Ntwserbus 1 Agenda · Ntwserbus 6 Sharing economy • The sharing economy means collaborative consumption and the sharing of resources by leveraging Internet - more efficient usage

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© Sakari Luukkainen

Agenda14.1. Introduction, Sakari Luukkainen21.1. Theoretical frameworks, Sakari Luukkainen28.1. Business model design, Sakari Luukkainen4.2. ICT in business process, Sakari Luukkainen11.2. STOF cases, Olli Mäkinen25.2. Cloud computing, Sakari Luukkainen4.3. Green ICT, Sakari Luukkainen11.3. Mobile cloud computing, Sakari Luukkainen18.3. Mobile ecosystems, Juha Winter25.3. ICT start-up development, Aalto ACE1.4. Summary, Sakari Luukkainen

10.4. Examination

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ICT and Economic growth -definitions

• ICT investment – purchase of computer &telecommunications HW, SW, and services• Value added – output minus input of certainproduction sector, practically wages plus profits• GDP – sum of value added created by allproduction sectors in the national economy• Labour productivity – value added per workinghours• TFP – modern productivity indicator thatdescribes that part of production growth that cannot be explained by the growth of inputs

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Production Value addedICTinvestment

GDP

Innovation

R&Dinvestment

Goal of ICT – economic growth

Productivity

ICT is considered aspecial case of newtechnologies that serveas enabling technologiesleading to even furtherinnovations

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• from transformation from bulk materialmanufacturing to design and use of technology

• from processing of resources to processing ofinformation –digital economy• intangible capital is the new engine of growth• endogenic growth theory explains such ainnovation driven phase of economies• technological over price competitiveness• technology tends to accumulate in certain places of

economy and diffuse value also to actors which donot take fully part to its creation cost - spillover

• technology explains for at least half of the long termeconomic growth of industrialized nations


ICT Investments and EconomicGrowth

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• a lot of studies has been made since 1980 ́s• common argument is that ICT is a general purpose

technology, a “platform” that enables efficientknowledge creation, codification and transmissionwidely in the economy

• productivity paradox (Solow 1987): “You can seecomputer age everywhere but in the productivitystatistics”

• empirical findings show however a long learning periodand slow diffusion, finally about 20 % from GDP growth• “computers are part of a larger system of technologicaland organisational changes that increases productivity

over time” (Brynjolfsson and Hitt 2000)• ICT generates spillovers – effect on TFP


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Sharing economy

• The sharing economy means collaborative consumption and thesharing of resources by leveraging Internet - more efficient usage ofresources increase productivity

• Owning a product versus renting or borrowing it makes littledifference to its value

• Unused value refers to that goods lay idle, this idle time is wastedvalue that sharing business models businesses utilize

• E.g. average car is unused 92% of the time

• When information about goods availability is shared, the value ofgoods increase

• The sharing model is based on ICT platforms in order to enablepeer-to-peer renting of goods


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Sharing economy

• Now the Internet has reduced marginal costs to near zero

• Creative destruction theory describes the process of technologicalchange that revolutionizes the industrial structure by destroying theold one and creating a new one - sharing business models arenow disrupting traditional industries based on models ofindividual private ownership

• E.g. the home-sharing service Airbnb.com is challenging biggesthotel chains in the world similarly than Uber.com taxis

• For a traditional hotel chain the new room must be built at asignificant cost

• Airbnb.com can add another room to its offering at almost nomarginal cost and households are able to rent their apartmentscheaper than hotels

© Sakari LuukkainenSource: Rifkin, 2014

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ICT and productivity

• to what extent ICT is investment and to what extententertainment?• effect of Angry Birds to productivity?• the cost of taking ICT into use can be 5 times bigger than

actual SW & HW investment, problems and alsopossibilities to improve productivity especially in Finnishpublic health service

• relatively long time gap between the introduction ofa technology and its positive impact on productivity• ICT is only an enabler - parallel organizational change

is mandatory• Finland has benefited a lot of from ICT production– a lot of potential left in taking ICT productively into use


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ICT in business process – where is the value?

