BADM 350 Lecture 3Outline of Current Lecture I. Moore’s LawII. IT Value ParadoxMoore’s LawMoore’s Law- computing power has been doubling roughly every 18-24 months while the price for performance has become more favorable for consumers- Named after Intel co-founder Gordon Moore- Technology products are highly price elastic, meaning that consumers buy more when they become cheaper- Since pathways are getting closer together, electrons travel shorter distances which means the chip is that many times faster- If products are radically improving in a short period of time, then these products rapidly falli n value; it is deadly to overproduce and have excess inventory sitting in a warehouse too long- The cheapness of technology has allowed some poorer areas of the world to have access to technology- Dell claims its inventory depreciates as much as a single percentage point each weekDeath of Moore’s law? Size, heat, and power are threatening to slow Moore’s law- The power to cool a device to stop it from melting is increasing and becoming costly- Computers draw 4-5% of the world’s power- Moore’s law can’t last forever because chip pathways can’t be shorter than a single molecule and the physical limit is probably more than thatMulticore microprocessors- two or more lower power processor cores on a single chip- They will outperform a single speedy chip while staying cooler and drawing less powerRandom Access Memory- chip based memoryVolatile Memory- the RAM inside personal computers that gets erased when the power shuts ofNonvolatile memory- more permanent storage media - Hard disk or flash memoryThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.IT Value ParadoxWas first discussed by Dr. Eric Brynjolfson in 1993 where he observed that industry wide increases in IT investments in the 1980’s were not being reflected in a proportionate increase in productivityIt is difficult to measure the value of IT investmentsTime lags are important to considerManagement practices need to evolve to take advantage of the potential of the technologyIT helps individual firms relative to competitors, but might not increase productivity in the whole economyDecentralized organizations performed much better than those with centralized organizations because it allows for flexibility and responsiveness to dynamic marketsIndustrialized countries showed a significant positive relationship between IT and productivity while developing countries shoed no evidence of a relationshipIT investments represent about 4% of US GDP Some studies suggest that IT investments show much higher returns than non-IT investments meaning that they might be underinvesting in ITThere are some problems with this hypothesis including taking into account IT depreciation, large standard deviations in the results of these studies, and the risks involved in these investmentsMany companies don’t use ROI evaluation on IT projects or evaluate projects after implementationOverall idea: IT spending does pay of and managers should be concerned about how they should maximize their return on investmentAligning IT investments with business strategy is critical to successIT is most efective when implemented in conjunction with complementary practices like total quality management and process redesignMost companies have no idea how they rank in relation to competitors in IT spending levels so it is important to look at this