e-Everything Age

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.

The Age of Networked Intelligence

Not just networking of technology but it is about the networking of humans through technology

Digital Economy

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

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)

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

Pressures

Market Global Economy and Strong Competition Changing Nature of the Workforce Powerful Customers

Technological Technological innovation and

obsolescence Information Overload

Pressures (cont.)

Societal Social Responsibility Government Regulations Government Deregulations Shrinking budgets and subsidies

Ethical Issues

Organization Structure

Need for new structures…..

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

Organization Structure

Division of Labor Who does what?

Division of Decision Rights Who should make which decision?

Coordination Mechanisms Organizational Boundaries Informal Structures

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.

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

Types of Information Systems

Old Rule Intervening 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.

Ena

blin

g R

ole

of IT

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.

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.

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

IT Era’s

Data Processing (DP) Micro Era Network Era WAN Network Environment

Client-Server Thin Client WAP

Customer

ManufacturingInformation Systems

Quality ControlInformationSystems

MarketingInformationSystems (CRM)

Financialand AccountingSystems

GeographicInformationSystems

HumanResourcesSystems

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.

Information Technology in CRM

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

Tools for Customer Service

Personalized Web Pages

FAQs

Tracking Tools

Chat Rooms

E-mail and Automated Response

Help Desks and Call Centers

Troubleshooting Tools

Other Information Systems

Strategic National Semiconductor – “faster & better”

decisions

Global – Levi’s

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

IT Planning & BPR

Nuts and Bolts…….

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

Dell Case Study

How Dell Reengineered its Supply Chain

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.

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

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.

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

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?

Reengineering….

BPR, Process Innovation, ERP, Mass Customization, Networked

Organization, Empowerment, Teams, Virtual Corporations, TQM, JIT, POM,

BPM, CRM

Reengineering the Corporation

Written - 1993 Michael Hammer

One of 1996 most influential people in the U.S.

Time Magazine July 17,1996

James Champy

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

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.

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

Why Reengineer

The 3 C’s Customers Competition Change

Nothing is Constant or Predictable Change is the only constant

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

Keys

Leaders Staff Empowerment Broader Scope

Knowledge / Skills

Tasks to Process Redesign of Systems

Information Technology Community

The 3 R’s

Redesign Cross-function approach

Retool Information Tools

Reorchestrate Organization changes

Problems

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

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

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

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]

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)

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.

CHANGE

“It is an educational and communications campaign”

p.148

4 C’s – from Last Week

Convergence Core Competencies Content (distributed) Control (local / departmental)

QVC

Moving CRM from TV to the Web

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

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.