R&D investment

Product innovation

Service innovation

Process innovation

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ICT in business process• up to 90% of ICT projects fail to meet their goals and less

than 25% properly integrate business and technologyobjectives

• other surveys indicate that companies waste 40% of thetotal amount they spend on ICT because the systemsthey build are not aligned with business process

• organizations often tend to use ICT to automateaccounting, stock control and other routine functions

• heavy investments in information technology havedelivered disappointing results, largely becausecompanies tend to use technology to automate old waysof doing business

Source: Weerakkody & Currie, 2003

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ICT in business process• principal challenge is not to design systems that

will process data more efficiently but to create anenvironment in which people can exploitinformation more effectively and create morevalue

• business process development projects haveencouraged firms to analyze the business first,before designing computer systems

• process improvement and ICT change shouldhappen in parallel, organizations shouldtherefore try and integrate the two

Source: Weerakkody & Currie, 2003

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ICT is a tool which should helpenduser perform the task productive

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Enduser Task

Tool

Environment

Source: Shackel 1984

Designing information systems

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© Sakari LuukkainenSource: Rummler, 1993

Process improvement & management

ProductivityMore producedunits bydecreased costCustomervalueIncreased salesby customersatisfaction

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Source: Vartiainen, 2004

Information system design framework

ReachabilityPortabilityBandwidth

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Designing mobile information systems

Local MobileWorking WorkingMedical Repair

Professionals engineers

Office RemoteWorking WorkingCall-centre Virtual team/

Worker teleworker

Mobile

LocalMobility

Stationary

Co-located Remote

Remoteness

Source: Sorensen 2011

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Mobile working of repair work team

number of concurrentfaults in an electricitydistribution network can exceed1500 during a storm

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© Sakari LuukkainenSource: Vartiainen, 2004

Case study: Eltel Networks

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Case study: Eltel Networks


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Continuous maintenance - before redesign

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Continuous maintenance – after redesign

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Urgent fault repairs - before redesign


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Urgent fault repairs – after redesign


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Experiences


• level of automation

• regulation

• personnel commitment

• customer commitment

• administrative process

• usability

• centralized reporting system

• capability to manage large amount of data in concurrent faults

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Conclusion

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Industrial Internet

• The integration of ICT with physical industrial equipmente.g. machinery or vehicles

• It refers to all of the devices, sensors, and software thatenables connectivity between machines

• Machines use network resources to communicate withremote application infrastructure in order to monitor andcontrol the machine itself or the surrounding environment

• Internet of Things can be thought of as the vision of whatthe Industrial Internet will ultimately lead to, wherein thephysical world becomes merged with the digital world

• Important here is the added value that ICT could bring tobusiness process of those machinery industries

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Case: Ponsse Mobile Fleet Management

• tool for real-time monitoring of forest machines• centralized managing and monitoring field

operations in real time• machines are equipped with data transfer and

GPS to transmit the data automatically to anInternet-based reporting service

• possible to check at any time the location or thecurrent situation of the forest machine on the map

• detailed productivity reports - machine engineworking hours, the amount of fuel in the tank, theamount of wood harvested in the active stand andmachine productivity and fuel consumption fordifferent drivers

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Case: Ponsse Mobile Fleet Management

• it’s possible to foresee the need for spare partsand maintenance

• organizing the stands becomes easier when themachine drivers themselves can ordertransportation for the machine to the right place atthe right time

• possible to use the system with mobile devices,user can control your fleet and operationsregardless of time and place

• One of the most significant export product ofFinland

• See related video:https://www.youtube.com/watch?v=dVgQVJJ348g

Documents

Ntwserbus 1 Agenda · Ntwserbus 6 Sharing economy • The sharing economy means collaborative consumption and the sharing of resources by leveraging Internet - more efficient usage