2014

Digital Business
SUMMARY & NOTES FOR GEST-D-482
DAMIEN DRAIME

Table des matires

1.

The digital age in perspective .................................................................................... 3

a) The technology story ................................................................................................ 3
b) The business story....................................................................................................... 4

2.

Process innovation, digitization & replication ........................................................... 6

a) What is a process? .................................................................................................... 6
b) Why and how to redesign a process? ................................................................... 7

3.

A Primer on Enterprise IT ............................................................................................... 9

a) Understanding Information Systems ....................................................................... 9
b) What are Information Systems made of? .............................................................. 9
c) The rise of cross-functional applications .............................................................. 10
d) Then came the WWW ............................................................................................. 11
e) The rise of business processes and the push for modularity .............................. 12
f)

When IT itself gets dematerialized ........................................................................ 13

4.

A Primer on Business Intelligence .............................................................................. 14

5.

Competing on Analytics ............................................................................................ 16

a) What does it mean? ............................................................................................... 16
b) Internal processes.................................................................................................... 16
c) External processes ................................................................................................... 17
d) What does it take to become an analytical competitor?................................ 17

6.

Enterprise architecture as strategy ........................................................................... 18

7.

Implementing IT ........................................................................................................... 19

8.

Strategic management of IT ..................................................................................... 21

a) The CIO perspective ............................................................................................... 21

9.

Enterprise Architecture as a Strategy....................................................................... 24

a) Building an operational model.............................................................................. 24
b) Implement operating model via enterprise architecture ................................. 24
c) Enterprise architecture maturity ............................................................................ 25

10. E-Commerce ............................................................................................................... 26

a) Why is e-Commerce different? ............................................................................. 26
b) Barnes & Noble vs Amazon.................................................................................... 28
11. IT-enabled business models & transformation ........................................................ 29
a) Deconstruction and disintermediating ................................................................ 29
12. IT and Society .............................................................................................................. 30
a) Social and ethical aspects of IT ............................................................................ 30
b) Where did the jobs go? .......................................................................................... 30

13. IT Management Les dfis de la gestion IT ............................................................. 32

1. The digital age in perspective

a) The technology story
ICT is the set of technologies enabling information storage, processing and
transmission.
Now we use computers for all kind of activities: there is, what we call, a digitalization
of the Value Chain. Thus businesses are more and more dependent of IT. But a lot of
companies are not able to align IT with their Business Strategy which can lead to a
deep loss.

TECHNOLOGICAL

TECHNOLOGY
ENABLERS

DRIVERS

- Storage

- Dematerialization:

- Processing

Physical products turn into

information goods and
services

-Transmission

Possession versus access

- Ubiquity:
Mobility (requires tiny
equipment)
Technological invariants of
ICT

Real-time personalization
Everywhere (requires
wireless)
- Multifunctionality:
Ever new applications
Human monopolies are
eroding
- Modularity:

Technological progress in
ICT is exponential in all 3
invariants

Shared platforms (ex;

Dropbox, Google Drive,
etc.)
Innovation even faster

The 4 essential
transformational
capabilities of IT

Transformational
capabilities are
complementary

Technology Enablers
shape the industry and
enable evolutions

b) The business story

IT is most disruptive in information-intensive industries (whether information
intensive products/services, whether information-intensive processes or value
chain). We can thus anticipate business transformation because
dematerialization is likely to happen when both information content of the
product and information intensity of the value chain are high. See Porter and
Millars information intensity matrix:

Legal Services
Education

Fashion
Perishables

What is IT used for in the Value Chain?

IT invades Value Chains in 4 forms: Functional IT, Enterprise IT, Network IT, and
Embedded IT.
Function IT (FIT)

Enterprise IT (EIT)

Productivity and optimization.

IT that assists execution of a discrete
function or task.
Increased experimentation
capacity.
Greater precision/productivity.

Standardization and monitor of work.

IT that integrates multiple functions
by imposing new work structures.
(Re-)Design of business processes.

Network IT (NIT)

Embedded IT (MIT)

Examples:
1) ERP, Consumers Relation
Examples:
Management, Supply Chain
1) Reduce development time of
Management
new products by increasing
2) Provide clear picture of
experimentation
pending orders and
2) The national mail company
inventories
wants to calculate the optimal
3) Harmonize client orders
route of its mailmen to
handling across retail stores
accelerate the delivery
4) An aerospace company
needs to reduce its inventory
costs by integrating its
management across its sites

Communication and collaboration.

IT that integrates multiple functions
without imposing new work
structures.
Facilitating collaboration without
mandating how people should
interact.
Enhancing collective intelligence.

Enhancement of products or
services.
IT that is integrated or merged within
a product.
Adding features and interactivity to
existing products.
Quality control.

