INTRODUCTION You live in a digital age Average American relies on more than 250 computers per day According to Time magazine, 14% of cell phone users stopped having sex to take a phone call 50 of the 2006 Fortune 500 companies were IT companies Dell Computer is one of them – it was started in 1984 and now has 65,000 employees worldwide

Welcome-MIS 7111 Brian Harrington

MANAGEMENT INFORMATION SYSTEMS MIS – planning for, development, management, and use of IT tools to help people perform all tasks related to information processing and management Three key resources in MIS 1. Information 2. People 3. Information technology

Information Technology

Michael Porter and Entourage

PORTER’S FIVE FORCES MODEL The Five Forces Model helps business people understand the relative attractiveness of an industry and the industry’s competitive pressures in terms of 1. Buyer power 2. Supplier power 3. Threat of substitute products or services 4. Threat of new entrants 5. Rivalry among existing competitors

PORTER’S FIVE FORCES MODEL

Buyer Power Buyer power – high when buyers have many choices and low when their choices are few Competitive advantages are created to get buyers to stay with a given company NetFlix – set up and maintain your movie list United Airlines – frequent flyer program Apple iTunes – buy/manage your music Dell – customize a computer purchase

Buyer Power Competitive advantage – providing a product or service in a way that customers value more than what the competition is able to do First-mover advantage – significant impact on gaining market share by being the first to market with a competitive advantage All competitive advantages are fleeting E.G., all airlines now have frequent flyer programs

Supplier Power Supplier power – high when buyers have few choices and low when choices are many The opposite of buyer power

Threat of Substitute Products and Services Threat of substitute products and services – high when there are many alternatives for buyers and low when there are few alternatives Switching costs can reduce this threat Switching cost – a cost that makes buyers reluctant to switch to another product/service Long-term contract with financial penalty Great service Personalized products based on purchase history

Threat of New Entrants Threat of new entrants – high when it is easy for competitors to enter the market and low when entry barriers are significant Entry barrier – product or service feature that customers have come to expect and that must be offered by an entering organization Banking – ATMs, online bill pay, etc

Rivalry Among Existing Competitors Rivalry among existing competitors – high when competition is fierce and low when competition is more complacent General trend is toward more competition in almost all industries IT has certainly intensified competition in all sectors of business

PORTER’S THREE GENERIC STRATEGIES Porter identified 3 generic business strategies for beating the competition 1. Overall cost leadership 2. Differentiation 3. Focus

Overall Cost Leadership Overall cost leadership – offering the same or better quality product or service at a price that is less than what any of the competition is able to do Wal-Mart (Always Low Prices, Every Day Low Prices) Dell – a computer the way you want it at an affordable price Hyundai and Kia – reliable low-cost cars Grocery stores – high-volume, low-margin

Differentiation Differentiation – offering a product or service that is perceived as being “unique” in the marketplace Hummer – Like Nothing Else Audi and Michelin – safety Whole Foods – high-end grocery store

Focus Focus – focusing on offering products or services To a particular segment or buyer group Within a segment of a product line To a specific geographic market Examples Restaurants Physician offices Legal offices

The Delta Model - Three Distinct Strategic Options System Lock-In System Economics Monopolistic Power Total Customer Solutions Customer Economics Cooperation Best Product Product Economics Rivalry Ex: Southwest Ex: iPod Google-Adwords

The Triangle: Options for Strategic Positioning System Lock-In Total Customer Solutions Best Product Proprietary Standard Microsoft, Intel Low Cost Dominant Exchange eBay, Yellow Pages Horizontal Breadth Accenture Exclusive Channel DifferentiationRedefining the Customer Relationship Netflix Customer Integration EDS

VALUE-CHAIN ANALYSIS Value-chain analysis – systematic approach to assessing and improving the value of business processes Value chain – chain or series of business processes, each of which adds value to your organization’s products or services Business process – standardized set of activities that accomplishes a specific task Two types of processes: Primary and Support

VALUE-CHAIN ANALYSIS VALUE-REDUCING PROCESSES

SUPPLY CHAIN MANAGEMENT Supply chain management (SCM) – tracks inventory and information among business processes and across companies Supply chain management (SCM) system – IT system that supports supply chain management Just-in-time (JIT) – method for producing or delivering a product or service just at the time the customer wants it Key feature of effective SCM Dell uses JIT to deliver custom computers

Dell’s Effective SCM Through JIT

Supply Chain Management Most supply chains use inter-modal transportation, multiple transportation channels (railway, truck, etc) to move products from origin destination This creates supply chain complexities

Opportunities of SCM Business strategy Overall cost leadership Bottom-line initiative Running the organization (RGT) framework Goal is to squeeze out every penny of cost possible in the supply chain This will optimize fulfillment, logistics, production, revenue and profit, and cost and price

IT Support for SCM SCM systems pioneered by specialist companies SCM is now part of ERP software (discussed later)

CUSTOMER RELATIONSHIP MANAGEMENT Customer relationship management (CRM) system – uses information about customers to gain insight into their needs, wants, and behaviors in order to serve them better Includes multi-channel service delivery, multiple ways in which customers can interact with a business Focuses on 1. Sales force automation 2. Customer service and support 3. Marketing campaign management and analysis

Customer Relationship Management

How is data organized in a CRM?

Customer Relationship Management Sales force automation (SFA) systems – automatically track all the steps in the sales process Sales lead tracking Listing potential customers Market and customer analysis Product configuration Getting repeat customers

GM’s Sales Force Automation (Purchase Funnel)

Opportunities of CRM Business strategy Differentiation and focus Top-line initiative Growing the organization Classic goals Treating customers better Understanding their needs and wants Tailoring offerings Providing “delightful” experiences

IT Support for CRM

Like, SCM systems, CRM was pioneered by specialist companies Like SCM, CRM is now part of ERP software (discussed later) Learn more Siebel Systems Salesforce.com CIO Magazine CRM Today destinationCRM.com

Force.com Wow!

Knowledge Management Systems Knowledge management (KM) system – IT system that supports the capturing, organizing, and dissemination of knowledge throughout the organization Knowledge of facts Sources of information Solutions, patents, and trademarks Best-practice processes

Social Networking Sites, etc Social networking site – site on which you post information about yourself, create a network of friends, read about other people, share content such as photos and videos, and communicate with other people (e.g., Myspace, Facebook, etc) Wiki’s-what the hell is a wiki? e

E-Learning Tools Facilitate learning on IT-enabled platforms WebCT, Blackboard, and e-College Used in education environments and also in business environments

IT Function Structural Placement Top-down silo – IT function handles all IT needs; strong “command and control” structure

IT Function Structural Placement Matrix – Separate IT department but decision making is “matrixed” across the organization

IT Function Structural Placement Fully integrated– separate IT function but IT personnel are placed within functional areas; tremendous empowerment

IT Culture Philosophical Approach Ranging from… “Wait and see” Must prove ROI before adopting technologies Early adopters Support technology innovation failure, a reward system for trying new technologies even if they prove to be unsuccessful

IT Culture Philosophical Approach

ENTERPRISE RESOURCE PLANNING How do you bring together SCM, CRM, and e-collaboration systems? With an ERP system. Enterprise resource planning (ERP) system – collection of integrated software for business management, accounting, finance, supply chain management, inventory management, customer relationship management, e-collaboration, etc.

ENTERPRISE RESOURCE PLANNING

Major ERP Vendors

ERP Attempts to integrate everything CRM drives what SCM will produce Everyone works together in e-collaboration The entire organization knows the entire organization

ERP Integrates Everything