e-everything age learning objectives relate functional areas and business processes to the value...
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e-Everything Age
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Learning Objectives
Relate functional areas and business processes to the value chain model.
Describe the support provided by IT and the Web to each of these functional areas: production/operations, marketing and sales, accounting and finance, and human resources management.
Describe the benefits & issues of integrating functional information systems.
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The Age of Networked Intelligence
Not just networking of technology but it is about the networking of humans through technology
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Digital Economy
Individuals and enterprises create wealth by applying knowledge, networked human intelligence, and effort to manufacturing, agriculture, and services
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Knowledge Economy Based on the application of human know
how Life long learner “SMART” products Economy added value will be created by
brain not brawn Mass Customized rather than mass-
produced (Boutique Bakers/Garden scents)
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Mass Customization
One of the most successful models of e-Commerce is mass customization. the production of large
quantities of customized items.
It supplements or even replaces one of the most innovative concepts of the Industrial Revolution, mass production.
Mass customization can be facilitated by the Web in four different approaches;
Collaborative customizers
Adaptive customizers
Cosmetic customizers
Transparent customizers
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Pressures
Market Global Economy and Strong Competition Changing Nature of the Workforce Powerful Customers
Technological Technological innovation and
obsolescence Information Overload
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Pressures (cont.)
Societal Social Responsibility Government Regulations Government Deregulations Shrinking budgets and subsidies
Ethical Issues
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Organization Structure
Need for new structures…..
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Information Technology
Information technologies are flexible tools, constrained primarily by managers’ will to use them, expectations about their roles, and applications choices.
Cash p.267
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Organization Structure
Division of Labor Who does what?
Division of Decision Rights Who should make which decision?
Coordination Mechanisms Organizational Boundaries Informal Structures
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Virtual Corporations A Virtual Corporation (VC) is an organization
composed of several business partners sharing costs and resources for the purpose of producing a product or service.
According to Goldman et al. (1995), permanent virtual corporations are designed to do the following:
1. Create or assemble productive resources rapidly.
2. Create or assemble productive resources frequently and concurrently.
3. Create or assemble a broad range of productive resources.
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Virtual Corporations (cont.)
In a VC, the resources of the business partners remain in their original locations but are integrated.
In order to function, VCs rely on the following forms of IT; Communication/ collaboration among dispersed
business partners e.g., e-mail, desktop videoconferencing, screen-
sharing, etc. EDI and EFT Intelligent agents Modern database technologies and networking Intranet/Internet applications
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Types of Information Systems
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Old Rule Intervening Technology
New Rule
Information appears in only one place at one time.
Shared databases, client/server architecture, Internet, intranets
Information appears simultaneously wherever needed.
Only an expert can perform complex work.
Expert systems, neural computing
Novices can perform complex work.
Business must be either centralized or distributed.
Telecommunication and networks: client/server, intranet
Business can be both centralized and distributed.
Only managers make decisions.
Decision support systems, enterprise support systems, expert systems
Decision making is part of everyone’s job.
Ena
blin
g R
ole
of IT
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Empowerment Using IT Empowerment is the vesting of decision-making or
approval authority in employees where, traditionally, such authority was a managerial prerogative.
Empowerment can be enhanced through IT. Empowered employees are expected to perform better.
In addition to empowering employees, companies are empowering their customers, suppliers, and other business partners. E.g. Federal Express uses the Internet to empower its
customers.
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Strategic Information Planning
To accomplish business/IT alignment, the organization must execute the following (same for e-business): Set the IT mission. Assess the environment. Assess existing systems’ availabilities and
capabilities. Assess organizational objectives and strategies. Set IT objectives, strategies, and policies. Assess the potential impacts of IT.
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Why Organizations need Information Systems
Meeting Global Challenges Capturing opportunities in the Market Place Supporting Corporate Strategy Linking Departments Whose Functions are
different Enhancing Worker Productivity Increasing Quality of Goods and Services
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IT Era’s
Data Processing (DP) Micro Era Network Era WAN Network Environment
Client-Server Thin Client WAP
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Customer
ManufacturingInformation Systems
Quality ControlInformationSystems
MarketingInformationSystems (CRM)
Financialand AccountingSystems
GeographicInformationSystems
HumanResourcesSystems
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Customer Relationship Management
Customer relationship management (CRM) is an approach that recognizes that customers are the core of the business and that the company’s success depends on effectively managing relationships with them.
Customer service is a series of activities designed to enhance the level of customer satisfaction.
Relationship marketing is the “overt attempt of exchange partners to build a long-term association, characterized by purposeful cooperation and mutual dependence on the development of social, as well as structural, bonds” (Mowen & Minor, 1998).
E-Service is customer service that is performed on the Web, sometimes automatically.
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Information Technology in CRM
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Customer Service on the Web
Providing Search and Comparison Capabilities.
Providing Free Products and Services.
Providing Technical and Other Information and Service.
Allowing Customers to Order Customized Products and Services Online.
Letting Customers Track Accounts or Order Status
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Tools for Customer Service
Personalized Web Pages
FAQs
Tracking Tools
Chat Rooms
E-mail and Automated Response
Help Desks and Call Centers
Troubleshooting Tools
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Other Information Systems
Strategic National Semiconductor – “faster & better”
decisions
Global – Levi’s
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Strategic Information Systems
Cost leadership Differentiation Supports strategic changes – like
reengineering Growth Innovation Provide business intelligence by
collecting and analyzing information Improve internal efficiency
Customer-oriented approaches
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IT Planning & BPR
Nuts and Bolts…….
