP3,PMP, andother gadgets Railway reservationsystem MyTrip,,,,, YouTube Social /professionalnetworks:MySpace,Facebook,Hi5,Linkedlin9
  10. 10. Why Innovation is critical ! Demography: 55 crore population below the age of 25 Disparitycaste, class, gender, region etc. Developmenturgent need to improve quality of lifeSam PitrodaAdviser to the PM of India, Public Infrastructure and Innovations,10
  11. 11. Opportunities in IT IT has been a major success story for India India leads the world in the Out sourcing business IT-BPO industry revenue is around US $ 7o billion/Yr India has around 500 million phones now & isprojected to have over 750 million in 2012 India has only 7 million broadband connections &needs 100 million The next benefits will come from Broadband,Government, applications & public delivery systems
  12. 12. Innovation Technological innovations are defined as new productsand processes and major technological modificationsto products and processes. An innovation is considered performed if it isintroduced to the market (product innovation) orimplemented in the production process (processinnovation).
  13. 13. Remarks.. Technological innovations – based on specifictechnology, invention, discovery, Social innovations – in critical historic periodsmore important than technological ones (mail,educational systém, social systém, health care, …)
  14. 14. Degree of novelty.. Incremental innovations Radical innovations Systemic innovations
  15. 15. Government Initiatives National Innovation Council (India) www.innovationcouncil Information Technology Innovation Foundation(USA) Information Technology Industry InnovationCouncil (Australia)
  16. 16. Remarks. IT has a major role in driving innovation andcompetitiveness for SMEs and IT sector itself Innovation has become “mot du jour” ! IT helps to reduce cost, streamline processesand bring markets closer to products & services
  17. 17. IT is making world flatter !(Thanks to Friedman !) Outsourcing dominated paradigm Team work and leadership assumes new meaning Geography has become history: Time and distance are no longer theimportant variables Mobile dense and multimedia rich environment has accelerateddigital environment. Connectivity has made the global village possible Working on-line, flexi-time, tele/videoconferencing, spiral careerpaths, continuous learning and global competition are changing thetraditional notions of how work gets done. Internet is changing the way we communicate with –suppliers,customers, potential and current employees by way of 2-waycommunications ! SMS driven communication
  18. 18. AutomateBusinessTransactionInformateMake a basisfor DecisionMakingTransformateForInclusivenessandSustainabilityMaturity of IT application
  19. 19. Use of InformationTechnology (IT) IT as an enabler and facilitator IT as a tool IT for streamlining processes IT for bringing in transparency and objectivity IT helps in automation !
  20. 20. Impression 1: Role of IT IT acting as strategic weapon to gain differentiation andadvantage. Assumption: IT’s potency and ubiquity have increased, sotoo has its strategic value? Examples: Indian Railways, CBSE , State Transport Truly strategic resource : Its not ubiquity but scarcity of aresource which brings sustained competitive advantage.
  21. 21. Impression 2.. Availability of IT Ubiquity of resources transform them from potentiallystrategic resources into commodity factors ofproduction . They are becoming costs of doing business that mustbe paid but provide distinction to none. Availability of IT increased (see even at Grocery shops)and cost decreased. More ubiquitous they are, less strategic they become.
  22. 22. Commoditization of IT Makes it valuable when shared than in isolation. IT is also highly replicable- no perfect commodity thana byte of data at virtually no cost. Scalability of IT combined with technicalstandardization dooms applications to economicobsolescence. Internet accelerated commoditization of IT byproviding perfect delivery channel of apps. IT diffuses very fast from inception to maturity. Last ten years number of WWW sites grew from 0 to 40 million. Since 1980, over 280 million miles of fiber optic cable is installed- circlethe earth 11,320 times.