Examples:
Examples:
1) Onboard systems in cars
1) Email, instant messaging,
2) Lift security devices
video conferencing
3) Add functionality to a bike for
2) Enable scientists to contribute
bikers to monitor their efforts &
micro expertise to a
performance
technological problem
4) Remotely monitor
3) Create and leverage
performance and status of
communities of practice within
sports cars during race
the firm
5) A bracelet worn by a football
player has to calculate the

4) Psychiatrists need to share

their knowledge of a rare
disease

distance run by the player

during a game

2. Process innovation, digitization & replication

a) What is a process?
A business process is a set of logically related tasks to accomplish a clearly defined
business goal in order to create value through a valuable product or service.
Examples: Evaluating a request for a loan, purchasing a part, hiring an
employee, conducting an advertising campaign.
Key features of business process:
1) BP have clearly defined starting and ending points
For example, Manufacturing is the procurement-to-shipment process.
2) BP are made of steps which are frequently done in sequence, but can be
conducted in parallel
3) BP require and generate a lot of information
4) BP cross functional boundaries
For example, fulfilling a customer order involves a complex set of steps that
requires the close coordination of the sales accounting and manufacturing
functions.
5) BP often cross organizational boundaries
6) BP exhibit a certain performance
7) BP can be a source of competitive advantage if they enable the company to
innovate or to execute better than its rivals
8) BP can affect the performance of a business depending its design and its
coordination
Remarque: For a process to be efficient, information (that it generates) needs to flow
rapidly and reliably within the firm, and even with suppliers, partners and customers.

Function-based versus process-based organization:

A functional business orientation organizes a company along functional lines, such as
sales and production. Silo syndrome
A process orientation means that the company focuses on business processes, such
as order processing or strategic planning.
In each case, the companies optimize their activities, either within the functional units
or for each process. The main difference is that optimizing one functional unit may
harm another function, but optimizing the business processes across organizational
lines helps the whole company.

When a functionally oriented company optimizes its work, each functionally organized
department optimizes its function independently. This means, for example, that sales
maximizes orders received while production may not be able to manufacture what
has been ordered. When companies focus on process, optimization has a different
outcome. Sales and production work together to ensure that the maximum volume of
orders is processed through the system. The result is better performance for the
company as a whole.

Business process modeling is made using modeling tools such as Bonitasoft, etc.

b) Why and how to redesign a process?

Business Process Reengineering is the fundamental rethinking and radical redesign of
business processes to achieve drastic improvements in critical measurements of
performance such as time, cost and quality
We use BPR to solve the following symptoms that harm the industry:
-

Cross-functional, cross-departmental problems;

Too many non-value-adding-steps1;
Too many wait stages;
Sequential instead of parallel tasks;
Too many exceptions;
Some processes have never been measured;
Too many processes result from decisions made by functional units, with little
attention to effectiveness across the entire process Silo Syndrome

Those are reasons why companies decide to redesign their business processes.
Moreover, potential returns to BPR are huge because of digitization and costless
replication of processes and also because we can solve the symptoms above.

But how to implement BPR?

You need to persuade people to embrace the prospect of change through:
1) Building a case for action: Here is where we are and this is why we cant stay
there
2) Having a vision: This is what we, as a company, need to become
But above all, how to identify business processes to redesign?

Bcp dentreprises apportent ici et l des petites modifications leur BP mais sans penser aux
consquences que cela aura dans lensemble. Au final, ces entreprises se retrouvent avec
des processus qui peuvent se rpter plusieurs fois sans rien apporter de nouveaux. Le BP final
nest alors plus toujours optimal, simple et pratique.
1

First, it is important to notice that no company can reengineer all its processes
simultaneously. A company needs to select a process that need to be reengineered
before the other. To select the right one, companies use three criteria:
-

Dysfunction: which processes are in the deepest trouble?

Importance: which processes have the greatest impact on customers?
Feasibility: which processes are the most susceptible to redesign?

Many BPR projects fail because it cannot be planned perfectly and deployed step by
step. But the biggest challenges are to break old routines and to get through
employees resistance. A lot of BPR projects fail because of interference between old
and new practices.
Here are some BPR principles to observe in order to avoid a BPR fail:
-

Organize around outcomes, not around tasks

Have those who use the output of the process perform the process
Link parallel activities instead of integrating their results
Treat geographically-dispersed resources as though they were centralized

IT is a General Purpose Technology, a technology that can affect an entire company

like railroads, steam engine. Value is maximized by complementary innovations. GPT
needs to be in complement with other innovations to create value. For IT,
complementary innovation is organizational (work structures): It is useless to implement
in a company if we do not change the organization/work structures in order to support
IT. Thus we need changes in organizations configurations to maximize the impact of
new IT. IT investments only work if complemented by organizational innovation. There
are four types of organizational complements/changes of EIT:

Workflows
Who does what and when
Decision rights
Who can take decisions within/about
the process

Interdependencies
Who is using/needs the inputs of whom
Data integrity and consistency
Are the data correct and consistent
The new process will increase the
amount of data shared between depts.
But is reliability guaranteed?

