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

MAJOR BUSINESS INITIATIVES Gaining Competitive Advantage with IT Chapter 2

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

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)

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

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

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

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.

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)

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

McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved IT Support for SCM Supply Chain Knowledge Base – Supply Chain Management Review – Logistics/Supply Chain –

McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved 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( , fax, web…) Sales force automation Customer service and support Marketing campaign management

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

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

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

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

McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved IT Support for CRM CRM Today – Customer Management Community – CIO Magazine Enterprise CRM –

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

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

McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved INTEGRATED COLLABORATION ENVIRONMENTS (ICEs) Start with 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.

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

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

McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved IT Support for ICEs TYPEEXAMPLE CollaborationLiveMeeting ( WorkflowMetastorm ( Document ManagementFileNet ( Peer to PeerGroove ( Knowledge ManagementIBM Knowledge ( Social NetworkLinkedin (

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

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

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

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

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

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

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