  23. 23. Impression 3: IT capability Because of its ability to record every customerinteraction, Ability to offer insights into customer andmarket behavior, Turn a business into a scientific laboratory forpre and post-production and manufacturingpurposes Its potential to re-invent the business itself IT’s proximity to decision making23
  24. 24. IT Capability.. How IT is used rather that what of IT is used IT fundamentally offers two importantcapabilities to businesses: Integration and Interactivity These capabilities have to be managedeffectively for business24
  25. 25. Implication 1: Integration Enables powerful integration of variousbusiness functions : Marketing, Operations,Design , Finance (Example: ERP basedsystems) Integrates both internal and external functions Empowers suppliers and customers to becomepart of the extended enterprise25
  26. 26. Web 2.0 Web 2.0 covers a broad range of new online services,user-generated content, communities and socialnetworking tools.Examples :Blogger, Flickr, MySpace, YouTube ,Wikipedia and the Godfather of web 2.0 - Google. It is creation of far greater levels of interactivity, notjust between users, or between users and the internetbut between complementary online services throughweb services26
  27. 27. Observation.. “..Ordinary people now have access totechnology, where they can createvalue and even collaborate and levelthe playing field with the world’smightiest enterprises .. Anthony Williams, “ Wikinomics: How Masscollaboration Changes Everything”, 200727
  28. 28. Insight.. Web 2.0 takes some of its philosophicalunderpinning from James Surowieckis book“The Wisdom of Crowds”, which asserts thatthe aggregated insights of large groups ofdiverse people can provide betteranswers and innovations than individualexperts.28
  29. 29. Comment.. If infrastructure is for connectivity -- akin to railroad,Integration is about integrating functionalities ofvarious systems and applications even people; in abroad sense focused on integrating people, processesand technology in an enterprise setting. Role of Management: Enables effectiveintegration, provide necessary eco-system forintegration29
  30. 30. Implication 2:Interactivity Interactivity (WAP, Web Services, XML) beingmore recent in the IT evolution Enables to understand customer better Establishes long term relationships with bothcustomer and suppliers Helps in understanding product features andadd-ons by close interaction30
  31. 31. Implication for Management:Connectivity !Communication is anytime, anywhere via anydevice : Person-to-person, person-to-machine,machine-to-machine Connecting to Information sources Connecting to Change Connecting to an ever-changing , far reachinguniverse Connecting to new issues and trends Connecting to diverse resources Connecting to talent pipeline Connecting to different ways of thinking Connecting to unexpected allies
  32. 32. Implication.. Ever since the Internet brought down the cost ofconnectivity, the need for integration (be it applicationintegration, b2b integration or data integration) hasbeen growing So also interactivity needs of enterprises particularlydealing with bringing in pervasive functionalities as inenterprise mobility, personalisation and so on32
  33. 33. Insight.. IT may become ubiquitous, but the insightrequired to harness its potential will not be soevenly distributed Therein lies the opportunityfor significant strategic advantage33
  34. 34. Part 2 Evaluation of Coordination in supplychain- A Soft Computing Approach
  35. 35. INTRANETInternet and IntranetInternet and IntranetBuy Side Sell-sideIT Enabled view of SCMSuppliersKeySuppliers’ suppliersOrganizational processesand functional unitsIntermediariesCustomersCustomers’ customers
  36. 36. Tangible BenefitsIncreased sales from new sales leads giving rise to increasedrevenue fromnew customers, new marketsexisting customers (repeat-selling), existing customers (cross-selling)Marketing cost reduction fromreduced time in customer serviceonline sales, reduced printing and distribution costs of marketingcommunicationsSupply chain cost reductions fromreduced levels of inventoryincreased competition from suppliers, shorter cycle time inorderingAdministration cost reductions frommore efficient routine business processes such as invoice payment,inventory transactions, etc
