sfi machine age to information age

8/8/2019 SFI Machine Age to Information Age

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Paradigm Shift from

Machine Age to

Information Age

Strategy,Formulation & Implementation

Prepared By: Group 3 & Group 4

33130 Mridula Muraleedharan

33135 Modak Sarda

33137 Varun Sharda

33144 Varenya Vadlamani

33150 Shruti Dadu

33152 Akshay Fomra

33154 Aashish Gupta

33155 Manish Jain

33157 Felix Jesudass

33160 Sanket Karmarkar

33169 Nader Piani

33170 Peush Pillai


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Evolution from Machine Age to Information Age

Civilization has completed two life-changing shifts from machine to information age and

so has the world of business. Consumers no longer live or react the way they did in the

machine age. They have different lifestyles, tastes , preferences and better standards ofliving. Considering the external scenario, technology has risen and strengthened manifolds

and everlasting competition has completely changed the markets.

Most of us are familiar with the turmoil of the Industrial Revolution. It took generations

for man to come to terms with the changes brought about by the industrial revolution.

Man went through the turmoil of that revolution and finally came to terms with the

change.People who went through it were not aware that they were going through a

transition that was called the industrial revolution. It was only later that we realized as

hindsight that the pain they went through was due to the turmoil of the transition to the

industrial era.

Similarly, we are all going through the pain and turmoil of the information revolution right

now. Most of us may not be even aware of it.

Turmoil of the Information revolution?, you may therefore ask. What turmoil? The

computerization scenario looks very euphoric. Computers are proliferating business

organizations and entering every walk of our life. So where is the turmoil?

Just as man did not realize he was going through the turmoil of the industrial revolution

till it was all over, we are not aware of the turmoil we are passing through. If we look

more closely at what is happening in most of the companies trying to automate processes

using computers, it will be evident that deep inside, this technology is still foreign to us.Man is still not at ease with this device. He is perplexed, foxed, fidgety and sometimes

angry when dealing with this animal. This leads to considerable friction, frustration and

conflicts between departments as companies go through the transition to computerized

processes.

In this insightful article we will try to see the change from business and str ategy point of

view.

Adapting to the new driver

News flash to Information Age businesses:Youre not in the drivers seat anymore. There

has beena drastic power shift that will either

make you or break you, depending on how well

you adapt.Unlike the past, you cant steer

people where you want them to go using

interruptive, intrusivemarketing and sales

tactics. Now, your job is to build the car (i.e.

The rules have changed and

consumers now hold all the power.They can screen the calls, sign up

for the Do Not Call Registry, edit

out commercials with DVRs,

unsubscribe from emails and toss

mailers unopened.

-Scott S. Smith

PARADIGM SHIFT FROM MACHINE AGE TO INFORMATION AGE


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provide the products and services)that your customers want to drive. If you grab the

steering wheel and force the direction, theyllhop out and leave you in the dust.Its

becoming increasingly difficult to catch the eyes of the consumer. Once you have them

youhave to keep them. Technology has transformed relationships between businesses

and customers.Now, your job isnt just to transact sales. Your job is to cultivate trust,

build community, andinteract with your customers on an ongoing basis.

What is the new power?

In the Machine Age, money and size were power. The 20th Century business model was

based on injecting large amounts of cash into advertising campaigns that promoted and

sold products to cold contacts. Traditional advertising models were based on buying

eyeballsin other words, the goal was to interrupt consumers.

Newspapers produced much of their revenue through ad space. Television, if you had the

budget for it, was also a proven way toward success, given the right products and services.

Mass mailings, advertising in magazines, tradeshows and events, and telemarketing werealso effective. Reaching the masses, or quantity, was the goal, rather than quality

relationships. Mass production, rather than customization, was the methodology.In the

Information Age, relevant, engaging information is power.

A small business that provides relevant information along with incredible products and

services to solve the problems of its customers wields more power than the large

corporation that throws big bucks into interruptive ad cam paigns that dont speak

tocustomer desires. The market has been transformed and it demands a new kind of

business, one that markets and communicates differently.


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Who has the power?

Not only has power itself changed, but also who controls it has shifted. In the past, it was

business that wielded power to achieve its ends. Now, the power lies with customers. It is

customers who dictate the creation and disposition of information. It is customers whodetermine not only what things get produced, but also how they get produced (note the

rise in social-oriented and environmentally friendly businesses).Customers are firmly

planted on the new throne; businesses are their servants. Those that understand and

adapt will survive and thrive. Those who dont will disapp ear, leaving only a memory.

Why the power shift?

Why has the proliferation of information changed everything? Because it delivers choiceto customers and makes business transparent. Furthermore, the new technologies give

consumers the ability to enjoy media content without ads.

Choice

The web is to blame for all this chaotic change. Innovation in communication has given

consumers a virtually limitless menu of information and choice. They can get what they


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want, when they want it, how they want it and from

whom they want it. Choice is killing the old business

model. Telemarketing has died. Newspapers and TV

are less effective and more expensive for their return

on investment. Mass mailings are tossed by

consumers who dont even open them. Consumers

dont have to rely on tradeshows and events for their basic information. They go to the

web. Product and customer reviews and consumer reports/alerts make it increasingly

difficult to secure loyalty from consumers. You could hard-sell a car buyer twenty years

ago when you had them on the lot, but today, buyers explore hundreds of cars with their

fingers in the comfort of their own home, before ever setting foot on a car lot. Consumers

are swimming in choice, theyre fully aware of it, and they exploit it to the fullest. Which

product are you inclined to buythe one that is shoved in your face with a one -time-must

buy- now special offer, or the product that you can research on the Internet and choose to

buy from thirty providers?

Transparency

Customers want to know exactly whom theyre dealing with. They dont want hype,

posturing, and sales devices. They want to do business with the authentic youthe you

that cannot be taught or faked.In the digital age, there is nowhere to hide. Every

interaction a customer has with your company leaves a mark, an impression, a brand that

they will most likely share. This experience may or may not be the brand that you are

promoting through your various marketing initiatives. This has always been the case. But

now, the power is in the hands of the customer more so than ever before. You cant hide

your mistakes when they spread like a virus through word-of-mouth, email, and blogging

networks. You cant cover up incompetence under thick layers of advertising make-up.

You cant run from negative publicity. The Information Age has stripped you naked and

left you exposed, flaws and all. You cant bury customer feedbackall you can do is

manage how you respond to it. Search engines keep a record for all to read of your

business practices. If you leave a trail of destruction, the crumbs are not hard to find.

Customers are firmly

planted on the new throne;

businesses are their

servants.


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Hunters Vs Farmers

Business hunters are nomadicthey track down their prey, make the sale, then move

on. They have superficial relationships with their customers at best. Their focus is on what

they want to take from customers, not on what they have to give. They have to close hard

and fast or they starve. At best, hunters sell good products with the hope that the

customer will buy more, simply because of the product merits. At worst, they employ one

of two approaches, if not both: either they attack viciously through pressure, or they

sneak up and pounce through deceit. Business farmers, on the other hand, settle down

and cultivate long-term relationships. They understand that one seed of trust planted in

the heart of a customer will result in an abundant, ongoing harvest of profit. Theyunderstand the natural law that giving value first is what results in receiving profit. Where

hunters see dollar signs, farmers see relationships. Where hunters are hard and closed,

farmers are soft and open. Where hunters manipulate and try to hide flaws, farmers are

authentic and down-to-earth. Customers are wary around hunters, yet they feel secure

and trusting with farmers. If you want to survive Information Age business, you must

dispense with the short-term approach of making a killing. Instead, sow seeds of trust

and goodwill through interaction to reap a long -term harvest.


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Level of Engagement

Machine Age Information Age

Various levels of loyalty- move to where the

most value for the least price was located

Extreme loyalty become ravings fan and

evangelists for the cause

Willing to lose some- cost of doing business All efforts go to help customers succeed

Client as long as the value and price are

right

Client for life

Not focussed on the needs of the client Meet clients at their level

Short term experience Long term relationship with company and

brand

The primary goal of the old, transactional model was to make a profit by advertising to a

cold market. The primary goals of building community are to facilitate interactivity by

capturing data, cultivating trust, and providing continuous value to keep cust omers


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en

ed

ofit beco

es

n

tu

l b poduct of this p

ocess

ou can

t affod to be

tansactional an lon

er. You

e got to cling to indi idual custo

ers as if your life

depended on it

as indeed it does. Getting the attention of potential custo

ers is the

most expensi e partofmarketing. Once youhave it you can

t affordtolose it. You must

institute systems andprocessesthat capture customersthen continually offer them value,

keeping them engagedon a constantbasis. Customers want a sense ofbelonging. Theyll

be loyalto you aslong as youre relevant andserviceable tothem. Ifnot, they willquietly

move on.

Profit Engine ofthe New InformationAge

Ec c Engine

(P it Cente s)


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Scientific Management Theories of Machine Age

Taylorism

Frederick Taylor and Scientific Management

In 1911, Frederick Winslow Taylor published his work, The Principles of Scientific

Management, in which he described how the application of the scientific method to the

management of workers greatly could improve productivity. Scientific management

methods called for optimizing the way that tasks were performed and simplifying the jobs

enough so that workers could be trained to perform their specialized sequence of motions

in the one "best" way.

Prior to scientific management, work was performed by skilled craftsmen who had

learned their jobs in lengthy apprenticeships. They made their own decisions about howtheir job was to be performed. Scientific management took away much of this autonomy

and converted skilled crafts into a series of simplified jobs that could be performed by

unskilled workers who easily could be trained for the tasks.

Taylor became interested in improving worker productivity early in his career when he

observed gross inefficiencies during his contact with steel workers.

Taylor's 4 Principles of Scientific Management

After years of various experiments to determine optimal work methods, Taylor proposed

the following four principles of scientific management:

1. Replace rule-of-thumb work methods with methods based on a scientific study ofthe tasks.

2. Scientifically select, train, and develop each worker rather than passively leavingthem to train themselves.

3. Cooperate with the workers to ensure that the scientifically developed methodsare being followed.

4. Divide work nearly equally between managers and workers, so that the managersapply scientific management principles to planning the work and the workers

actually perform the tasks.

These principles were implemented in many factories, often increasing productivity by a

factor of three or more. Henry Ford applied Taylor's principles in his automobile factories,

and families even began to perform their household tasks based on the results of time and

motion studies.


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Drawbacks of Scientific Management

While scientific management principles improved productivity and had a substantial

impact on industry, they also increased the monotony of work. The core job dimensions of

skill variety, task identity, task significance, autonomy, and feedback all were missing

from the picture of scientific management.

While in many cases the new ways of working were accepted by the workers, in some

cases they were not. The use of stopwatches often was a protested issue and led to a

strike at one factory where "Taylorism" was being tested. Complaints that Taylorism was

dehumanizing led to an investigation by the United States Congress. Despite its

controversy, scientific management changed the way that work was done, and forms of it

continue to be used today.

Fayolism

While American manufacturing processes were being revolutionised by Frederick Winslow

Taylor, Frances were being overturned by Fayolism, a system devised by an engineer,

Henri Fayol (1841-1925), who became something of a hero for rescuing a troubled mining

company and turning it into one of Frances most successful businesses.

Though he was born in Istanbul, Fayol spent all his working life as a manager at

Compagnie de Commentry-Fourchambeau-Decazeville, a big French mining conglomerate.

For the last 30 years of his working life (18881918) he was managing director of the

company. He is the founding father of what has become known as the administration

school of management. At its heart was Fayols five-point breakdown of managerial

responsibility into planning, organizing, coordinating, commanding and controlling, adivision which has pervaded much management thinking since.

Command and control became the slogan for the authoritative style of management

fashionable through the 1950s and 1960s, though Fayols method was more nuanced than

this. His commanding, for instance, included energising employees, while controlling

included adapting the overall plan to changing circumstances.

Fayol was the first to identify the four function s of management: planning, organizing,

directing, and controlling, as known today.

His original definition of management comprised of five elements: forecast & plan,

organise, command, coordinate, and control.

His 14 principles are:

1) Division of work - specialisation provides the individual to build up experience,continuous improvement in skills, and thereby be more productive.


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2) Authority - the right to issue commands, along with which must go thebalanced responsibility for its function

3) Discipline - which is two-sided, for employees only obey orders if managementplay their part by providing good leadership.

4) Unity of Command - each worker should have only one boss with no otherconflicting lines of command.

5) Unity of direction - people engaged in the same kind of activities must have thesame objectives in a single plan

6) Subordination of individual interest to general interest - management must seethat the goals of the firms are always paramount.

7) Remuneration - payment is an important motivator although by analysing anumber of possibilities, Fayol points out that there is no such thing as a perfect

system

8) Centralisation or decentralisation - this is a matter of degree depending on thecondition of the business and the quality of its personnel

9) Scalar chain (line of Authority) - a hierarchy is necessary for unity of directionbut lateral communication is also fundamental as long as superiors know that

such communication is taking place.

10)Order- both material order and social order are necessary. The formerminimises lost time and useless handling of materials. The latter is achieved

through organisation and selection.

11)Equity - in running a business a 'combination of kindliness and justice' isneeded in treating employees if equity is to be achieved.

12)Stability of tenure - this is essential due to the time and expense involved intraining good management.

13)Initiative - allowing all personnel to show their initiative in some way is asource of strength for the organisation even though it may well involve a

sacrifice of 'personal vanity' on the part of many managers

14)Esprit de corps - management must foster the morale of its employees. Hefurther suggests that, "real talent is needed to coordinate effort, encouragekeenness, use each person's abilities, and reward each one's merit without

arousing possible jealousies and disturbing harmonious relations." Harmony

and pulling together among personnel.


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Parkinsons Law

Parkinson's Law is the adage first articulated by Cyril Northcote Parkinson as the first

sentence of a humorous essay published in The Economist in 1955.

His basic premise -- "work expands to fill the time available" -- became a very powerful

tool in understanding the never -ending needs and wants of human beings.

Prof. C. Northcote Parkinson authored about sixty books, and the most popular was the

Parkinson's Law: The Pursuit of Progress (1957) which became a bestseller upon its

publication. He first presented his essay in the University of Singapore in 1955, and

received novelty as a satirical critique on how government bureaucracies get to bloat over

time. His book became one of the foundational texts in public administration,

management theory, human behavior and organizational management among others. The

Parkinson's Law evolved into other eponymous laws, which are based on the first premise

(also known as the First Law):

Parkinson's Law: Work expands or contracts in order to fill the time available.

The simple definition: "work expands to fill the time available" does not fully explore the

concerns expressed in C. Northcote Parkinson's Book. An example is provided of two

people writing a postcard. An elderly retired person may consume an entire day for this

task: carefully choosing the card, contemplating the word choice, followed by a long,

leisurely walk to the post office. A busy person will pick the first appropriate card, write it

and mail it on the way home.

Many other examples were given by Parkinson. One of his most alarming relates tobureaucracies. For example, most of the population assumes that a growing civil service

reflects a growing workload. Parkinson believes otherwise and provides this argument:

Civil servant A is overworked (this may be illusory or the result of reaching their level of

incompetence). The worker has only a few options; he may leave, share his work with

colleagues at the same level or appoint two juniors. It is important to note that he has to

appoint two juniors. A single subordinate would very quickly assume almost equal status

with A in their own minds as well as others and would therefore be a rival. This is also the

reason against sharing the work with someone on the same level. So now, assuming A

didn't leave, we have A and two subordinates B and C. Very soon either B or C will

complain about being overworked and two more subordinates to them will be appointed.Another two will have to be appointed to keep the other original subordinate happy.

Seven are now doing the work of one. All will be busy shuffling paperwork, holding

meetings, and passing e-mails amongst themselves, correcting grammar, passing decisions

down the line and back up again, and plotting or defending themselves from coworker

backstabbing. Person A is now reduced to management, something he may not be happy

with, in fact he may have had his level of incompetence enforced on him.


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Mintzbergs Model

Traditionally, the relationship between strategy formulation, strategy implementation,

and organizational performance has been depicted. In this model, organizations begin

strategy formulation by carefully specifying their mission, goals, and objectives, and then

they engage in SWOTanalysis to choose appropriate strategies. Henry Mintzberg suggests

that the traditional way of thinking about strategy implementation focuses only on

deliberate strategies. Minztberg claims that some organizations begin implementing

strategies before they clearly articulate mission, goals, or objectives. In this case strategy

implementation actually precedes strategy formulation.

Minztberg calls strategies that unfold in this way emergent strategies. Implementation of

emergent strategies involves the allocation of resources even though an organization has

not explicitly chosen its strategies. Most organizations make use of both deliberate and

emergent strategies. Whether deliberate or emergent, however, a strategy has little

effect on an organization's performance until it is implemented.

According to Mintzberg organisations are formed of five main parts:

Operating core: Those who perform the basic work related directly to the production of

products and services

Strategic apex :Charged with ensuring that the organisation serve its mission in an

effective way, and also that it serve the needs of those people who control or otherwise

have power over the organisation

Middle line managers :Form a chain joining the strategic apex to the operating core by theuse of delegated formal authority

Technostructure :The analysts who serve the organisation by affecting the work of others.

They may design it, plan it, change it, or train the people who do it, but they do not do it

themselves

Support staff :Composed of specialised units that exist to provide support to the

organisation outside the operating work flow


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Mi

tz

er

Modelon ManagerialRole

Mint berg's empirical researchinvolvedobserving and analysing the activitiesofthe CEOs

offive private andsemi-public organisations. Previous managementbehaviour studies

had concentratedonteam andsubordinate behaviour or organisationalstructure rather

thanonthe day-to-day reality ofmanagerialbehaviour.

Todescribe the work life ofa CEO, Mint berg firstidentifiedsix characteristicsofthejob:

1. Managersprocesslarge, open-ended workloadsunder tighttime pressure- amanager'sjobisnever done.

2. Managerial activities are relatively shortinduration, varied andfragmented andoftenself-initiated.3. CEOsprefer action and actiondriven activities anddislike mail andpaperwork.

4. They prefer verbal communicationthrough meetings andphone conversations.5. They maintain relationshipsprimarily withtheir subordinates and externalparties

andleast withtheir superiors.

6. Their involvementinthe executionofthe work islimited althoughthey initiatemany ofthe decisions.

Mint

berg's study on the 'nature ofmanagerial work' exposed many managerial myths

requiring change such as replacing the aura ofreflective strategists carefully planning their

firm'snext move withone of fallible humans who are continuously interrupted. Indeed,

half of the managerial activities studied lasted less than nine minutes. Mint berg also

foundthat althoughindividual capabilitiesinfluence the implementationofa role, itisthe

organisationthatdeterminesthe needfor a particular role, addressing the commonbelief

that it predominantly a manager's skill set that determines success. Effective managers

develop protocols for action given their job description and personal preference, and

matchthese withthe situation athand.


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Value System Redesign and Business Process Re-Engineering

Business process re-engineering (BPR) is a methodologythat originates from implementing

enhanced informationtechnology to streamline business performance. Not only can the

efficiency of existing business processesbe improved, but also have entirely new business

processes and even entirely new business come into reach through informationtechnology. Thus, BPR hasbecome a major organizational and strategic challenge. Here we

will address the questions- how enterprises can benefit and how they can create

valuefrom the emerging information society by enhanced BPR. For this purpose we will

set the scene by describing thecompetitive background. We will then focus on the

spanningof boundaries, synergy among management functions and the idea of platforms

as three important implicationsof the process concept. Value System Redesign (VSR)

ispresented as a methodology that builds on theseimplications of the process concept and

provides systematicalsupport to gain competitive advantage new inbusiness

opportunities. We will present VSR as an approachthat is under development in the

TELEflow project.

A Competitive Scenario

Competition in the information age will no longer take place among single companies, but

among clusters of companies that come together to exploit the value of a business

opportunity. We call such clusters Value Systems (VS) and understand that VS are

organized actions and interactions which bring together processes from different

companies, different sites, suppliers, OEMs, distributors, service providers, etc. that co -

operate to provide the customer service . Most popular examples of this kind of co-

operations are Nike or Diesel

With the emerging information society, co-operation on a global scale can be expected to

become more intense. This might turn into a competitive advantage for large

multinationals that already today provide the organizational structure of global presence.

To share the benefits of the information society, it is therefore often necessary for them

to engage in co-operative strategies to achieve global presence. As smaller companies lack

the power of large multinationals, they have to seize the opportunity to substantially

improve their competitiveness by creating, leadingand sharing win-win constellations

with their partners. This in turn requires advanced management competence,or at least

the broadening of the domain of interest for managers. They have to leave their turf and

actively reengineer inter-company processes. The link between the use of information

technology and the hereby possible improvement of business performance have been

categorized in a range from efficiency gains in single functions to the strategic definition of

new businesses. Generally speaking, the impact on business performance is predicted to

increase with the degree of networking information technology from standalone

computers to worldwide networks.

Processes in Business Innovation

'Don't automate, obliterate' is the motto that Hammer gave to BPR to point out that

business processesshould be designed to create customer value and to free BPR from


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constraints of the organization in place. And indeed, for any business opportunity a

'natural' business process can be imagined, which only consists of the activities that are

vital to create value. As in the case of the Internet bookshop amazon.com, this can lead to

completely new ways to work, here for example without physical bookshops. This

innovation obviously requires two things. First, the vision of how to do business must not

be restricted by existing organizational boundaries and second, in order to work, the

business design must cover all necessary activities, regardless of the supplying firm. The

business process concept meets both requirements, because processes are independent

of organizational boundaries and processes can be checked for consistency in the creation

of any given product or service.

Processes Effect Synergies between Workflow, Logistics, and ICT

Processes are coordinated activities or tasks, which are linked thro ugh different types of

flows . A coordinatedprocess can be perceived as a system of at least five types of flows,

the material flow, the formal information or dataflow, the workflow and the informal

information flow. In today's hierarchical organizations highly specialized management

functions typically take care of systematic coordination for each of the flows, and as a

result mostly operate their management systems independently. In that manner, material

flow is managed by the logistics department, workflow by the organizational development

department and the formal information flow by the ITdepartment.However, when

changes are required to serve a new market opportunity with a different organization,

additional coordination between the different departments cannot be avoided. As long as

changes are not numerous this does not create difficulties. However, when change

becomes frequent, which is the case for exploiting short-term business opportunities the

co-ordination between isolated functional departments leads to an increase in total

complexity. Reduced complexity can in such situations be achieved through total

management systems aiming at totally optimized coordination of all flows thus creating

synergy.

'Platforms' for Business Processes

Today much work in BPR has to be dedicated to the implementation of operative systems

that ensure seamless flows of material, information and work. Because many of these

investments are highly process specific, they have to be replaced for re -engineered

processes. That limits the flexibility to change processes. A trend is however conceivable

towards the establishment of more process independent infrastructures as platforms,

which would release process innovation from investments and thus allow for more

flexibility. The Internet, for example, is rapidly emerging as a globally accessible network,

which can be expected to replace much of the more process specific EDI implementation.Examples from logistics show that networks of hubs and transportation platforms are

designed by major logistics providers like UPS, Fed-Ex, or Danzas, which allow free routing

of goods and replace point-to-point transportation. Technical constraints, of course do

not immediately and totally disappear, however the 'breathing space' for business value

driven re-design of processes can be expected to increase.


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Value System Redesign

To approach each business opportunity with adapted business processes requires

continuous restructuring (Figure 1). Indeed, value system redesign is based on the

Schumpeterian assumption that sustainable competitive advantage can only be achieved

with organizational agility to exploit change. In other words, the source of value changes

for dynamic competition. In mass production value has been added to raw material in

form of labour when it wastransformed into products. Avoiding the waste of labo ur and

thus creating efficiency was the approach to increase the value added. Under the changing

conditions of the information society and its global markets, less andless value stems from

the manufacturing of physical products. Instead, services and knowledge that satisfy the

needs of a short-term business opportunity 'on demand' become important sources to

create value.

Figure 1 : The Essence of Value System Redesign is Perpetual restructuring

10 Products and Services where Information Technology is fast replacing

traditional methods

1. Bank Tellers: The proliferation of online banking means that the brick and mortarbank is soon on its way to fossilization and a place in a museum. If the Automated

Transaction Machine (ATM) had not already given the personal teller a clear signal

that he or she was no longer an entirely necessary service, the now ubiquitous

online banking services offered by all major and minor banks across the nation will

certainly spell the end for redundant tellers.


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2. Paper is resource that has cost the earth heavily when it comes to carbon sinkssuch as the South American rainforest and soil stabilizers such as the evergreen

forests of the northwest United States. So it is with a happy countenance that we

predict the redundancy of paper within the next decade or so, as electronic

documents take over the niche formerly filled by blank sheets.

3. Insurance Agents: Door to door insurance agents, thankfully, will soon become adistant past memory, as more and more insurance companies realize the

advantages of peddling their insurance packages online and making themselves

available to customers actually seeking their services for a fraction of the cost of

face to face solicitation. In this process, saving much of the paper based

transaction involved.

4. Travel Agents: Fewer and fewer travel consumers are going to brick and mortartravel agents as the majority of travel plans are being made online. Travel agents

will still operate, but their range of service will be greatly expanded as fewer and

wider geographic barriers will exist. Whats more, efficiency will be greatly

enhanced, as agents will no longer wait for customers to come to the agencylocation, but will serve a much larger online market.

5. Real Estate Agents: Buying and selling homes and property has become an almostentirely online experience. From perusing the real estate news to scanning lists of

available for sale homes to the communication between agents and clients, the

process is rarely completed on a face to face level. Moreover, real estat e agents

are becoming redundant service, as sellers are able to get in touch with buyers

directly and cut out the expense of a flesh and blood agent.

6. Music Stores: Virgin Records and HMV will very shortly be closing their doors inmany locations as the demand for brick and mortar music stores decreases to

nothing and more and more of the total percentage of music sales occurs online. I -

Tunes has already paved the way for music to be distributed entirely online and, in

doing so, cutting out large amounts of overhead cost while not passing that saving

on to the consumer who seems happy to continue paying the same rate online as

he or she would in a conventional music store.

7. Cable Television: With cable consumers less and less satisfied with the rates andpackages available through conventional cable providers, and with digital and

satellite services often outside an average consumers budget, online television will

be become ever more prevalent as the millennium progresses. For instance, for

fifty dollars, a consumer can usually purchase twenty eight channels. Some of

those channels broadcast the same content, sometimes at the same time, whilealmost eighty per cent of the content will have no interest to the consumer

whatsoever. It seems only logical that a pay per channel or even per program

service online would attract a substantial proportion of the television

entertainment dollar.

8. Movie Theatres: Movie theatres across the country are haemorrhaging money asfewer and fewer consumers choose the traditional venu es of entertainment and


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their attention is ever increasingly split between film, television, music, and other

forms of entertainment. As a result, Hollywood and other worldwide film

production and distribution centres will have to explore new routes to get their

products to the consumer. For films, the obvious route is online distribution.

Movies, both released and unreleased are already widely illegally distributed

online, so it only makes good business sense to make clean and easy to work down

loadable copies of films available online to compete with bootleggers and provide

a new alternative revenue stream. Like music, similar fees could be charged for

downloads as for more costly distribution methods such as theatres and stores.

9. AM/FM Radio: The AM and FM channels are quickly being replaced by satelliteradio and by live streaming over the internet. Live streaming in particular is a

virtual twin to a on-air broadcast, except the signal quality of live streaming is

easier to control and can be received anywhere with the proper connection.

10.Ticket Agents: High street ticket agents are a thing of the past now that theinternet has revolutionized the way we buy tickets. In years to come there will be

no high street ticket agents what-so-ever, all tickets will be purchased on theinternet with ease and without the hassle of all that queuing malarkey.

Dell and Cloud Computing

Dell is one of the most trustworthy names in the field of personal computing.When a

company such as this, has begun moving towards an IT centric technological service, it

shows the importance of the information age when compared to machines.

Cloud computing is Internet-based computing, whereby shared servers provide resources,

software, and data to computers and other devices on demand, as with the electricity

grid. Cloud computing is a natural evolution of the widespread adoptionofvirtualization, service-oriented architecture and utility computing. Details are

abstracted from consumers, who no longer have need for expertise in, or control over, the

technology infrastructure "in the cloud" that supports them.

When Dell scooped up IT services giant Perot Systems for $3.9 billion last year, many

assumed the deal was all about IT outsourcing.Perot does know how to outsource. But

one of its most important contributions to Dells big services business these days is in the

cloud.

But Perot does have some very specific cloud capabilities that are making Dell Services

customers more efficient and competitive capabilities that range from moreevolutionary virtualization services that help customers create their own so -called

"private clouds," to more revolutionary, "-as-a-Service" models standardized offers

that are completely hosted and managed from a Dell data centre and consumed on a per -

month, per-unit basis.

Before the acquisition, "Dell had the hardware: servers, storage, networking and

desktops. It also had great consulting and deployment capabilities. It did a great job

helping customers virtualize any kind of infrastructure," Packer explains. "Perot made


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those existing services deeper, and provided additional breadth by helping customers

change their applications to fully take advantage of virtualized environments, as well as

hosting and managing those environments or providing all these bundled together into a

comprehensive solution." Perot provides services for any vendors products, further

expanding the Dell capabilities.

Some companies are still resistant to putting mission-critical or production applications in

the cloud. Executives worry about security; whether theyll really achieve cost savings by

moving to the cloud; and whether theyll be forced into a standardized menu of options,

instead of having all the flexibility of customizing their IT as they long have done. Thats

why many companies are taking baby steps into cloud computing, typically by

experimenting with their test-and-development environments before moving to

production systems, Packer says.

But he stresses that Dell does have customers trusting the cloud with core applications. In

addition, Dell offers cloud services on a continuum: not all companies need to outsource

to an offsite "public cloud." They might design a more modest private cloud for certain

applications, or even create a hybrid setup through which applications are run in their

buildings, on their servers, but managed remotely. In that scenario, "they dont have to

have a single person on their staffs who knows how to run a cloud," Packer says. "But the

actual infrastructure is sitting in their facility. "

Dell also provides meta-cloud environments that combine all these scenarios with other

public-cloud offers to create a more comprehensive solution.

Dell executives see the cloud as something most companies will eventually come to

embrace in some form. "Everyones on a journey to the cloud," says Janet Bartleson, a

senior marketing consultant at Dell. "And no matter where you are, we can help you get

there."

The Wal-Mart Story

Wal-Mart is now moving towards the RFID technology that makes the bar code reader

look like a prehistoric tool.

Wal-Mart Stores is an American public corporation that runs a chain of large, discount

department stores. It is the world's largest public corporation by revenue, according to

the 2008 Fortune Global 500, founded by Sam Walton in 1962. Wal -Mart's international

operations currently comprise 2,980 stores in 14 countries outside the United States withits 7,390 stores and club locations (Yahoo Finance). Wal-Mart also participates

internationally, there are wholly owned operations in Argentina, Brazil, Canada, Puerto

Rico and the U.K. About 40% of products sold in Wal -Mart are private label store brands,

or products offered by Wal-Mart and produced through contracts with manufacturers.

Wal-Mart has more than 3,300 diverse suppliers who provide products and services to

customers. Since the beginning the company has been providing retail merchandising and

services to lower and middle class income consumers. Wal-Mart currently uses SMART


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system which is basically a tracking system, it keeps track of all inventory, the on-hand

counts, and can automatically reorder product that is low or empty.

It operates in three different formats in United States which includes supercenters of

approximately 187000 square feet in size and offers general merchandise; discount stores

of approximately 108000 square feet in size and offers general merchandise and variety of

food products; and Neighborhood markets approximately 42000 square feet in size. The

company focuses on saving customers money and providing them lower prices every day.

Companys major share of its sales approximately three fifth is being dominated by its

Wal-Mart store segment whereas rest two fifth has been shared with around 24.2% and

11.8 by Sams Club and International respectively. Total revenue generated by Wal-Mart

is over $350 billion with average inventory for 2007 $34 billion (Annual Report). Although

average inventory was $34 billion their inventory turnover ratio was 8.32, and inventory

days was a mere 43.86*. This amazing turnover for the worlds largest retailer is one of

the reasons we decided to investigate further into Wal -Marts technological use.

*Figures calculated based on the annual report filed on Jan 31 2008.

y Wal-Mart use of RFIDWal-Mart was one of the early players who jumped on the RFID technology to facilitate

the use of electronic product codes ( EPCs). Wal-Mart started using RFID back in 2004

when its rivals were still using the old traditional bar code system for tracking. Initially

Wal-Mart used RFID tags in its retail stores to reduce the stock-outs and to provide better

customer service. Lately, Wal-Mart started using RFID tags in its distribution centers also,

but its ability to improve the supply chain is limited by business partners willingness to

participate in this initiative.

According to Wal-Marts executives, RFID can help Wal-Mart in fixing a small portion of its

inventory problems and it could increase sales by $287 million. Currently, 2% of the lost

sales account for the simple fact that a store has run out of inventory, but 41% of lost

sales are due to other inventory problems. Therefore, RFID can play a very important role

in fixing those inventory problems. Additionally, like mentioned before, if RFID can f ix 10%

of those inventory problems it will gain $287 million per year by avoiding lost sales. The

company also thinks that RFID will have a much bigger impact on inventory management

than the bar code technology had when it was first introduced into the ma rket.

Also, in near future, Wal-Mart plans to work more closely with suppliers on RFID. But

RFIDs ability to improve the supply chain is limited by the business partners willingnessto participate. So far, Wal-Mart has managed to work with its top 600 suppliers to

incorporate RFID technology. Some of these suppliers have found their own inventory cost

savings but others havent. Wal-Mart is taking the initiative to work with suppliers to help

them cut costs.

sfi machine age to information age

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