EIT will force a significant change in workflows and this will in respond affect the
responsibilities too. Responsibilities will shift from one to the other and thus decision
rights will change too. But people hate when we change their routines but they hate
even more when a BPR changes their decision rights. It is now clear that organizational
changes (because of EIT) will always raise resistance. But the resistance is not
necessarily due to IT change rather due to implicit changes to work structures. In order
to avoid those resistances, change needs to be anticipated, planned and managed.
Moreover, a top-down approach is a must because people will not change their way
of doing by themselves.

3. A Primer on Enterprise IT
a) Understanding Information Systems
Enterprise IT is an IT systems that serve key corporate functions; involve centralized
information shared by many users; are made of one or more databases.
In an EIT workflows are coded in the systems and users are forced to follow the coded
process. Those two elements are the reason why employee dont like EIT (because EIT
tells them how they have to work: resistance). However digitized processes can be
replicated easily by deploying EIT. Moreover EIT enables companies to develop a
system that everybody will use (=standardization). And data centralization enables
monitoring. Those three last points explain why managers do like EIT companies.
Another special point about Enterprise IT is that it often covers entire processes of the
firm and increasingly crosses firm boundaries: inter-organizational systems (no more silo
syndrome).
The key point to keep in mind is that it is all about data and processes. You can have
the best process in the world but if your data are not reliable, it will be useless and vice
versa.

An information system (IS) is a system composed of people and computers that

processes or interprets information. There are 6 components that must come together
in order to have an IS:
-

Hardware, includes the computer itself

Software, refers to computer programs
Networks
Data, facts that are used by programs to produce useful information
Processes
Users

The bulk of the problems often comes from the interaction between users and
systems.

b) What are Information Systems made of?

The data model provides a digital view of the firms activities and resources.
And Information System will need data (for example on products, clients, orders, etc.)
and will have to provide several functions. Functions are stored in procedures which
access the data when needed.
Architecting an information system essentially means organizing its 3 constituting
layers (MVC):
-

Model (Data)
View (Presentation)

Control (Logic)

It is important to separate the three layers because if one day we want to change
something in one layer we need to be sure that it will not affect the other layers.
Data need to be shared by all users or inconsistencies would arise.

There are 3 main EIT architectures:

-

Master-slave: 3 layer form a whole and run on mainframe computer. User

interface also runs on server.
Client-server: User interface runs on light clients while Model and Control run
on server.
3-tier: Each layer runs on a different platform. Model runs on database server,
Control on application server and View runs in different ways on different
types of clients.

The thing to bear in mind is that 3-Tier architectures offer a lot more flexibility.
Advantages: It facilitates maintenance, the same data can be shared by different
users and the same logic can serve different interfaces.

c) The rise of cross-functional applications

As EIT develops, it gradually integrates different functions across departments. Business
processes need to be supported across systems.
Example: Payroll both HR department and Accounting department are
involved. Need to cross department information.
Sophistication of EIT requires cross-application integration.
Sometimes EIT can be out of control. When the scope of EIT processes gets larger and
more and more functions are integrated while data merges across applications, it can
result in a Spaghetti architecture. Spaghetti architectures raise immense barriers to
maintenance and development: Domino effects become unpredictable and
hardcoding becomes ever more difficult. Unless entire replacement of the IT
infrastructure is possible (not realistic: too expensive/complicated), the best option is
to integrate applications through an Enterprise Application Integration (EAI) solution.

What EAI solution offers?

Thanks to EAI, new and cross-systems applications can be built because they will be
built on top of the EAI solution. Moreover, EAI manages cross-application connections,
establishes data correspondences between systems and provides ad-hoc connectors
to each enterprise system.

d) Then came the WWW

At the beginning, corporate websites flourish but only provide static information. The
challenge is how to manage the content to ensure quality and consistency.
Here is the history of the Web Management:

V 1.0

Not efficient because Content Contributors had to always submit their

content to a Webmaster (who was overbooked) in order to publish it on
the corporate website
It take weeks before a content is being published

V 1.1

More and more Content Contributors bypass the Webmaster in order to

publish their content more quickly. But they have to create their own
website
Too messy

V 2.0 =
CMS

Content Management with workflow

Each Content Contributor creates his final version of the content and
submit it to their respective Content Approvers. Once validated by a
Content Approvers, Content can be published on the website.

In Content Management Systems (CMS), workflow and privileges are embedded in the
System. CMS separates content and template and builds pages by applying template
to content. Web server makes pages available to visitors. CMS gradually evolve
toward Enterprise Content Management ECM.

Web server

Websites become increasingly transactional thanks to transactional web applications

which run on dedicated server. But such applications need access to enterprise
systems.