  37. 37. Supply Chain Coordination Act of working together and managing dependenciesamong activities (Malone and Crowston, 1994) Integration or linking together of different parts of anorganization to accomplish a collective set of tasks(Van de Ven et al., 1976) Coordination is a process to bring into a commonaction, movement or condition, or to act together in asmooth concerted way (Mattessich et al., 2001)
  38. 38. Types of ITTransactional ITConcerned with acquiring, processing and communicatingraw data about the company’s past and current supply chainoperationse.g., POS systems, general ledger systems, quarterly sales reports, ERPand e-commerce systemsAnalytical ITConcerned with developing and applying systems forevaluating and disseminating decisions based on modelsconstructed from supply chain decision databasese.g., production scheduling systems, forecasting systems, supply chainnetwork optimization systems Source : Shapiro J F , The Role of Optimization in Supply Chain Management, Sep 23, 2002. Slim Tehnologies,IMAWorkshop,38
  39. 39. Sn Aspect Transactional IT Analytical IT1 Time frame addressed Past and Present Future2 Purpose Reporting Forecasting & Decisionmaking3 Business scope Myopic Hierarchical andlongitudinal4 Nature of Databases Raw and lightlytransformed objectivedataRaw, moderately andheavily transformeddata that is bothobjective andjudgmental5 Response time for queries Real-time Real-time and batchprocessing6 Implications to BPR Substitute for, oreliminate, inefficienthuman effortImprove managerialdecision-makingSource : Shapiro J F , The Role of Optimization in Supply ChainManagement, Sep 23, 2002. Slim Technologies, IMA Workshop,
  40. 40. {Production SchedulingOptimizationModeling Systems{Distribution SchedulingOptimizationModeling SystemsTransactional ITDemandForecastingand OrderManagementSystemStrategic OptimizationModeling SystemTactical OptimizationModeling SystemProduction PlanningOptimizationModelingSystemLogisticsOptimizationModelingSystemSupply ChainModeling SystemHierarchyTop-Down ViewScopeStrategicAnalysisLong-TermTacticalAnalysisShort-termTacticalAnalysisOperationalAnalysis
  41. 41. Observation.. IT is inherently strategic because of itsindirect effects It creates possibilities and options for thechain members that did not exist before Companies that see, and act on, thesepossibilities before others do will continue todifferentiate themselves in the marketplaceand reap economic rewards41
  42. 42. IT based Managementinterventions.. Datamining & BusinessIntelligence K-sharing Customer RelationshipManagement Supplier RelationshipManagement Enterprise ResourcePlanning Etc..Implementation of theserequire carefulconsiderations on thefollowing IT capabilities: Infrastructure Integration Interactivity42
  43. 43. Implication : IIIM Framework Innovation Integration InteractivityThese capabilities are to be effectivelymanaged : Role of Innovative Management43
  44. 44. Initiative-Capability MatrixIT Initiative CapabilityInnovation Integration InteractivityData-mining &BusinessIntelligenceK-sharingSRMCRMERP Low ? High Medium44
  45. 45. 45Soft Computing Soft computing is an umbrella term for a collection ofcomputing techniques It is tolerant of imprecision, uncertainty and partialtruth Models based on human reasoning. Models can be- linguistic,- simple (no number crunching),- comprehensible (no black boxes),- fast when computing,- good in practice.
  46. 46. 46Soft Computing Applications : Business• supplier evaluationcustomer targeting,• sequencing,• scheduling,• optimizing R&D,• projects,• knowledge-basedprognosis,• fuzzy data analysis• hospital stay prediction,• TV commercial slotevaluation,• address matching,• multi-criteria optimization,etc.•Supply Chain Coordination
  47. 47. Need of Coordination The supply chain entities optimize their localobjectives without taking into account its effect onwhole supply chain performance These conflicting objectives result in more inventory held up, increased system wide costs, more uncertainty and more demand fluctuations To improve the performance of whole supply chainthese conflicting issues are required to be resolved bycoordinating the supply chain processes
  48. 48. How supply chain coordination can be achieved? Effective Implementation of coordination mechanisms is agood indicator of coordination Extent of coordination may be represented as a function of icoordination mechanisms (CM)EC= f (CM1, CM2, CM3, .......... CMi) A soft computing based model is proposed to evaluate EC:Fuzzy based Analytic Hierarch Process (FAHP)
