1. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-1

2. MAJOR BUSINESS INITIATIVES Gaining Competitive Advantage with IT Chapter 2

3. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-3 INTRODUCTION Businesses must be innovative to stay in business and succeed IT can be a powerful tool Must use IT within business strategy to be successful

4. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-4 INTRODUCTION Major business initiatives that need IT 1. Customer relationship management (CRM) 2. Supply chain management (SCM) 3. Business intelligence (BI) 4. Integrated collaboration environments (ICE)

5. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-5 SUPPLY CHAIN MANAGEMENT Supply chain management (SCM) – tracks inventory and information among processes and across companies SCM system – IT support for supply chain management Dell – famous for its sell-source-ship supply chain model

6. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-6 SUPPLY CHAIN MANAGEMENT Buy-hold-sell Sell-source-ship

7. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-7 SUPPLY CHAIN MANAGEMENT Distribution chain – path followed by product or service JIT – provides product/service just when needed Inter-modal transportation – uses multiple channels (trucks, boats, etc) of transportation

8. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-8 Strategic & Competitive Opportunities with SCM SCM system optimize supply chain activities: Fulfillment – ensuring the right quantity of parts for production or product for sale arrive at right time Logistics – keeping transportation costs low Production – production lines run smoothly because high quality parts available when needed.

9. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-9 Strategic & Competitive Opportunities with SCM Revenue and profit – no sales are lost because of stock-outs Spend (COST)– minimizing costs of purchases of material (BOTTOM=OVERALL COST LEADERSHIP=RUN)

10. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-10 IT Support for SCM Previously specialized providers (i2, Manugistics, etc) Now dominated by enterprise software providers SAP Oracle PeopleSoft

11. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-11 IT Support for SCM Supply Chain Knowledge Base – http://supplychain.ittoolbox.com http://supplychain.ittoolbox.com Supply Chain Management Review – www.manufacturing.net/scm www.manufacturing.net/scm Logistics/Supply Chain – http://logistics.about.comhttp://logistics.about.com

12. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-12 CUSTOMER RELATIONSHIP MANAGEMENT Part of Miami Dolphins opening case study CRM system – uses information about customers to gain insight in order to serve them better Management of customer interaction  Interaction should be easy enjoyable and error free  Multi-channel service delivery: multiple ways of interaction(email, fax, web…) Sales force automation Customer service and support Marketing campaign management

13. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-13 CUSTOMER RELATIONSHIP MANAGEMENT Sales force automation (SFA) systems – track all steps in sales process Sales lead tracking, listing potential customer Analyze the market and customer and offer product configuration tool Create repeat customer

14. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-14 Strategic & Competitive Opportunities with CRM More effective marketing campaigns Efficient sales process Superior after-sale service and support Treat customers better Tailor offerings in response to needs CRM is not just a software it encompass many different aspect of business including software, hardware, support and strategic business goals.

15. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-15 IT Support for CRM Front office systems – primary interface to customers and sales channels Back office systems – fulfill and support customer orders Databases are central The primary focus of customer relationship management: Top-line = Differentiation and focus = Growing

16. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-16 IT Support for CRM

17. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-17 IT Support for CRM CRM Today – www.crm2day.comwww.crm2day.com Customer Management Community – www.insightexec.com www.insightexec.com CIO Magazine Enterprise CRM – www.cio.com/enterprise/crm/index.html www.cio.com/enterprise/crm/index.html

18. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-18 E-Collaboration Integrated collaboration Knowledge management Social networking E-learning Open source information

19. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-19 INTEGRATED COLLABORATION ENVIRONMENTS (ICEs) ICE – environment in which virtual teams do their work Virtual team – when team members are located in varied geographical locations

20. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-20 INTEGRATED COLLABORATION ENVIRONMENTS (ICEs) Start with e-mail and get more advanced Workflow system – facilitates automation of business processes (value chain implementation) Workflow – steps, from beginning to end, required for a business process Document management system: manage documents through all processing stages, like workflow but more focus on document storage and retrieval.

21. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-21 INTEGRATED COLLABORATION ENVIRONMENTS (ICEs) Knowledge management (KM) system – supports capturing, organization, and dissemination of knowledge (know-how) Avoids reinventing the wheel Social network system – links you to people you know, and from there, people they know Referral service E-learning tools: facilitate learning on the job, in virtual class rooms or in self-study environment 24*7*265 (ex. Blackboard)

22. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-22 Strategic & Competitive Opportunities with ICEs Open source information: content that is publicly available, free of charge and most often updatable by anyone (ex. Wiki) Strategic & Competitive Opportunities with ICEs Joint ventures on large projects within an industry Collaborative preferred provider relationships Sharing knowledge Making the most of contacts

23. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-23 IT Support for ICEs TYPEEXAMPLE CollaborationLiveMeeting (www.microsoft.com) WorkflowMetastorm (www.metastorm.com) Document ManagementFileNet (www.filenet.com) Peer to PeerGroove (www.groove.net) Knowledge ManagementIBM Knowledge (www.ibm.com) Social NetworkLinkedin (www.linkedin.com)

24. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-24 IT Culture-Organizational perspective 1-Structuring IT function 2-Philosophical approach to IT

25. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-25 IT CULTURE-STRUCTURING IT FUNCTION 1- TOP-DOWN silo (command and control): Create an IT department devoted to everything related to technology 2-MATRIX: maintain IT personnel within the IT department but matrix them across the other function 3-Fully integrated: many IT personnel located within the other functional units In all of the above three structure there is still a separate IT department or function unit, but it differ by personnel distribution across other function

26. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. IT CULTURE-STRUCTURING IT FUNCTION Significant strategic IT functions in organizations CEO (chief executive officer): top level management CIO (chief information officer): overseeing every aspect of an organization information resource CTO (chief technology officer): overseeing both the underlying IT infrastructure and user facing technology CSO (chief security officer): ensuring security of information (firewall, intranet, extranet, anti-virus) CPO (chief privacy officer): ensuring the information is used ethically and the right people have access to certain type of information 2-26

27. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-27 IT CULTURE-Philosophical approach Decentralized (fully integrated) Centralized (top-down silo) Wait and see adopters: whether emerging technology prove it self before adopting them. Early IT adopters: try new things Technology innovation failure: a reward system for trying new technology even if they prove to be unsuccessful.

28. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. IT CULTURE-Philosophical approach Decentralized, early adopter: empower employees throughout the organization to try new and emerging technology in hope to succeed and have competitive advantage (like new companies looking for growth) Centralized wait and see organization: require demonstration of significant ROI before first adopting a new technology within the IT function and then deploying that technology to the rest of organization (companies in mature industry) 2-28

29. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 2-29 Enterprise Resource Planning(ERP) Collection of integrated software for business management, accounting, finance, service and maintenance, human resource management, inventory management, supply chain management, customer relationship management and e- collaboration Implement single integrated system to replace their legacy information systems. Legacy information system: massive, long-term business investment in software system with single focus, such system are often slow and nonextensible.

30. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Enterprise Resource Planning(ERP) ERP integrate all information process in the company within and across all functional area. The result: Integrated information across the board (data, information and business intelligence) One suit of applications Unified interface across the entire enterprise. 2-30