Web portals provide a single access point for all applications/services. Those are
offered through a website. Users may personalize the content and layout of their page
and select the services that are most useful to them.

e) The rise of business processes and the push for modularity

Evolution of EIT and web applications increases need for:
-

Further integration of data and applications

Mutualisation of key software functions. We need interconnections between
the infrastructures: a module may be used several times in different blocs
Shorter development ties and faster implementation of new business
processes and services. We need to be able to react and transform the
infrastructure quickly

EIT evolves toward Service-Oriented Architectures (SOA) where each application

offers a set of ready-to-use services that can be invoked by other applications. Such
services are packaged within APIs (which says how two programs must work
together).
With SOA, EIT becomes as modular as possible: Now EIT is made of software modules
that render specific services. Moreover new business processes can easily be
implemented by assembling pre-programmed services or modules. We can create
different functions with several modules. It is really easy to design new processes if the
structure is already in place. We can rapidly implement new ideas/functions by using
the modules we already have.
IT Architecture: SOA
Data & legacy
systems
EAI
Services
Processes
Interfaces (Web,
intranet, B2B)

The idea to keep in mind is that the evolution in IT architecture is drive by the need to
isolate and hide the complexity of the structure.
Moreover, Business process design is facilitated when:
-

Infrastructure is organized around services (SOA architecture)

Processes can be implemented by assembling services
Processes can be delivered through different interfaces seemingly

f) When IT itself gets dematerialized

Latest trend is to outsource the IT infrastructure (Infrastructure as a Service: IaaS),
platform (Paas) or even software (SaaS) and purchase IT services rather than
equipment and software licenses. That is another IT architecture. It is called Cloud
Computing. Those cloud services are enabled thanks to broadband and shared
platforms.
Cloud Computing means paying for access to a remote system instead of investing in
and maintaining your own.
That is the ultimate case of dematerialization: IT dematerializes itself.
Major benefits of Cloud Computing are:
-

Economies of scale for the provider because he can provide the same service
to multiple companies thanks to shared platforms
Companies using Cloud Computing dont have to pay the implementation
and maintenance costs anymore
Companies using Cloud Computing can now focus on their core businesses

Major pitfalls of Cloud Computing are:

-

Security: loss of control over data

Lack of customization
Further commoditization of IT

4. A Primer on Business Intelligence

Business Intelligence aims at analyzing data to produce exploitable business insights
and inform decisions. But BI systems dont extract data from real databases, they
rather store a copy of all relevant data in large warehouses. The data warehouse
consolidates and standardizes information from different operational databases so
that the information can be used across the enterprise for management analysis.
Major issues of BI are:
-

Analyze so much data takes time and powerful computers are needed: need
to replicate the structure
Sending copies of data to the data warehouse takes time and requires a lot
of resources
Standardization is needed in order to gather same data and analyze them

Here is the BI infrastructure:

Databases keep track of transactions/etc. BI systems extract, transform and load

(ETL) data from operational IT systems into Data Warehouse Data Warehouses find
patterns and insights and extract data into multidimensional cubes Analyze and
report BI: decision to respond to the data and patterns.
Remarque: Thanks to Online Analytical Processing (OLAP), we are able to
analyze data on multiple dimensions where each aspect of information
(example: product, price, region, etc.) represents a different dimension.

There are 3 main categories of analyzes:

Descriptive
Averages, trends,
seasonality, distributions

Parametric
Theory-based modeling
and classical inference

Non-Parametric
Data mining: Discoverydriven techniques to
search for patterns within
data

Statistical and data mining techniques are used to analyze the data in search for
relevant and exploitable insights.
Data mining has four main tasks: Classification, prediction, estimation and clustering.

5. Competing on Analytics
a) What does it mean?
Now we can take better decisions thanks to data. We dont have to take decisions
with your guts-feelings anymore. Indeed, analytics can be a powerful way to
outperform the competition but it need to spread everywhere within an organization.
Analytics is the extensive use of data, statistical and quantitative analysis, predictive
and explanatory models, and fact-based management to drive decisions and
actions.

Competing on analytics is now a necessity because classical sources of differentiation

are more difficult to sustain. Indeed, geographical advantage is irrelevant with
Internet, technology is commoditized, product and service differentiations vanish, etc.
Companies can now only compete on business process performance. This means
execute your business with maximum efficiency, make smartest business decisions
possible.

But to perform a positive analytical competition, some requirements are needed:

-

Analytical competition needs to be align with the strategy of the company

It needs an enterprise-level approach. It needs to be enterprise wide
It needs the senior management commitment because organizational
changes will be huge. It must not be delegated
It needs to have a large scale ambition. Aspiration to achieve large-scale
results

We can use analytics to perform better on intern or extern. Thus Internal and External
Analytics are viable.

b) Internal processes
Examples of Internal Analytics are:
-

Financial Analytics for revenue forecasting and thus anticipate slowdown in

sales
Manufacturing Analytics for quality control and thus identify potential quality
issues

c) External processes
Examples:
-

Identify most profitable customers and most at-risk of switching to competition

using predictive modeling
Establish prices in real time to get highest yield per transaction
Optimize advertising and marketing strategies
Customer Analytics
Supplier Analytics

d) What does it take to become an analytical competitor?

