2. e-Everything Age

3. 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.

4. The Age of Networked Intelligence Not just networking of technology but it is about the networking of humans through technology

5. Digital Economy Individuals and enterprises create wealth by applying knowledge, networked human intelligence, and effort to manufacturing, agriculture, and services

6. 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)

7. 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

8. Pressures Market Global Economy and Strong Competition Changing Nature of the Workforce Powerful Customers Technological Technological innovation and obsolescence Information Overload

9. Pressures (cont.) Societal Social Responsibility Government Regulations Government Deregulations Shrinking budgets and subsidies Ethical Issues

10. Organization Structure Need for new structures…..

11. 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

12. Organization Structure Division of Labor Who does what? Division of Decision Rights Who should make which decision? Coordination Mechanisms Organizational Boundaries Informal Structures

13. 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.

14. 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

15. Types of Information Systems

16. Old RuleIntervening 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. Enabling Role of IT

17. 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.

18. 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.

19. 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

20. IT Era’s Data Processing (DP) Micro Era Network Era WAN Network Environment Client-Server Thin Client WAP

21. Customer Manufacturing Information Systems Quality Control Information Systems Marketing Information Systems (CRM) Financial and Accounting Systems Geographic Information Systems Human Resources Systems

22. 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.

23. Information Technology in CRM

24. 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

25. Tools for Customer Service  Personalized Web Pages  FAQs  Tracking Tools  Chat Rooms  E-mail and Automated Response  Help Desks and Call Centers  Troubleshooting Tools

26. Other Information Systems Strategic National Semiconductor – “faster & better” decisions National Semiconductor – “faster & better” decisions Global – Levi’sLevi’s

27. 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

28. Control Systems

29. Information Age Transform the corporation enabled by information technology The goal should not just be cost control but the dramatic and profound transformation of customer service, responsiveness, and innovation

30. Management Control Systems Tools Measures Criteria Processes

31. Control & Auditing  Budgetary controls  Internal and External audits  Financial Ratio Analysis  Profitability Analysis &Cost Control  Product Pricing

32. IT Planning & BPR Nuts and Bolts…….

33. 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

34. Dell Case Study How Dell Reengineered its Supply Chain

35. Case: How Dell Reengineered its Supply Chain Problem:  Dell pioneered the mail order approach to selling PCs  In 1993, Compaq cuts prices to drive Dell out of the market. Dell experiences $65 million in losses. Solution:  Dell implements the following re-engineering strategies: just-in-time marketing mass customization electronic orders & shipments e-collaboration with major buyers reduction in testing period monitoring of productivity & returns on investments

36. Case: How Dell Reengineered its Supply Chain Results:  In 2001, Dell made over $4 million in computer web sales/ day.  Becomes leader in Customer Relationship Management (CRM)  Online tracking of orders & shipments  Viewer approved configurations and pricing  Customized home pages for clients.  Use of Intelligent Agents in production process.  Increased communication with suppliers.  By 1999, Dell becomes the number two PC seller and is a leader in management & profitability.

37. 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.

38. 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

39. IT Planning & E-Planning Some connections between IT planning and e-planning are:  Web applications may replace traditional IT applications for improving their operations.  Web applications must be integrated with legacy systems, ERP, etc.  The e-Commerce unit may report to the CIO.  The ISD and the e-Commerce project may compete for limited resources.  Some Web-based applications are designed to directly support the IT strategy and goals.

40. 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.

41. Applications Portfolio Tjan’s Portfolio Strategy. Tjan (2001) adopted a business project portfolio applications approach to create an Internet portfolio planning. The strategy is based on company fit, which can be either low or high, and the project’s viability, which can also be low or high. The various initiatives are then mapped on the Internet portfolio matrix, based on the two average scores. If both viability and fit are low, the project is killed. If both are high, then the project is adopted, etc.

42. 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

43. 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?

44. Reengineering…. BPR, Process Innovation, ERP, Mass Customization, Networked Organization, Empowerment, Teams, Virtual Corporations, TQM, JIT, POM, BPM, CRM

45. Reengineering the Corporation Written - 1993 Michael Hammer One of 1996 most influential people in the U.S. Time Magazine July 17,1996 James Champy

46. 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

47. Reengineering is... Reversing the Industrial revolution  Innovation  Process Oriented  Re-Inventing  Re-creating  Starting Over from Scratch

48. 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.

49. 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

50. Why Reengineer The 3 C’s Customers Competition Change Nothing is Constant or Predictable Change is the only constant

51. 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

52. Keys Leaders Staff Empowerment Broader Scope Knowledge / Skills Tasks to Process Redesign of Systems Information Technology Community

53. The 3 R’s Redesign Cross-function approach Retool Information Tools Reorchestrate Organization changes

54. Problems Fix vs. Change Focus Ignore Quit Scope HR / Unions Success Rate

55. 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

56. 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

57. 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]

58. 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)

59. Process Innovation vs. Incremental Improvement Change Effects Involvement Investment Orientation Focus Abrupt, volatile Immediate Few champions High initially, less later Technology Profits  Gradual, constant  Long-term  From few to everybody  Low initially, high to sustain  People  Processes Process Innov. Incr. Improv.

60. 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.

61. Enabling IT (P. 133) Information appears in only one place Only expert can perform complex work Only managers make decisions Locate items manually Shared Database, Inter, Intra Expert Systems Decision support systems Tracking technology  Information appears simultaneously  Novices can perform work  Decision making is part of everyone’s job  Items located automatically Old Rule Intervene Tech New Rule

62. CHANGE “It is an educational and communications campaign” p.148

63. 4 C’s – from Last Week Convergence Core Competencies Content (distributed) Control (local / departmental)

64. QVC Moving CRM from TV to the Web

65. 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

66. 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.