The five information technology blind spots of economists

On August 9, 2007, the European Central Bank (ECB) decided to organize a conference call with the twenty largest banks in Europe. The problem was that these banks were no longer lending each other money. Banks were in urgent need of money and as one of the bankers made it clear: “We need three things: we need cash, we need a lot, and we need it now” (NRC Handelsblad , 2012). The same day, the ECB started to inject 95 billion euro, followed the next day by the Federal Reserve System (FED) in the United States (US) with an injection of 24 billion US dollars. It was the first sign that something was going wrong. However, very few people understood the significance of it. [...

Big data and disruptions in business models

There are many challenges to reaping the benefits of the newest, emerging technologies. If it were easy, every business would do it and competitive advantage would easily fade away. It is in fact extremely difficult and challenging for companies to create value with emerging technologies. Every year, Gartner, a respected consultancy company, reviews the newest, emerging technologies and uses its hype cycle concept to explain the path that technologies take. The cycle consists of five phases: (i) the technology trigger phase: the invention of new technology that happens in a research lab, usually at a university (most companies outsource their fundamental research to universities nowadays). (ii) the peak of inflated expectations phase: the technology is discussed by companies at conferences and in the press. There is a great deal of talk about the new technology, but no one has used it yet. R&D projects are launched. (iii) the trough of disillusionment phase: it turns out that the technology is not as useful as it was thought to be. (iv) the slope of enlightenment phase: here, the valuable fusion of business and technology is explored. (v) the plateau of productivity phase: it is clear how business can use the technology to create value. In Gartner’s (2019) emerging technologies hype cycle, technologies such as biorobots, augmented reality cloud, decentralized web, adaptive machine learning, nanoscale 3D printing, and 5G are reviewed and positioned in the first phases. Gartner expect that these technologies will reach the plateau of productivity within 5 to 10 years.Muitos são os desafios que impedem o aproveitamento dos benefícios das tecnologias emergentes mais recentes. Se fosse simples, todas as empresas o fariam, e a vantagem competitiva desapareceria facilmente. Na verdade, é extremamente difícil e desafiador para as empresas criarem valor com tecnologias emergentes. Todos os anos, a Gartner, empresa de consultoria respeitada, analisa as tecnologias mais recentes e emergentes e utiliza o seu conceito de ciclo de hype para explicar o caminho que as tecnologias tomam. O ciclo consiste em cinco fases: (i) a fase de ativação tecnológica: a invenção de novas tecnologias, que ocorre em um laboratório de pesquisa, geralmente em uma universidade (hoje em dia, a maioria das empresas terceiriza suas pesquisas mais importantes para as universidades); ii) a fase de auge das expectativas inflacionadas: a tecnologia é discutida pelas empresas em conferências e na imprensa. Fala-se muito da nova tecnologia, mas ninguém a utilizou ainda. São lançados projetos de P&D; iii) a fase de desilusão: verifica-se que a tecnologia não é tão útil quanto se pensava; iv) a fase de declive de esclarecimento: é explorada a valiosa fusão entre negócios e tecnologia; (v) a fase de patamar da produtividade: fica claro como as empresas podem usar a tecnologia para criar valor. No ciclo de hype das tecnologias emergentes da Gartner (2019), tecnologias como biorrobôs, realidade aumentada na nuvem, web descentralizada, aprendizado de máquina adaptativo, impressão 3D em nanoescala e 5G são revisadas e posicionadas nas primeiras fases. A Gartner espera que essas tecnologias atinjam o patamar da produtividade dentro de 5 a 10 anos

The five information technology blind spots of economists

On August 9, 2007, the European Central Bank (ECB) decided to organize a conference call with the twenty largest banks in Europe. The problem was that these banks were no longer lending each other money. Banks were in urgent need of money and as one of the bankers made it clear: “We need three things: we need cash, we need a lot, and we need it now” (NRC Handelsblad , 2012). The same day, the ECB started to inject 95 billion euro, followed the next day by the Federal Reserve System (FED) in the United States (US) with an injection of 24 billion US dollars. It was the first sign that something was going wrong. However, very few people understood the significance of it. [...

The Role Of Product Quality Information, Market State Information And Transaction Costs In Electronic Auctions

Electronic auctions have rapidly increased in popularity, but the consequences of switching to an electronic auction are unclear. In part this is because multiple changes occur at the same time so one can only observe the combined effect of these changes and not the effect of each separate change. For instance, electronic bidders face lower transaction costs, but also have less information about product quality and about the state of the market such as the number of bidders. In this paper, we report a study of bidding behavior at a large Dutch flower auction in which we are able to separate some of these effects. We compare electronic bidders with traditional bidders and when correcting for quality differences and seasonal effects, we find that they to bid lower on average than traditional buyers, as predicted by Bakos (1991, 1997). The electronic bidders were divided in two subgroups, internal bidders and external bidders. The external bidders had less product quality information and market state information than the internal bidders. This led the external bidders to not only bid significantly higher than the internal bidders, but in fact as high as the traditional bidders. Both these effects run counter to theoretical predictions and some possible alternative explanations are offered. In general, it highlights the importance of focusing the information flows that occur in a market

New ways of working: Microsoft’s ‘mobility’ office

There is a common expectation among forward-looking companies that through the use of information technology new ways of working can be created that will enhance workplace conditions with such an effect as to improve employee satisfaction levels, increase productivity and ultimately impact positively upon company performance

How Will Online Affiliate Marketing Networks Impact Search Engine Rankings?

In online affiliate marketing networks advertising web sites offer their affiliates revenues based on provided web site traffic and associated leads and sales. Advertising web sites can have a network of thousands of affiliates providing them with web site traffic through hyperlinks on their web sites. Search engines such as Google, MSN, and Yahoo, consider hyperlinks as a proof of quality and/or reliability of the linked web sites, and therefore use them to determine the relevance of web sites with regard to search queries. In this research we investigate the potential impact of online affiliate marketing networks on the ranking of advertisers’ web sites in search results. This article empirically explores how seven different affiliate marketing networks affect the rankings of the advertising web sites within web search engines. The field study followed intensively seven online affiliate marketing networks for twelve weeks after their launch. The results indicate that newly started affiliate networks effectively improve the rankings of advertising web sites in search engine results. Also, it was found that the effects of affiliate marketing networks on search engine rankings were smaller for advertising web sites operating in highly competitive markets. Another finding was that a growth in visitors coming from search engines was present as a result of the improvement of search engine rankings. Finally, the results indicate that cost-benefit metrics associated with affiliate marketing programs, such as the average marketing cost will decrease when the positive effects of affiliate marketing on search engine rankings are taken into account

Web Auctions in Europe

This paper argues that a better understanding of the business model of web auctions can be reached if we adopt a broader view and provide empirical research from different sites. In this paper the business model of web auctions is refined into four dimensions. These are auction model, motives, exchange processes, and stakeholders. One of the objects of this research is to redefine the blurry concept of the business model by analyzing one business model, the web auction model. We show in this research the complexity and diversity of factors contributing to the success of the web auction model. By generalizing the results to the level of business model we also show how complex and diverse business models can be. Motivated by the lack of empirically grounded justification for the mixed business results of web auctions, this paper adopts a qualitative approach that includes telephone interviews with web auctions developed in different European countries

Coping with Costly Bid Evaluation in Online Reverse Auctions for IT Services

Online markets have dramatically decreased costs of search and communication for buyers. By contrast, costs of evaluating purchasing alternatives have become critical due to an overwhelming range of available options. When high, evaluation costs can offset potential gains from transactions and cause inefficiencies, e.g. by forcing buyers to abandon transactions without allocating contracts. While most previous studies treat evaluation costs as an exoge-nous factor, this study considers them endogenous. We identify several tactics (search, request for proposal preparation, budget announcement, bid filtering, and negotiation) that buyers at online markets can use to reduce their evaluation costs and hence influence project allocation. Using data from nearly 10 thousand transactions at a leading online marketplace for IT services, we show that buyers who use these tactics are more likely to allocate their project to a winner than buyers not using these tactics. Buyer experience also has a positive effect on allocation and, in addition, moderates the effectiveness of some of the tactics. As experience grows, budget announcement be-comes more effective in coping with evaluation costs and increases the likelihood of allocation, while the effectiveness of request for proposal preparation decreases. Together, these results shed more light on the buyer side of online reverse auctions, which leads to guidelines for improving the efficiency of online marketplaces

Understanding transition performance during offshore IT outsourcing

Purpose - Within an IT outsourcing relationship, transition represents a critical and complex phase that starts immediately after contract signing. Transition involves handing over outsourced activities from client firm to service provider firm and accompanies a new way of operating. The purpose of this paper is to determine and detail factors influencing the performance of transition phase within global IT outsourcing relationships. Design/methodology/approach - In this paper, the authors present a framework for transition performance that includes four factors: transition planning, knowledge transfer, transition governance and retained organization. This framework is tested and enriched by utilizing a single, in-depth case study involving over 25 interviews with a global offshore IT outsourcing engagement. Findings - It was found that knowledge transfer and transition governance are more critical factors than transition planning and retained organization for transition performance. This was due mainly to two reasons: the critical challenges faced, within the scope of these factors, had higher potential to disrupt transition; and both these factors and their related issues required a significant joint and coordinated effort from client and service provider firms, thereby, making implementation challenging for transition. Originality/value - Practitioners have suggested that over two-thirds of failed outsourcing relationships are due to transition-related challenges. This paper represents one of the first in-depth studies that provides insights from a real-life global outsourcing engagement, which contributes to and complements existing literature on IT outsourcing by providing a greater understanding of transition. Furthermore, it provides practitioners with insights and best practices that can be used to guide transitions in real-life engagements