4.2. ICT in business process, Sakari Luukkainen

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1 Ntwserbus 1 Agenda Introduction, Sakari Luukkainen Theoretical frameworks, Sakari Luukkainen Business model design, Sakari Luukkainen 4.2. ICT in business process, Sakari Luukkainen STOF cases, Olli Mäkinen Cloud computing, Sakari Luukkainen 4.3. Green ICT, Sakari Luukkainen Mobile cloud computing, Sakari Luukkainen Mobile ecosystems, Juha Winter ICT start-up development, Aalto ACE 1.4. Summary, Sakari Luukkainen Examination

2 ICT and Economic growth - definitions Ntwserbus 2 ICT investment purchase of computer & telecommunications HW, SW, and services Value added output minus input of certain production sector, practically wages plus profits GDP sum of value added created by all production sectors in the national economy Labour productivity value added per working hours TFP modern productivity indicator that describes that part of production growth that can not be explained by the growth of inputs

3 Ntwserbus 3 Goal of ICT economic growth Productivity Production ICT investment Value added GDP Innovation R&D investment ICT is considered a special case of new technologies that serve as enabling technologies leading to even further innovations

4 ICT Investments and Economic Growth Ntwserbus 4 from transformation from bulk material manufacturing to design and use of technology from processing of resources to processing of information digital economy intangible capital is the new engine of growth endogenic growth theory explains such a innovation driven phase of economies technological over price competitiveness technology tends to accumulate in certain places of economy and diffuse value also to actors which do not take fully part to its creation cost - spillover technology explains for at least half of the long term economic growth of industrialized nations

5 ICT Investments and Economic Growth Ntwserbus 5 a lot of studies has been made since 1980 ś common argument is that ICT is a general purpose technology, a platform that enables efficient knowledge creation, codification and transmission widely in the economy productivity paradox (Solow 1987): You can see computer age everywhere but in the productivity statistics empirical findings show however a long learning period and slow diffusion, finally about 20 % from GDP growth computers are part of a larger system of technological and organisational changes that increases productivity over time (Brynjolfsson and Hitt 2000) ICT generates spillovers effect on TFP

6 Ntwserbus 6 Sharing economy The sharing economy means collaborative consumption and the sharing of resources by leveraging Internet - more efficient usage of resources increase productivity Owning a product versus renting or borrowing it makes little difference to its value Unused value refers to that goods lay idle, this idle time is wasted value that sharing business models businesses utilize E.g. average car is unused 92% of the time When information about goods availability is shared, the value of goods increase The sharing model is based on ICT platforms in order to enable peer-to-peer renting of goods

7 Ntwserbus 7 Sharing economy Now the Internet has reduced marginal costs to near zero Creative destruction theory describes the process of technological change that revolutionizes the industrial structure by destroying the old one and creating a new one - sharing business models are now disrupting traditional industries based on models of individual private ownership E.g. the home-sharing service Airbnb.com is challenging biggest hotel chains in the world similarly than Uber.com taxis For a traditional hotel chain the new room must be built at a significant cost Airbnb.com can add another room to its offering at almost no marginal cost and households are able to rent their apartments cheaper than hotels Source: Rifkin, 2014

8 Ntwserbus 8 ICT and productivity to what extent ICT is investment and to what extent entertainment? effect of Angry Birds to productivity? the cost of taking ICT into use can be 5 times bigger than actual SW & HW investment, problems and also possibilities to improve productivity especially in Finnish public health service relatively long time gap between the introduction of a technology and its positive impact on productivity ICT is only an enabler - parallel organizational change is mandatory Finland has benefited a lot of from ICT production a lot of potential left in taking ICT productively into use

9 Ntwserbus 9 ICT in business process where is the value? Process innovation Service innovation Product innovation R&D investment

10 Ntwserbus 10 ICT in business process up to 90% of ICT projects fail to meet their goals and less than 25% properly integrate business and technology objectives other surveys indicate that companies waste 40% of the total amount they spend on ICT because the systems they build are not aligned with business process organizations often tend to use ICT to automate accounting, stock control and other routine functions heavy investments in information technology have delivered disappointing results, largely because companies tend to use technology to automate old ways of doing business Source: Weerakkody & Currie, 2003

11 Ntwserbus 11 ICT in business process principal challenge is not to design systems that will process data more efficiently but to create an environment in which people can exploit information more effectively and create more value business process development projects have encouraged firms to analyze the business first, before designing computer systems process improvement and ICT change should happen in parallel, organizations should therefore try and integrate the two Source: Weerakkody & Currie, 2003

12 ICT is a tool which should help enduser perform the task productive Ntwserbus 12

13 Ntwserbus 13 Designing information systems Environment Enduser Task Tool Source: Shackel 1984

14 Ntwserbus 14 Process improvement & management Productivity More produced units by decreased cost Customer value Increased sales by customer satisfaction Source: Rummler, 1993

15 Ntwserbus 15 Information system design framework Reachability Portability Bandwidth Source: Vartiainen, 2004

16 Designing mobile information systems Ntwserbus 16 Mobile Local Mobility Stationary Local Working Medical Professionals Office Working Call-centre Worker Co-located Mobile Working Repair engineers Remote Working Virtual team/ teleworker Remote Remoteness Source: Sorensen 2011

17 Ntwserbus 17 Mobile working of repair work team number of concurrent faults in an electricity distribution network can exceed 1500 during a storm

18 Ntwserbus 18 Case study: Eltel Networks Source: Vartiainen, 2004

19 Ntwserbus 19 Case study: Eltel Networks Source: Vartiainen, 2004

20 Ntwserbus 20 Continuous maintenance - before redesign Source: Vartiainen, 2004

21 Ntwserbus 21 Continuous maintenance after redesign Source: Vartiainen, 2004

22 Urgent fault repairs - before redesign Ntwserbus 22 Source: Vartiainen, 2004

23 Urgent fault repairs after redesign Ntwserbus 23 Source: Vartiainen, 2004

24 Ntwserbus 24 Experiences level of automation regulation personnel commitment customer commitment administrative process usability centralized reporting system capability to manage large amount of data in concurrent faults Source: Vartiainen, 2004

25 Ntwserbus 25 Conclusion Source: Vartiainen, 2004

26 Ntwserbus 26 Industrial Internet The integration of ICT with physical industrial equipment e.g. machinery or vehicles It refers to all of the devices, sensors, and software that enables connectivity between machines Machines use network resources to communicate with remote application infrastructure in order to monitor and control the machine itself or the surrounding environment Internet of Things can be thought of as the vision of what the Industrial Internet will ultimately lead to, wherein the physical world becomes merged with the digital world Important here is the added value that ICT could bring to business process of those machinery industries

27 Case: Ponsse Mobile Fleet Management Ntwserbus 27 tool for real-time monitoring of forest machines centralized managing and monitoring field operations in real time machines are equipped with data transfer and GPS to transmit the data automatically to an Internet-based reporting service possible to check at any time the location or the current situation of the forest machine on the map detailed productivity reports - machine engine working hours, the amount of fuel in the tank, the amount of wood harvested in the active stand and machine productivity and fuel consumption for different drivers

28 Case: Ponsse Mobile Fleet Management Ntwserbus 28 it s possible to foresee the need for spare parts and maintenance organizing the stands becomes easier when the machine drivers themselves can order transportation for the machine to the right place at the right time possible to use the system with mobile devices, user can control your fleet and operations regardless of time and place One of the most significant export product of Finland See related video: