TECM 720 Analysis of IT Industries

1. TECM 720 Analysis of IT Industries Dr. Andres Fortino Spring 2001

2. TECM 720 - Analysis of IT Industries Session 1 The Industry

3. TECM 720 - Analysis of IT Industries Course Administration

4. Mission • Together we will explore the IT industry • Do it in 4 intensive days • Understand the forces and the players that shape the industry • Understand where we stand with respect to the industry • Develop some tools to analyze the industry • Develop and information base for future use

5. Course Outline and Conduct • Mini lectures as outlined in syllabus • Starting point of discussion • Work through burning issues and questions • Develop metrics and tools for analysis (soft, not hard) • Develop parameters for deliverables

6. Syllabus • Posted on the web (syllabus) • Changes as we work together • keep checking, agreed upon changes will be noted • Website has assignments and topics to be covered, course material and slides • Ground rules

7. Assignments • One IT Industry Segment Research Study • Each team of students write a report covering each major industry segment • Presentation to the class, report posted to the web • Six short analysis papers - • individual work, two per session • One IT Company Case Study • Each team of students write a report covering one major company that is an industry leader • Study will be posted to the web as a resource for entire class after studies are turned in

8. Schedule • Four days -- all Saturdays • 8:30AM-4:00PM • One hour for lunch 11:45-12:45 • Mini lectures and workshops • See syllabus for schedule

9. Communications • Open ended in class • We will try to stick to the subject but all questions are allowed • Use e-mail • I am available via e-mail at afortino@som.gmu.edu • Feedback • via forms

10. Grades • 30% for IT company case study • 30% for IT industry segment study • peer reviewed • 30% individual analysis papers • 5% each. Two per class session (every 2 weeks) for the first 3 sessions • 5% team peer review of your team work in the IT segment study • 5% team peer review of your team work in the IT company case study

11. Dr. Andres Fortino • Ph.D. in Electrical Engineering - City University of New York • Consultant in information technology and computer networks • Worked for IBM in advanced semiconductor research • Working as a consultant in computer networks since 1983 • Certified NetWare Engineer - CNE • Professional Engineer - PE • Educator and seminar leader • Director MBA and MBSTM programs • Associate professor of MIS, George Mason University • Taught more than 170 short technical courses in 15 years for Learning Tree International • Has lectured internationally • Author • Has written seven books, many technical articles, a dozen high technology seminars, and two CBT courses

12. Any Questions? Ready? Let’s start...

13. Session 1 - The Industry • Module 1 - Positioning of the class • Module 2 - Man the Model maker • Module 3 - The Historical Forces Model • Module 4 - The Laws of the IT Universe • Module 5 - Industry Segmentation • Module 6 - The Role of Government • Assignments

14. TECM 720 - Analysis of IT Industries Module 1 Positioning of the Class Student Requirements

15. Objective • To find out what you need from the class • To sort out “consumers” of the products of the IT industry from “producers” of IT • To position you as “consumers” of IT with respect to the industry • To find out where the industry is going • To find out what are the questions we should be asking

16. What you have told me so far: • Most students are managers or executives or on their way to being executives • You are getting a MSTM degree to enhance their opportunities for executive assignments -- CIO role in the future? • All of you work in the IT industry in one form or another -- most as “consumers” of IT • Question: What other objectives do you have?

17. Industry Forces • Industry forces that shape the industry • Advances in technology • Advances in business models • Entrepreneurs • The US Government • Existing firms competing to survive and thrive • Question: What other “primal” forces do you see?

18. Consumers and Producers of IT • Consumers are those who uses IT in doing their job • with respect to customers outside the organisation • Producers of IT are those who produce some IT product or service • with respect to outside users • Question: Can you be an internal producer and an external consumer? - Example?

19. Focus of Course • We should agree that this course is for those who are consumers of IT with respect to their external customers • Your burning issue should be: What can IT do for my organisation? • NOT: How can I get people to buy my hot new IT product? • And we are interested in Information Technologies not information • The CIO vs. CTO issue -- see The Research Board

20. Workshop • Question:Is your organization a consumer or producer of IT? Are you internally a consumer or producer of IT? Who are your customers and your organization's customers? • Process: Answer to yourself the questions and explain it to your partner • Class discussion: share your company’s and your job’s position with respect to consumers and producers of IT

21. TECM 720 - Analysis of IT Industries Module 2 Man the Model Maker

22. Model Making • A model is a representation of reality from the modeler's perspective • We will develop multi-perspective models of the problem on hand • Understand the IT industry sufficiently to make successful decisions about technology • Components of the process: • A problem, leads to • gathering data, leads to • creating a model to fit data and predict outcomes, leads to • validation of model, leads to • use of model to solve the problem

23. Model Making • Friedrich Nietzsche's theory of knowledge: • "There is only a perspective seeing, only a perspective knowing, and the more affects we allow to think about one thing, the more complete will our concept of this thing, our objectivity, be." • Immanuel Kant and Arthur Schopenhauer: • called this model "the World as a representation" of our understanding through Time, Space, and Causality. • Spinoza introduced the concept of motivation to explain humans' actions • goes beyond the cause-and-effect models that explain the physical world, • We must look at the IT industry from many angles and consider how the pieces fit together, to see the "whole" of the IT universe - many models

24. Models Of The Firm And Its Positioning With In Its Industry • Types of firm (value chain, value network, and value shop) • Model of competitive positioning (Porter) • Model for productivity measure • Model for technology investment by a firm (McFarland, Fortino) • Model for analyzing the leadership of a firm with in the industry (Hamel) • Model for capturing market share positioning (first mover, follower) • Model of architectural leadership • Model of firm's IT infrastructure (the CIO's viewpoint) • Model of a firm's IT architecture • Model of IT alignment with firm strategy • Model of IT governance systems

25. Models of the Industry • Model of industry segmentation • Laws of the IT universe • Unwritten rules and operative laws of the IT Industry • Model of the personality-driven industry • Model of the consulting-services industry • Model for government impact/influence on the industry • Model for globalization forces in the industry • Model of historical trends

26. Models For Technology Introduction And Development • Model for technology penetration • Model for technology adoption • Model for standard types • Model for standards development • Model for technology lifecycle • Model of market dominance by product extension • Model For Innovation • Model of paradigm shifts • Model of inflection points (Grove) • Model for R&D economics • Model for innovation metrics • Model of economics of innovation • The kinder model of trend spotting (the 5 whys)

27. Models For Professional Development • Model for personal positioning within the industry • Model for profile of technology executive • Model of executive characteristics • Model of CTO responsibilities • Model of CIO responsibilities • Model of management philosophy and style

28. Workshop • Question: Can you add to these lists? • Process: Check each list carefully and see if any additional models need to be added to the portfolio dealing with the subject matter of this class. Work with a your team and create additional list items • Class discussion: Report back to the class

29. The Rise and Fall of Models Management frameworks seem to follow a predictable lifecycle, (Source: J.A. Bailey. "The Rise and Fall of Educational Panaceas", NSPI Journal, 10:7)

30. TECM 720 - Analysis of IT Industries Module 3 The Historical Forces Model of the IT Industry

31. Computer History • 40 Years of IT History • The first issue of Datamation was published 40 years ago. In the past four decades, we've seen computing go from an obscure technical discipline to the heart and soul of business profitability. • By Paul A. Strassmann • in Datamation October 1997 http://www.strassmann.com/pubs/datamation1097/index.html

32. Strassmann Computer History • 1930-1957: The machine accounting era • 1957-1963: The mechanization cycle • 1963-1969: The datacenter cycle • 1969-1975: The time-sharing cycle • 1975-1981: The minicomputer cycle • 1981-1988: The microcomputer cycle • 1988-1995: The client/server investment cycle

