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© 2013, published by Flat World Knowledge 5-1 Information Systems: A Manager’s Guide to Harnessing Technology, version 2.0 John Gallaugher
© 2013, published by Flat World Knowledge Published by: Flat World Knowledge, Inc. © 2013 by Flat World Knowledge, Inc. All rights reserved. Your use of this work is subject to the License Agreement available here http://www.flatworldknowledge.com/legal. No part of this work may be used, modified, or reproduced in any form or by any means except as expressly permitted under the License Agreement.http://www.flatworldknowledge.com/legal 5-2
© 2013, published by Flat World Knowledge Chapter 5 Moore’s Law and More: Fast, Cheap Computing, Disruptive Innovation, and What This Means for the Manager 5-3
© 2013, published by Flat World Knowledge Learning Objectives Define Moore’s Law and understand the approximate rate of advancement for other technologies, including magnetic storage (disk drives) and telecommunications (fiber-optic transmission) Understand how the price elasticity associated with faster and cheaper technologies opens new markets, creates new opportunities for firms and society, and can catalyze industry disruption 5-4
© 2013, published by Flat World Knowledge Learning Objectives Recognize and define various terms for measuring data capacity Consider the managerial implication of faster and cheaper computing on areas such as strategic planning, inventory, and accounting 5-5
© 2013, published by Flat World Knowledge Some Definitions Chip performance per dollar doubles every eighteen months Moore’s Law Part of the computer that executes the instructions of a computer program Microprocessor Fast, chip-based volatile storage in a computing device Random-access memory (RAM) Storage that is wiped clean when power is cut off from a device Volatile memory 5-6
© 2013, published by Flat World Knowledge Some Definitions Storage that retains data even when powered down Nonvolatile memory Nonvolatile, chip-based storage Flash memory Semiconductor-based devices Solid state electronics Substance such as silicon dioxide used inside most computer chips that is capable of enabling and inhibiting the flow of electricity Semiconductors High-speed glass or plastic-lined networking cable used in telecommunications Optical fiber line 5-7
© 2013, published by Flat World Knowledge Figure 5.1 - Advancing Rates of Technology (Silicon, Storage, Telecom) 5-8
© 2013, published by Flat World Knowledge Get Out Your Crystal Ball Price elasticity: Rate at which the demand for a product or service fluctuates with price change Evolving waves of computing – 1960s - Mainframe computers – 1970s - Minicomputers – 1980s - PCs – 1990s - Internet computing – 2000s - Smartphone revolution – 2010s - Pervasive computing 5-9
© 2013, published by Flat World Knowledge Internet of Things Vision of embedding low-cost sensors, processors, and communication into a wide array of products and the environment – Allow a vast network to collect data, analyze input, and automatically coordinate collective action 5-10
© 2013, published by Flat World Knowledge Learning Objectives Describe why Moore’s Law continues to advance and discuss the physical limitations of this advancement Name and describe various technologies that may extend the life of Moore’s Law Discuss the limitations of each of these approaches 5-11
© 2013, published by Flat World Knowledge The Death of Moore’s Law? Moore’s Law is possible because the distance between the pathways inside silicon chips gets smaller with each successive generation – Fabs: Semiconductor fabrication facilities – Silicon wafer: Thin, circular slice of material used to create semiconductor device 5-12
© 2013, published by Flat World Knowledge The Death of Moore’s Law? Packing pathways tightly together creates problems associated with three interrelated forces – Size – Heat – Power Chip starts to melt when the processor gets smaller – Need to cool modern data centers draws a lot of power and that costs a lot of money Quantum tunneling kicks in when chips get smaller 5-13
© 2013, published by Flat World Knowledge Buying Time Multicore microprocessors: Contains two or more calculating processor cores on the same piece of silicon Multicore chips outperform a single speedy chip, while running cooler and drawing less power Now mainstream, most PCs and laptops sold have at least a two-core (dual-core) processor Can run older software written for single-brain chips by using only one core at a time 5-14
© 2013, published by Flat World Knowledge Buying Time Firms are radically boosting speed and efficiency of chips – Taking chips from being paper-flat devices to built-up 3-D affairs – Transistors - Supertiny on-off switches in a chip that work collectively to calculate or store things in memory 5-15
© 2013, published by Flat World Knowledge Learning Objectives Understand the differences between supercomputing, grid computing, cluster computing, and cloud computing Describe how grid computing can transform the economics of supercomputing Recognize that these technologies provide the backbone of remote computing resources used in cloud computing 5-16
© 2013, published by Flat World Knowledge Learning Objectives Understand the characteristics of problems that are and are not well suited for parallel processing found in modern supercomputing, grid computing, cluster computing, and multi-core processors. Also be able to discuss how network latency places limits on offloading computing to the cloud 5-17