  49. 49. Contracts• Structured at beginning of relationship• Decisions regarding risks and rewards• Set foundation for the adoption of othermechanisms• Optimal decisions do not satisfy allmembers of supply chain• Sort out conflicts and confusions• Reduces uncertainties and encourage longterm partnerships• Comprised of quantity, price, cost anddemandInformation Sharing• Type of information shared• Willingness to share information• Improve different performancemeasures like reduce supply chaincosts, inventory levels, demandvariance, lead time and greatercustomer satisfaction• Reduces uncertainty in supply anddemandInformation Technology• Type of information system• Speed and accuracy of informationsystem• SCM/ERP software• Mode of communicationJoint Decision Making• Joint planning• Joint forecasting•Joint replenishment• Joint ordering• Joint benefit sharingSUPPLY CHAIN COORDINATION
  50. 50. Coordination mechanism-Information Sharing Order information Inventory data End customerdemand Sales data Capacity Production schedule Lead time Price scheme Status of order Product quality Future plans New technologies Productspecifications
  51. 51. Coordination mechanism-Information Technology Precise and accurate information flow Faster and cheaper order processing Reduces uncertainty Increase flexibility Improves customer service Reduces response time
  52. 52. Extent of coordination (EC)EC = w1*CO + w2*IS + w3*IT + w4*CLwhere w1, w2, w3, w4 are relative weights of fourcoordination mechanisms CO, IS, IT and CL are the crisp scores of fourmechanisms i.e contracts, information sharing,information technology and collaboration respectively The crisp scores are assessed by defuzzyfying thelinguistic terms representing these factors
  53. 53. EL VL L SL AV SH H VH EH100 0.2 0.4 0.6 0.81.0Degreeofmembershipa b cdSH HVHa b cd1121abbdcdCLinguistic terms assigned to coordination mechanismsConversion of fuzzy to crisp numberCrisp scoresCSCO: Contracts, CSIT: Informationtechnology, CSIS: Information sharingand CSJD: Joint decision makingPair wise comparisons ofcoordination mechanismsRelative weights of coordinationmechanismsCheck forconsistencyRelative weights forContracts, Information technology, Informationsharing and Joint decision-making respectivelyJDISITco ωandω,ω,ωInconsistentConsistent Extent of CoordinationJDJDISISITITCOco CSωCSωCSωCSωEC +++=FAHP modelAHP
  54. 54. Outcomes of FAHP model Uniform linguistic terms to coordination mechanisms Easiness of assigning linguistic terms by managers Extent of coordination based on the implementation andimportance of coordination mechanisms Applied to a real life case study7701570770287068051407700420 .*.+.*.+.*.+.*.=EC= 0.724Low100 0.3 0.4 0.70.86Medium HighScore for Extent of CoordinationDegree ofmembership
  55. 55. Pairwise comparison scoreCoordina-tion byContracts InformationSharingInformationTechnologyCollaborationContracts 1 a12 1/a31 a14InformationSharing1/a12 1 a23 1/a42InformationTechnologya31 1/a23 1 1/a43Collaboration1/a14 a42 a43 1
  56. 56. Analytic Hierarchy Process (AHP) Set AHP subjective scale for pair wisecomparison of factors on the basis of theirrelative importance Normalize the comparison scores Calculate the relative weights by taking averageof normalized scores and assign as w1, w2, w3and w4 for contracts, information sharing,information technology and collaborationrespectively
  57. 57.  The defuzzification process is done using theconversion formula given by Chen and Hwang (1992).Where C is the crisp number computed by usingtrapezoidal membership fuzzy number M= (a,b,c,d)1121abbdcdC
  58. 58. Input data for DSTSCC for two level SC(A) Data considered for numerical exampleCost (cs) : 12 Cost (cb) : 2Salvage (ss) : 9 Salvage (sb) :10Goodwill cost (gs ) : 8 Goodwill cost (gb) : 14Wholesale price (w) : 20 Price of product (p) : 30Demand ~ N (100, 302)(B) Decision variables for numerical exampleOptimal order quantity : 111.35 units : 139.35 unitsOther variables:  : 15, w’ : 10.1  : 0.6 and  : 0.148Input data for DSTSCC for three level SC(A) Data considered for numerical exampleLevel 1 Level 3Marginal cost(cL1) : 20 Marginal cost (cL3) : 5Goodwill cost (gL1) : 6 Goodwill cost (gL3) : 8Salvage (sL1) : 16 Salvage (sL3) : 28Wholesale price (w12) : 36 Price of product (p) : 60Level 2Marginal cost (cL2) :7Goodwill cost (gL2) :7 Demand distribution N(100, 202)Salvage (sL2) : 17Wholesale price (w23) : 50 The cost and price are in monetary units(B) Decision variables as Output data for DSTSCC23 = 46 12 = 2623 = 0.532 12 = 0.519w’23 = 23.8 w’12 = 18.03δ = 0.2936 Q*sc = 128.72 units*bQ *scQ
  59. 59. Snapshot of the Model
