Strategic Initiatives for Implementing Competitive Advantage Great products—Innovative products Doesn’t matter---Bad processes—no perceived value 1) You want customers to buy your product 2) You have to be able to produce at a price customers are willing to pay

Using IT to gain a competitive advantage Businesses use IT to give themselves a competitive advantage Customers value their product or service more than the competition’s product or service. How can we do things better and more efficiently? Is there a better way of doing things? Businesses have to understand the process by which they do things Find bottlenecks Remove redundant tasks Recognize smooth running processes

Business Processes Drive IT choices Business strategies and goals drive processes Figure out business needs and goals first—then select IT to get the job done Managers often find themselves in the difficult position of changing a business process because the system can’t support the ideal solution. Typically fail when IT selected first When considering change, alternative business processes should be: 1) Effective: deliver the intended results 2) Efficient: consume the least amount of resources for the intended value. 3) Adaptable/flexible and support change Technology and market forces constantly change

Changes to Improve Business Processes Automation: Operational process Manual tasks become computerized Streamlining: Managerial process Simplify steps Eliminate unnecessary steps and/or redundancies Eliminate bottlenecks Reengineer business processes: strategic process change Find a completely different approach Flat world has more competition than ever before as there are more companies and customers in the global marketplace. Focus on core processes that are critical to performance rather than on margin processes that have little impact

Finding Opportunity Using Business Process Improvement (Reengineering) A company can improve the way it travels the road by moving from foot to horse and then horse to car Follow the same path as before, but just do it faster Business Process Improvement looks at taking a different path, such as an airplane which ignores the road completely Workflow: Improving Business Processes Companies frequently strive to improve their business processes by performing tasks faster, cheaper, and better The above figure displays different ways to travel the same road A company could improve the way that it travels the road by moving from foot to horse and then from horse to car However, true BPR would look at taking a different path. A company could forget about traveling on the same old road and use an airplane to get to its final destination. Companies often follow the same indirect path for doing business, not realizing there might be a different, faster, and more direct way of doing business.

Businesses can also improve their competitiveness by changing what they do Focusing on business intelligence and data analytics Putting together all of the pieces so that you can better understand your business, the environment that it operates in, and the factors that influence it. Set of methodologies, processes, architectures and technologies that transform raw data into meaningful information (business intelligence) to enable more effective decision making and better insights into the business (strategical, tactical and operational). Goal: to make better business decisions Moving to the “cloud” may also help improve an organization’s ability to be competitive.

Major business initiatives where improving the process can result in a competitive advantage Managing the flows of information between all of the parties directly and indirectly involved in the procurement of a product or raw material. Supply Chain Management (SCM) Managing all aspects of a customer’s relationship with an organization with the goal of increasing customer loyalty and retention and an organization's profitability Customer Relationship Management (CRM) While SCM and CRM sound like IT systems, they are actually business processes and business goals that are enhanced by technology

Enterprise Resource Planning Enterprise resource planning (ERP) – integrates all departments and functions throughout an organization into a single IT system so that employees can make decisions by viewing enterprise wide information on all business operations (consistent enterprise wide information) Keyword in ERP is “enterprise” SCM systems focus specifically on suppliers CRM systems focus specifically on customers ERP systems focus on integrating all processes, departments and operations for the entire enterprise An ERP system provides a method for effective planning and controlling of all the resources required to take, make, ship, and account for customer orders in a manufacturing, distribution, or service organization. What happens when sales and marketing departments are working from two different sets of customer information and product information? Would the marketing campaigns be accurate? Would sales be able to deliver the products it sells to its customers? Enterprise resource planning systems provide organizations with consistency. The key word in enterprise resource planning is enterprise. SCM systems focus specifically on suppliers CRM systems focus specifically on customers ERP systems focus on everything, all processes, departments, and operations for an enterprise ERP systems encompass everything, including SCM and CRM.

Sa l es We don’t need this ERP stuff. We already have enterprise wide software that we are all using. It is called a SPREADSHEET. Acctg When displaying the sales database example and the accounting database be sure to point out the differences in the data Correlating and making sense of these two similar, but different, spreadsheets, is going to be challenging. How can you understand customers when one spreadsheet has customer name and one has customer ID? How can you understand sales reps when one spreadsheet has sales rep names and one spreadsheet has sales rep ID? Date format is different – will this cause problems? One quantity is in units and one quantity has decimal points – what problems will this cause? Unit price and unit cost is rounded to dollars in one spreadsheet and contains cents in another – what problems will this cause?

Enterprise Resource Planning ERP systems collect data from across an organization and correlates the data generating an enterprise wide view that is consistent and real-time. Common database Complete Data entry required Real time Consistent One true picture The true benefit of an ERP system is its ability take the many different forms of data from across the different organizational systems and correlate, aggregate, and provide an enterprise wide view of organizational information. The two previous spreadsheets display examples of differences in data that can be fixed by using an ERP system. Without understanding how all of the different divisions, products, departments, etc. are operating you cannot run the business

In Summary Information Technology can be an important enabler of business success and innovation. Information Technology is most useful when it leverages the talents of people. In order for this to happen, you must have an enterprise wide view of the entire business operation.