© 2013, published by Flat World Knowledge Bringing Brains Together Supercomputers: Computers that are among the fastest of any in the world at the time of their introduction Supercomputing was once considered the domain of governments and high-end research labs Modern supercomputing is done by massively parallel processing – Massively parallel: Computers designed with many microprocessors that work together, simultaneously, to solve problems 5-18
© 2013, published by Flat World Knowledge Bringing Brains Together Grid computing: Uses special software to enable several computers to work together on a common problem as if they were a massively parallel supercomputer Cluster computing: Connecting server computers via software and networking so that their resources can be used to collectively solve computing tasks 5-19
© 2013, published by Flat World Knowledge Bringing Brains Together Multicore, massively parallel, grid, and cluster computing are all related – Each attempts to lash together multiple computing devices so that they can work together to solve problems Software as a service (SaaS): Form of cloud computing where a firm subscribes to a third party software and receives a service that is delivered online 5-20
© 2013, published by Flat World Knowledge Bringing Brains Together Cloud computing: Replacing computing resources with services provided over the Internet – Server farms: Massive network of computer servers running software to coordinate their collective use – Latency: Delay in networking and data transfer speeds Low latency systems are faster systems Moore’s Law will likely hit its physical limit soon – Still-experimental quantum computing, could make computers more powerful 5-21
© 2013, published by Flat World Knowledge Learning Objectives Identify the two characteristics of disruptive innovations Understand why dominant firms often fail to capitalize on disruptive innovations Suggest techniques to identify potentially disruptive technologies and to effectively nurture their experimentation and development 5-22
© 2013, published by Flat World Knowledge Characteristics of Disruptive Technologies They come to market with a set of performance attributes that existing customers do not value Over time the performance attributes improve to the point where they invade established markets 5-23
© 2013, published by Flat World Knowledge Figure 5.3 - The Giant Killer 5-24 Source: Adapted from Shareholder Presentation by Jeff Bezos, Amazon.com, 2006.
© 2013, published by Flat World Knowledge Why Big Firms Fail Failure to see disruptive innovations as a threat – Reason - They do not dedicate resources to developing the potential technology since these markets do not look attractive Creates blindness by an otherwise rational focus on customer demands and financial performance Start ups amass expertise – Big firms are forced to play catch-up Few ever close the gap with the new leaders 5-25
© 2013, published by Flat World Knowledge Recognizing Potentially Disruptive Innovations Remove short-sighted, customer-focused, and bottom-line-obsessed blinders Have conversations with those on the experimental edge of advancements Increase conversations across product groups and between managers and technologists If employees are quitting to join a technology, it might be worth considering 5-26
© 2013, published by Flat World Knowledge When a Potential Disruptor is Spotted Build a portfolio of options on emerging technologies, investing in firms, start-ups, or internal efforts – Focusing solely on what may or may not turn out to be the next big thing Options give the firm the right to continue and increase funding as a technology shows promise 5-27
© 2013, published by Flat World Knowledge When a Potential Disruptor is Spotted If a firm has a stake in a start-up, it may consider acquiring the firm – If it supports a separate division, it can invest more resources if that division shows promise Encourage new market and technology development – Focus while isolating the firm from a creosote bush type of resource sapping from potentially competing cash-cow efforts 5-28
© 2013, published by Flat World Knowledge Learning Objectives Understand the magnitude of the environmental issues caused by rapidly obsolete, faster and cheaper computing Explain the limitations of approaches attempting to tackle e-waste 5-29
© 2013, published by Flat World Knowledge Learning Objectives Understand the risks firms are exposed to when not fully considering the lifecycle of the products they sell or consume Ask questions that expose concerning ethical issues in a firm or partner’s products and processes, and that help the manager behave more responsibly 5-30
© 2013, published by Flat World Knowledge E-waste Discarded, often obsolete technology May be toxic since many components contain harmful materials such as lead, cadmium, and mercury It also contains small bits of increasingly valuable metals such as silver, platinum, and copper Requires recycling, which is extremely labor intensive – Most of the waste is exported for recycling 5-31
© 2013, published by Flat World Knowledge E-waste Managers must consider and plan for the waste created by their: – Products, services, and technology used by the organization Managers must audit disposal and recycling partners with the same vigor as their suppliers and other corporate partners 5-32
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