The main elements needed for an organization to take advantage of analytics are
the following ones:
-

Strategy and focus to determine most relevant use of analytics

Transactional systems to generate accurate/relevant/granular data
Processes to get insights and act upon them
People who embrace analytics
Governance to share the data and foster fact-based decision
Software technology to extract and analyze the data

6. Enterprise architecture as strategy

Smart and profitable companies do something differently with their IT. They commit to
a way of operating. They use IT to digitize this commitment. In fast changing world they
managed to create stability by digitizing their core processes and embedding them
into their foundations.
3 critical tasks:
1. Identify core processes
2. Digitize them to better support the strategy
3. Exploit the digitized foundation

7. Implementing IT
The vast majority of IT implementation costs never shows up in statistics of IT
investments.
The bulk of IT implementation costs is due to management, training, organizational
changes, etc.
Important: See notes for Bombardier

There are two types of internal integrations (Operational and Functional). Lets analyze
them in details. But first lets remind that internal integration is an integration within a
firm.
Definition

Internal
Operational
Integration

Internal
Functional
Integration

Integration
of successive
stages within
the primary
process
chain

Integration
of
administrativ
e or support
activities of
the process
chain of a
company

Interdepen
dence
types
Sequential

Pooled

Barriers

-Political
considerations
-Silos too different
and with different
objectives or too
specialized

-Political
considerations
-Silos frame
differences

Integr
ation
effort

High

Low

Potential
benefits
-Greater
manufacturing
productivity
-Greater firm
competitivene
ss
-Lower
production
and inventory
costs
-Reduced
errors
-Improved
coordination
-Products more
adjusted to
market
-Greater
interfunctional
synergy
-Greater new
product
success
-Higher
innovation rate

A company can also chose to do both operational and functional integration. They
are not mutually exclusive.

Organizational transformation projects require clear vision and to be well

communicated to employees. Moreover the vision should provide clear view of future
state of the organization, its goals, processes, and supporting systems. Thus the vision

must be goal-oriented. Vision should strengthen the organizational sense of direction

and improve the decision-making process.
Action plan describes stages required to realize the vision. Actions should be aligned
with vision goals.

To measure the success of an IT integration/implementation, we can look at:

-

System quality: Does the system work? Is the system usable and reliable?
Information quality: Are the data consistent and accurate? Is the data model
clear and standardized?
Usage
User satisfaction
Individual impact
Organizational impact

We need to be sure that the business strategy is aligned with the IT strategy.
The things to bear in mind is that EIT implementations will always create organizational
transformations. Thus global vision is critical and anticipating organizational change is
paramount.

8. Strategic management of IT
a) The CIO perspective
CIO is responsible for IT from a general business perspective. His roles are to:
-

Develop IT vision/architecture
Deploy IT resources and facilitate their use
Maintain control over information resources and data
Develop partnership with users to exploit IT

Responsibilities

Resources

IT staff and skills

Selection:
- Which application does the
organisation need?
-Which solution is best adapted
to these needs?
- How much technology is the
organization able to absord?

Adoption:

IT Infrastructure

IT Contracts

IT Budget

- Deploying the system

-Adapting the organization
- Training the users
Exploitation:
- Maintaining the systems and
data: Continuous development
are needed to keep up with
user needs.
-Ensuring and promoting its
optimal use
-Encourage users to maximize
their use of the systems

Implement an IT system can generate new problems by itself (example: Data

explosion).

One of the challenges for a CIO is to select the right technology without being too
much influenced by emerging technologies and trends on which we do not know if
they are reliable yet. He needs to stay objective. There are also business pressures
because of growing business expectations (more speed, performance, reliability,
etc.). Moreover when selecting a technology a CIO should take into account the
security and the business continuity.

IT can also be outsourced instead of the in-house solution. IT outsourcing will eliminates
a part of the internal IT department by hiring outside vendor to perform some IT
functions. Thanks to IT outsourcing, a company can reduce its costs but also:
-

Avoid investments to handle peak loads

Focus on what is core

Moreover it is harder and harder to keep pace with technology changes and demand
for new IT skill sets.
But IT outsourcing must be done selectively. A company must never outsource
elements of IT that have strategic value to the firm.

When it comes to financing IT, there are two difficulties. First it will be difficult to assess
the total project cost because we may not have the full scope of it. Moreover it is
difficult to assess the support, training, maintenance costs, etc. Second it is difficult to
assess the benefits of the IT project since some benefits may be intangible.
The idea to keep in mind is that it might be difficult to compute a ROI for IT project.
Moreover costs do not vanish when implementation is completed. There will still be the
maintenance, the support and organizational change costs. Adding that to the initial
investment gives you the Total Cost of Ownership.
User-managers must justify IT investments and not IS managers.

When it comes to globalization, there are three ways:

International IT Strategy
Common architecture for
IT
IS management
centralized

Multinational IT Strategy
Highly decentralized with
only financial ties
between subsidiaries and
headquarters
IS management localized

Global IT Strategy
Both high degree of
integration and high
degree of local control
Teamwork is key

One can say that centralization is best because it avoid duplication of development
efforts and resources, it allows standardization and provides organization-wide, longrange focus. But the other will argue that decentralization allows empowerment of
local units, maintains bottom-line perspective and increases responsiveness to local
needs.
But what is clear is that IT vision, strategic planning, R&D, corporate data centers
should always be centralized.