33. Evolution of Computing • The 60’s - mainframes • The 70’s - minicomputers • The 80’s - personal computers • The 90’s - networking • The millenium - Internet-based computing • Today’s computing environments may be described: • In the words of Sun Microsystems: • “The network is the computer” • In the words of IBM: • “Enterprise-wide networking”

34. Evolution of Computing

35. Evolution of Computing (con’t) • Legacy systems • Large investment in business software keeps them around • They work and they are already paid for • The hardware they use may be expensive to maintain • New systems • They can be justified by large savings in maintenance of programs and hardware by replacing some legacy systems • They are more user friendly than legacy systems • They can be the base for more powerful systems using newer computing methods - client/server, for example • Strategy: • Keep the old and gradually replace with the new • Graceful, thoughtful evolution is most appropriate • Follow an upgrade pace that is just right for your business

36. Model to Classifiy IT by Innovation Value • Historical stream applied to a firm • We may classify IT by level of innovation at the present moment: • Bleeding edge technology • Leading edge technology • Trailing edge technology • Definitions are relative • They change with time

37. Use of IT in Business • Bleeding edge technology • Extremely new - 6 months to 2 years old • Relatively expensive but has potential for great cost savings due to productivity improvement • High risk due to its instability • Complex-- not properly understood or applied • Unless there is a definite business advantage most businesses have only 10%-15% of IT based on bleeding edge technology • Leading edge technology • Stable but new - 1 to 5 years old • A major portion of your industry segment is using it, and to be cost effective in your business you cannot lag behind • Most businesses only plan to have 50%-80% of the business using leading edge information technologies

38. Use of IT in Business • Trailing edge technology • Technology older than 5 years • The technology may still be viable--one possible reason to have any of this technology in place is the large investment made in software for a particular business-critical function, e.g., • Payroll, Accounts Receivable, Inventory Control • Usually older software requires older hardware to run • The hardware is very expensive to maintain/lease • Older programs are harder to modify--harder to get programmers who know the program language • Older data structures are not easily turned into information • The software development backlog problem • Most businesses have only 10%-25% of the business based on trailing edge technology

39. It Is a Moving Target

40. Workshop • Question:Where is your business with respect to bleeding, leading, trailing IT technologies? • Process: Ponder the application of the historical curve to your enterprise, explain it to your partner. Where has you company been, where it today in the IT industry historical stream • Class discussion • When we look at trends we shall classify technologies and products with respect to this curve

41. TECM 720 - Analysis of IT Industries Module 4 The Laws of the IT Universe

42. Laws of the IT Universe • Observations made by prominent industry technologists and business leaders based on empirical observations of trends or activities in the industry • Moore’s Law • Some have lost relevance or have been superceded, some continue in force today • There are also general rules and approaches to the industry that are important to recognize • the open software movement

43. A Few Sample Laws • Blaauw's Law • Established technology tends to persist in spite of new technology. • Brook's Law • Adding manpower to a late software project makes it later. • Joy's Law • Computing power of the fastest microprocessors, measured in MIPS, increases exponentially in time. http://techedcon.com/mason720/Articles/TechnologyLaws.htm

44. Industry Paradigms • What is the context and philosophy and consequences behind these: • “Information is Free” • “No one ever got fired by buying IBM” • Open Systems • The open software movement • Internet time • Any others?

45. Workshop • Question:Classify the laws and paradigms as to where they fall with respect to the four major areas of technology. • Process: Ponder each law, discuss its applicable area of technology and note it in the diagram on the next slide. Work with your team. Place in rough historical order, oldest first on the list. Exclude humorous and science fiction laws. Use general category if needed. • Class discussion - we will create a class composite.

46. The IT Universe • Model to categorize the laws of the IT universe Networks Software Hardware Systems

47. TECM 720 - Analysis of IT Industries Module 5 Industry Segmentation

48. Historical Changes in The Computer Industry

50. Business Week 2001 Industry Outlook - Information Industry • COMPUTERS & CHIPS • SOFTWARE • TELECOMMUNICATIONS • MEDIA • http://www.businessweek.com/