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Technology Issues
Transition to network computing Move from Legacy systems to
client/server How much infrastructure? Centralization vs decentralization –
finding the balance Role of end user
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Dell Case Study
How Dell Reengineered its Supply Chain
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Lessons from the Case By introducing a new business model , one can
change the manner in which business is done.
To implement this model on a large scale, one needs to build superb supply chain management.
Improved communications and customer service, which are part of Dell’s CRM program, are the cornerstones of its success.
Dell was using e-Commerce with its business partners.
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Key Planning Issues
Align IT plan with organizational business plan IT architecture that promotes and networks
the integration of users, applications, and databases
Allocation of IS and operational resources among competing applications
Completing projects on time and within budget
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Infrastructure Considerations Broadbent et al. (1996) found the following four
infrastructure relationships; Industry—manufacturing firms use less IT
infrastructure services than retail or financial firms. Market volatility—firms that need to change products
quickly use more IT infrastructure services. Business unit synergy—firms that emphasize
synergies (e.g., cross-selling) use more IT infrastructure services.
Strategy and planning—firms that integrate IT and organizational planning, use more IT infrastructure services.
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CSF’s Prime Source
Structure of Particular Industry Competitive Strategy, industry position,
and geographical location Environmental Factors Temporal Factors
The critical success factors (CSF) approach was developed to help identify the information needs of managers
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Critical Success Factors(CSF’s – Pg 346-347)
What industry objectives are central to your organization?
What are the critical factors that are essential to meeting these objectives?
What decisions or actions are key to these critical factors?
What information systems can supply these measures?
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Reengineering….
BPR, Process Innovation, ERP, Mass Customization, Networked
Organization, Empowerment, Teams, Virtual Corporations, TQM, JIT, POM,
BPM, CRM
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Reengineering the Corporation
Written - 1993 Michael Hammer
One of 1996 most influential people in the U.S.
Time Magazine July 17,1996
James Champy
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What is Reengineering?
“the fundamental rethinking and radical redesign of business
processes to achieve dramatic improvements in critical, contemporary measures or performance, such as cost, quality, service, and speed”
p. 32
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Business Process Reengineering
Initially, attention was given to a complete restructuring of organizations.
Later, the concept was changed due to failures of BPR projects and the emergence of Web-based applications.
Today, BPR can focus on anything from the complete restructuring of an organization to the redesigning of individual processes.
Major objective of BPR = Information Integration.
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Impacts
Increase product by an order of magnitude
Examine process
Vision Increase
Profits
Benefit from better product
Needs are met
Tendency to return
Loyalty
Teams
Less Workers - More Work
Empowered
Layoffs
Company Customers Employees
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Why Reengineer
The 3 C’s Customers Competition Change
Nothing is Constant or Predictable Change is the only constant
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To reengineer a company is to take a journey from the familiar into the unknown. The journey has to begin somewhere and with someone. Where and with whom?
P. 101
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Keys
Leaders Staff Empowerment Broader Scope
Knowledge / Skills
Tasks to Process Redesign of Systems
Information Technology Community
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The 3 R’s
Redesign Cross-function approach
Retool Information Tools
Reorchestrate Organization changes
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Problems
Fix vs. Change Focus Ignore Quit Scope HR / Unions Success Rate
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BPR Failures During the 1990s there were just as many cases of BPR
failures as there were success stories.
A survey conducted by the PROSCI organization (prosci.com) indicates a failure rate of 50 to 80%.
Some of the reasons cited for failures are: high risk inappropriate change management failure to plan for internal politics high cost of retooling lack of participation and leadership inflexible software lack of motivation
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Bell Atlantic’s Experience
The difference is that in a compliance mode I do what I must do because my boss tells me I must do it. In a commitment mode, I understand what the corporation is trying to achieve and how we’re going to achieve it, and I will do whatever it takes to make that happen, including changing the way I do my job if that is what is required
p. 196/197
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BPR
No longer a need to destroy everything - start from scratch
Instead - Flexible approach that can be executed by proven methodologies and principles.
Hammer and Stanton[1995]& Champy [1995]
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Process Innovation
Encompasses the envisioning of new work strategies, the actual process design activity, and the implementation of the change in all its complex technological, human, and organizational dimensions – order-of-magnitude improvements
Davenport (1993)
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Networked Organization
Formal Highly Structured Manage Control Direct Employee a cost Information management
owned Risk avoidance Individual contributions
Informal Loosely Structured Delegate/lead Ownership/participation Empower Employees an asset Information
shared-ownership Risk management Team
contributions
Classical/Hierarchical Networked Organ.
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CHANGE
“It is an educational and communications campaign”
p.148
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4 C’s – from Last Week
Convergence Core Competencies Content (distributed) Control (local / departmental)
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QVC
Moving CRM from TV to the Web
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Case: Integrated Solutions for Building Supply
Problem: Colonial is a small building supply company in Utah. To remain
competitive, they needed a technology to provide information about inventory levels & customer buying trends.
Solution: Colonial purchased an integrated system, point-of-sale (POS)
terminals, hand-held automatic product identification & data collection. Sold items are deducted from the inventory instantly.
Purchase orders are sent electronically via the Internet. Results: Lower costs for data entry labor, reductions in inventory/ storage
space, fast access to information, better customer service, & higher employee satisfaction
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Lessons from the Case
IT supports the routine processes of a retailer, enabling it to be efficient and effective and to satisfy its customers.
The software helped to modernize & redesign the company’s major business processes.
The software supports several business processes, not just one.
The system’s major applications are in logistics. However, the same software vendor provides ready-made accounting, marketing, & operations modules.
IT can be beneficial to a relatively small company.
The integration includes connection to business partners using the Internet.