To select the rights technology, CIO can use the strategic Threat/Opportunity Matrix
(see slides 23). He needs to put his company in this matrix but also the competitors. If
the quality of his IT resources is low and the IT value-adding potential is high, his
company needs to react quickly.

A CIO does not control the second phase alone. He needs to work with Business Units
to ensure exploitation of IT infrastructure and new IT Tools by the users.

IT produces benefits only when it comes with organizational change and/or business
innovation Need of top-down approaches.

9. Enterprise Architecture as a Strategy

a) Building an operational model
To choose your operational model you must ask yourself to which extend you want
your process to be standardized on your company. Does every employee need to use
the same IT process? We will whether choose a process standardization or a process
integration.
Process Standardization
Define exactly how a process will be
executed, regardless of who or where
Leads to efficiency and predictability

Process Integration
Harmonize formats and definitions +
share data between or across processes
Leads to internal integration and
superior performance

b) Implement operating model via enterprise architecture

An enterprise architecture is the organizing logic for business processes and IT
infrastructure reflecting the integration and standardization requirements of the
companys operating model. An EA has 4 components:

Core Business processes

Small set of processes defining the
stable set of company-wide capabilities
needed to execute the operating
model and respond to market
opportunities
Key linking & automation technologies
Portals and key customer interfaces

Shared data
The pieces of data that are necessary
to execute the core processes and
integrate them

Key customer groups

Groups of customers that are key to the
firms or BUs profitability

Depending of your operating model, you will design your Enterprise Architecture
differently.

c) Enterprise architecture maturity

There are four stages of architecture maturity that need to be achieved:

Business

Maximise individual business unit or functional

needs

Silos

Standardized
Technology

Optimized

IT efficiencies through technology standardization

and, in most cases, increased centralization of
technology management

Companywide data and process standardization

as appropriate for the operating model

Core

Business
Modularity

Manage and reuse loosely coupled It-enabled

business process components to preserve global
standards while enabling local differences

10.

E-Commerce

a) Why is e-Commerce different?

E-Commerce is just one small part of the e-Business.
E-Business is the conduct of business on the Internet, not only buying and selling but
also linking employees with each other, servicing customers, collaborating with
business partners.
Why so many companies invest in e-Business? Because of 4 main reasons:
1) Increase effectiveness through digitization
a. Reduce transaction costs
b. Reduce inventory costs
c. Enhance internal efficiency (through Intranet solutions)
2) Increase customer loyalty
a. Making it easier for customers to do business
b. Offering customers a self-service capability anytime
3) Increase revenue
a. More sales to existing customers
b. New customers and markets
c. New products and services
4) Online presence will strengthen brand name
Sometimes, it can be difficult to estimate a ROI for an IT project. Rather try to estimate
what you will lost if you dont do it.

There is a trade-off between the richness of your message and how many people you
can reach. But internet is able to break this rule.

Internet allows us to still reach a large audience while still being customized for each
users. Indeed, Internet eliminates geographical and time limitations and extends
beyond industry boundaries.
E-Commerce will deconstruct the way of working within the industry / value chain.

Internet is able to break the block containing the content, context and infrastructure:
unbundling. The infrastructure is no more the core competency. It will no more
differentiate us from the competition. Every site is the same and the content is always
pretty much the same between each specialized sites. Now we can only differentiate
ourselves with the context (= the consumer experience).
Example: Banks can only compete on App nowadays. They compete to offer
the better consumers experience,
There are 3 components of a digital business model:

If you want to be a successful firm you need to be good in the 3 layers. And if you want
to outperform competition, you will need to be excellent in at least one layer.

Mobile Commerce is the buying and selling of goods and services through wireless
hand-held devices such as mobile phones and personal digital assistants. Because
mobile commerce is everywhere and your action is limited, information need to be
specific about what you want tailored for where you are, what you are doing. It
needs to be more focus, short and contextual.

b) Barnes & Noble vs Amazon

See notes

11.

IT-enabled business models & transformation

a) Deconstruction and disintermediating

IT enables new models using technology to design new business models that would
not be possible otherwise such as cross-docking, Apple Pay. Moreover IT enables
transformations using technology to fundamentally transform the way business is done
in a given industry (Home banking, Instagram, Uber). To sum up: IT enables disruptions.
It transforms industries by deconstructing value chains.
IT has also deconstructed and digitized the value chain. Once a succession of
operations, now the deconstructed supply chain has a Physical Flow and Information
Flow and a Payment Flow. This deconstruction of the value chain has enabled the
digitization of Information Flows. The result is often the disintermediation of one or more
intermediaries in the value chain such as resellers and distributors. However,
specialization can increase in specific areas of the value chain such as physical
logistics and transport.
Digitizing the value chain has had 4 main consequences:
Dramatic fall in cost of doing business

Example : distribution of e-journals is

much cheaper than printing and
shipping copies
Dramatic shift in benefits of vertical
integration
IT-mediated collaboration shifts firm
boundaries

Dramatic increase in quality or

convenience of the product, process,
service
Example : Video-on-demand more
convenient than video rental stores
Dramatic increase in scalability (scale
without mass)
Digitized goods or processes are cheap
to replicate/distribute globally

But above all, digitizing the value chain creates new barriers (cost structure and
customer lock-in) and substitution. Those are the two main threats for incumbents.

12.

IT and Society

a) Social and ethical aspects of IT

IT raises ethical, social and political issues such as:
-

Information rights and obligations

What obligations do individuals and organizations have concerning this
information?
Property rights and obligations
How will traditional intellectual property rights to be protected in a
digital society in which tracing and accounting for ownership are
difficult?
Quality of life
What values should be preserved in an information and knowledgebased society?
Political issues
To what extent should government intervene, protect?

Ethics in an information society: Responsibility, accountability (assessing responsibilities

for decisions and actions), liability, due process (ensures laws are applied properly),
integrity (doing the right thing even when no one is watching).
Ethical questions regarding Internet are still difficult to assess because the neutrality of
the web is still in shaping: laws are not so clear about those new questions.

When it comes to the quality of life, we need to maintain boundaries between work
and home. Moreover, there are health risks and increasing racial and social class
cleavages.

But it exists some ethical principles that can guides you to keep a code of ethics:
Golden rule, Descartes rule of change, Kants categorical imperative,

b) Where did the jobs go?

Despite the economic recovery, unemployment rates remain abnormally high.
According to Krugmann, it is because growth is too weak to recreate employment.
But many other theories exist to explain the problem.
According to Rifkin, we are entering a new phase in world history, one in which fewer
and fewer workers will be needed to produce the goods and services for the global
population. More sophisticated software technologies are going to bring civilization
ever closer to a near-workerless world. There are indeed numerous examples of
technological displacement such as ATM, E-Commerce, Automatic check-out at

grocery stores. It is worth noting that digital revolution has created winners and losers.
The wage gap between high- and low- skill workers has increased despite increase in
average level of qualification. We call this the Skill-Biased Technological Change.
High-skilled workers are less affected by innovation that low-skilled workers.
But we can ask ourselves why does the SBTC occur only now? Indeed, job destructions
have always been compensated by job creations in new sectors (for example: jobs in
agriculture have been absorbed by industry and services). But the problem with digital
revolution is that technological progress is faster than institutional adjustment lag.
Moreover digital revolution was preceded by several technological revolutions. Digital
revolution was compensated partly by household debt but the great recession of 2008
created a shock in terms of household indebtedness.
Technological progresses go faster than us. We are much slower to absorb those new
technologies. Moreover the rate of progress is quickly increasing. Now technologies
can do a lot of tasks that were before performed only by human brains. Several human
monopolies have now collapsed. And humans can not catch up with this evolution,
partly because education is lagging behind and organizational change cannot keep
pace.
But what will happen in the future. The Moravecs paradox points out that high-skilled
and very-low-skilled workers are better protected against technological progress. But
medium-skilled workers will suffer more because the relation between automation and
labor is U-shaped: it is easier to automate itinerary planning than truck driving,
accounting than gardening, etc. Indeed, tasks requiring fine motor skills, vision,
advanced pattern recognition and locomotion are harder to automate. Humans are
still better at facial and spatial recognition as well as object handling. However IT
progress makes complex tasks increasingly accessible to machines.
So we will need to adapt organizations to make them robust to technological
evolution and able to seize new opportunities. We also need to educate people to
new technologies.

13.

IT Management Les dfis de la gestion IT

Gestion patrimoniale = La banque Degroof gre les comptes de riches clients.

A quoi sert linformatique la banque Degroof ?

-

Grer les donnes des clients (Customer Relationship Management)

To record financial operations/transactions
Risk Management
Gestion de portefeuilles
Intranet = Day to day work at the bank
Data Warehouse
Back Office
Comptabilit
Pouvoir tre capable de dire aux clients ce quils ont sur leurs comptes en
temps rel, pouvoir retransmettre les sorties et entres dargents et savoir dire
quand cela sest produit.
Documents management : every time a customers sign a document we need
to store it and be able to fin dit when needed

Infrastructure: tous les lments physiques qui font que lIT fonctionne.
Storage is a bulk pat of the IT expense. Buying all the disks to store the data is very
expensive.
On double les datacenters et on a des backups pour pouvoir continuer fonctionner
et ne rien perdre en cas de problmes.

Le dpartement IT est constitu de 3 ples:

-

Project&support : traduit les besoins financiers/business en IT. Cela require de

bien comprendre les notions dIT et de business.
Application Dveloppement.
Systems &Operations : se concentre sur le fait quon utilise bien la bonne
technologie pour ce type de projet IT.