  60. 60. Supply chainmemberExpected PerformanceMeasuresCase IScenario 0 (NoCoordination)Case II “Coordination”Scenario 1(Coordin-ationwith optimal)Scenario 2(Scenario1+Buyback contracts)Scenario 3(Scenario1+Revenue sharingcontracts)Scenario 4(Scenario1+Quantityflexibilitycontracts)•Level 3Actual Sale 86.760 99.20 99.195 99.195 102.171Revenue realized 5205.596 5951.72 5951.722 3166.812 6130.253Leftover inventory 4.165 29.53 29.529 29.53 2.539Salvage realized 116.615 826.81 1353.762 826.81 71.081Units short 13.048 0.61 0.612 0.61 0.480Goodwill realized 104.381 4.90 4.897 4.90 3.836Marginal value realized 454.624 643.62 643.621 643.62 586.922Wholesale value incurred 4546.238 6436.21 6436.207 3076.507 5869.217Buyback quantity realized 0 99.20 1353.762 0 633.741Expected Profits 216.969 -306.198 220.759 268.593 375.101•Level 2Leftover inventory 0 0 29.565 29.529 2.539Salvage realized 0 0 568.694 0 215.472Units short 13.052 0.924 0.924 0.612 0.480Goodwill realized 104.415 7.391 7.391 4.897 3.836Marginal value realized 636.473 901.068 901.068 901.068 586.922Wholesale value realized 4546.237 6436.205 6436.206 4522.280 5869.217Wholesale value incurred 3273.29 4634.068 4634.068 2385.040 4225.836Buyback quantity realized 0 0 568.694 0 456.294Buyback quantity incurred 0 0 1359.99708 0 633.741Expected Profits 545.110 894.602 1008.675 1231.886 856.358Performance measures for different scenarios for three levelsupply chain
  61. 61. Level 1Leftover inventory 0 0 29.565 29.565 2.539(Salvage realized –buyback quantity) 0 0 417.477 0 202.797Units short 13.052 0.924 0.924 0.612 0.480Goodwill realized 626.491 5.543 5.543 3.673 2.877Marginal value realized 1818.494 2574.482 2574.482 2574.483 2347.687Wholesale valueincurred 3273.290 4634.068 4634.068 4415.645 4225.836Expected Profits 828.305 2054.043 1936.279 1081.659 1621.776Total Expected Profits of SC 1599.022 2638.789 2638.789 3175.516 2853.235Supply chainmemberExpectedPerformanceMeasuresCase IScenario 0 (NoCoordination)Case II “Coordination”Scenario 1(Coordin-ation withoptimal)Scenario 2(Scenario1+Buybackcontracts)Scenario 3(Scenario1+Revenue sharingcontracts)Scenario 4(Scenario1+Quantityflexibilitycontracts)Performance measures for different scenarios for three levelsupply chain (Contd.....)
  62. 62. Significance of coordinationmechanismsAbsence of contractsReduces profits of buyerAbsence of Information technologyIncreases units short and goodwill costAbsence of information sharingIncrease in marginal cost of supplier and overstockAbsence of join decision makingReduces the profits of both supplier and buyer
  63. 63. Different ScenariosPerformance Measures* Scenario 2(Buybackcontract)Cont. to the profits(%)*Scenario 3(Revenuesharingcontract)Cont. to theprofits (%)Scenario 4(Quantityflexibilitycontract)Cont. to theprofits (%)BuyerRevenues realized 171.03 13.8 -995.06 -45.8 171.03 34.0Salvage realized/ (Returnsrealized in Scenario 2) 375.47 30.2 223.44 10.3 39.49 7.9Goodwill incurred 79.82 6.4 79.82 3.7 79.82 15.9Marginal cost incurred -56.00 -4.5 -56.00 -2.6 -19.28 -3.8Wholesale value realized -560.02 -45.1 819.08 37.7 -192.84 -38.4Total Gain (Loss) 626.32(-616.02)50.4(-49.6)1122.34(-1051.06) 51.6 (-48.4)290.34(-212.12)57.8(-42.2)SupplierSalvage realized 379.61 19.4 0 0 26.90 6.1Goodwill incurred 45.63 2.3 45.63 6.3 45.63 10.4Marginal cost incurred -336.01 -17.2 -336.01 -46.1 -115.70 -26.2Wholesale value realized 560.02 28.7 347.01 47.6 192.84 43.7Returns cost incurred -631.62 -32.3 0 0 -59.77 -13.6Total Gain (Loss) 985.26(-967.63)50.5(-49.5)392.64(-336.01)53.9(-42.1)265.36(-175.47)60.2(-39.8)Relative contribution of different performancemeasures in the profit function
  64. 64. End Thoughts IT is a dominant technology Smart use of technology IT does matter by offering capabilities Integration Interactivity IT as a back end tool in Soft computing Part of decision making Supply chain as an application domain Evaluation of various scenarios Evaluation of alternative scenarios
  65. 65. Useful references Arshinder Kaur, Kanda, A. and Deshmukh, S. G. (2006), “A graphtheoretic approach to evaluate supply chain coordination”, InternationalJournal of Logistics and Systems Management”, Vol. 2, No.4, pp. 329-341 Arshinder, Kanda, A. and Deshmukh, S. G. (2007), “Coordination inSupply Chains: An Evaluation using Fuzzy Logic” ,Production Planningand Control, Vol. 18, No. 5, pp. 420-435 IT doesn’t Matter: National Innovation Council: National Knowledge Commission: National Knowledge Network: National Innovation Portal: Media: Youtube:
  66. 66. Thank you for