La fonction doprateurs est celle sui contrle au quotidien lactivit de lIT. Il va

essayer de voir sil y a des problmes mergents,

Quels sont les dfis auxquels on fait face lorsquon est responsable dIT dans une
banque ?
-

Gestion des demandes: cela fait rfrence aux attentes des utilisateurs. Il est
important de savoir quelle priorit on donnera pour chaque demande, car
cela peut vite devenir problmatique. En effet si dans une entreprise 1000
personnes souhaitent voir son ide tre ralise par le dpartement IT, il va
devenir difficile de savoir laquelle il serait intressant de raliser et comment les

prioriser. De plus lIT doit pouvoir fournir des documents concernant les
risques, ?aux rgulatrices ?. De plus des volutions techniques sont
obligatoires. En effet, quand un systme dexploitation nest plus jour ou
support par le dveloppeur on est oblig dvoluer et de tout changer. Et
pour couronner le tout, cela doit tre ralis avec un budget dfini et restreint.
Pour pouvoir prioriser les demandes et attentes, on demande un business
plan/case pour savoir ce que lon retirera dun projet IT et savoir combien cela
nous coutera. Mais il est possible que certains projets ne crent pas de valeur,
ce nest pas pour cela quon ne les fera jamais. Par exemple pour des raisons
de scurit il faudra peut-tre dvelopper le risk management pour rester
cohrent avec le strategic alignement.
De plus il faut une implication du top management pour faire face ce dfi.
Centralisation >< dcentralisation : Vu que lIT est dj en retard (on attend
toujours que lIT dlivre ce quon attend mais a narrive pas toujours trs vite),
alors on dcide de le faire nous-mme localement (=dcentralisation).
Bien que la dcentralisation ait ses avantages (plus de rapidit, proximit de
lutilisateur, expertise), elle a aussi des dsavantages (gouvernance,
intgration, scurit, redondance).
Cycles technologiques : Les cycles sont de plus en plus courts et il existe de plus
en plus de technologies distinctes. On doit pourvoir sadapter rapidement mais
si on sadapte pour les iPhones et puis aprs plus personne nen veut et change
de technologie pour les iWatch. Ds lors avant dinvestir dans un
projet/sadapter, il faut bien estimer les projets et leurs rentabilits. Pour savoir si
un projet est viable, il faut se poser les bonnes questions : est-ce quil y a un
besoin pour cela ? etc. et savoir si cela est en accord avec les business
requirements. Il ne faut pas se laisser aller des effets de modes. De plus il faut
prendre tous les couts ; le temps dapprentissage pour chaque apprentisage,
les licences, la maintenance, Total Cost of Ownership
On doit pouvoir convertir les documents lorsque la version dune application
change pour tre sr que le document sera toujours exploitable dans la
nouvelle version. De plus ces cycles sont rapides donc peine fini la migration
que la nouvelle version fait surface.
Gestion de la complexit : Implmenter un nouveau IT system peut crer plus
de complexit car cela peut avoir des impacts dans dautres dpartements.
Ajouter des nouveaux lments rend toute la structure plus complexe. Il y a
donc une ncessit dune intgration intelligente et une ncessit de
rflexion avant de rajouter des nouveaux systmes. Il faut galement
standardiser les donnes.
Supplier management : Il y a de nombreux fournisseurs et donc ils ont peu de
pouvoir de ngociation. Mais ce nest pas toujours possible car dans certains
domaines, les fournisseurs sont concentrs sous forme doligopoles. Il est alors
impossible de ngocier avec eux. Il faut alors challenger tous ces comptiteurs
et les mettre en comptition si possible pour obtenir de meilleurs prix et services.
Cloud : Les avantages du cloud sont nombreux (dlgation de la complexit,
rapidit de mise en uvre, conomies dchelle, etc.), tout comme ses
dsavantages (localisation des donnes, services standards, question de la
responsabilit, etc.). Ce quil faut retenir cest que lorsquon a commenc
utiliser le Cloud, il est difficile de sen passer et de retourner en arrire (=lock-in).

Gestion des cots : IT = Poste de budget le plus important (hors personnel). Ainsi
investir dans lIT peut permettre dpargner beaucoup dargents. Pour garder
les cots sous contrle on pensera notamment limiter la complexit et
standardiser, ngocier et mettre en concurrence, outsourcer intelligemment,
exploiter les synergies internes,
Il y a donc l une ncessit de mettre en place une stratgie dinvestissement
IT.
Scurit : la scurit est galement une proccupation omniprsente et
multiforme. Trade off : si on laisse laccs internet aux employs mais on risque
alors des attaques via internet Zero risk : remove internet but nobody want it

Q&A:
IT can be a differentiation tool between banks but only for customers management.
IT can thus provide a competitive advantage! Tools/services related to Clients
relationships are thus strategic.
Open-source software yes but only if there is support. We need a solution when there
is a problem with a critical software within an hour. Commercial software has support
thats why they use it