Chapter 15 – Outsourcing in the 21st Century

Outsourcing Project

• Insourcing (in-house-development) – A common approach using the professional expertise within an organization to develop and maintain the organization’s information technology systems
• Outsourcing – An arrangement by which one organization provides a service or services for another organization that chooses not to perform them in-house

• Onshore outsourcing – engaging another company within the same country for services
• Near shore outsourcing – contracting an outsourcing arrangement with a company in a nearby country
• Offshore outsourcing – using organizations from developing countries to write code and develop systems
• Big selling point for offshore outsourcing “inexpensive good work”

• Factors driving outsourcing growth include;

• Core competencies
• Financial savings
• Rapid growth
• Industry changes
• The Internet
• Globalization

• According to PricewaterhouseCoopers “Businesses that outsource are growing faster, larger and more profitable than those that do not”
• Most organizations outsource their noncore business functions, such as payroll and IT

Outsourcing Benefits

Outsourcing benefits include;

• Increased quality and efficiency
• Reduced operating expenses
• Outsourcing non-core processes
• Reduced exposure to risk
• Economies of scale, expertise and best practices
• Access to advanced technologies
• Increased flexibility
• Avoid costly outlay of capital funds
• Reduced headcount and associated overhead expense
• Reduced time to market for products or services

Outsourcing challenges

Outsourcing challenges include;

• Contract length

• Difficulties in getting out of a contract
• Problems in foreseeing future needs
• Problems in reforming an internal IT department after the contract is finishe

• Competitive edge
• Confidentiality
• Scope definition 

Chapter 14 – Creating Collaborative Partnerships

Teams, Partnerships, and Alliances

• Organizations create and use teams, partnerships and alliances to;

• Undertake new initiatives
• Address both minor and major problems
• Capitalize on significant opportunities

• Organizations create teams, partnerships and alliances both internally with employees and externally with other organizations
• Collaboration system – supports the work of teams by facilitating the sharing and flow of information

 

• Organizations from alliance and partnerships with other organizations based on their core competency

• Core competency – An organization’s key strength, a business function that it does better than any of its competitors
• Core competency strategy – Organization chooses to focus specifically on its core competency and forms partnerships with other organizations to handle nonstrategic business processes
• Information technology can make a business partnership easier to establish and manage
• Information partnerships – Occurs when two or more organizations cooperate by integrating their IT systems, thereby providing customers with the best of what each can offer
• The internet has dramatically increased the ease and availability for IT – enabled organizational alliance and partnerships

Collaboration System

• Collaboration solves specific business tasks such as telecommuting, online meetings, deploying applications, and remote project and sales management
• Collaboration system – An IT- based set of tools that supports the work of teams by facilitating the sharing and flow of information.
• Two categories of collaboration

• Unstructured collaboration (information collaboration) – includes document exchange, shared whiteboards, discussion forums, and email.
• Structured collaboration (process collaboration) – involves shared participation in business processes such as workflow in which knowledge is hard-coded as rules

 Collaborative business functions

Collaboration systems include;

• Knowledge management systems
• Content management systems
• Workflow management systems
• Groupware systems

Knowledge Management Systems

• Knowledge management (KM) – involves capturing, classifying, evaluating, retrieving and sharing information assets in a way that provides context for effective decisions and actions
• Knowledge management system – supports the capturing and use of an organization’s “know-how”

Explicit and Tacit knowledge

• Intellectual and knowledge-based assets fall into two categories;

• Explicit knowledge – consists of anything that can be documented, archived, and codified, often with the help of IT
• Tacit knowledge – knowledge contained in people’s heads

• The following are two best practices for transferring or recreating tacit knowledge

• Shadowing – less experienced staff observe more experienced staff to learn how their more experienced counterparts approach their work
• Joint problem solving – a novice and expert work together on a project

Content Management

• Content management system (CMS) – provides tools to manage the creation, storage, editing and publication of information in a collaborative environment
• CMS marketplace includes;

• Document management system (DMS)
• Digital assets management system (DAM)
• Web content management system (WCM)

Working wikis

Wikis web based tools that make it easy for users to add, remove, and change online content

• Business wikis – collaborative web pages that allows users to edit documents, share ideas or monitor the status of a project

Workflow Management Systems

Work activities can be performed in series or in parallel that involves people and automated computer systems

• Workflow – defines all the steps or business rules, from beginning to end, required for a business process
• Workflow management system – facilitates the automation and management of business processes and controls the movement of work through the business process
• Messaging-based workflow system – sends work assignments through an email system
• Database-based workflow system – stores documents in a central location and automatically asks the team members to access the document when it is their turn to edit the document

Groupware systems

Groupware technologies

Web conferencing

Video conference – A set of interactive telecommunication technologies that allow two or more locations to interact via two-way video and audio transmissions simultaneously 

Instant message

Email is the dominant form of collaboration application, but real-time collaboration tools like instant messaging are creating a new communication dynamic

• Instant messaging – types of communications service that enables someone to create a kind of private chat room with another individual to communicate in real-time over the internet

Chapter 13 E-Business

E Business

• The internet is a powerful channel that presents new opportunities for organization to;

• Touch customers
• Enrich products and services with information
• Reduce costs

• How do ecommerce and e business differ?

• Ecommerce – the buying and selling of goods and services over the internet
• E business – the conducting of business on the internet including, not only buying and selling, but also serving customers and collaborating with business partners

Industries Using E business

E Business Modal

•  E business model – An approach to conducting electronic business on the Internet

 




Business-to-Business (B2B)


Electronic marketplace (E market place) – interactive business communities providing a central market where multiple buyers and sellers can engage in e business activities.


Business-to-Consumer (B2C)

Common B2C e business models include;

• E shop – A version of retail store where customers can shop at any hour of the day without leaving their home or office
• E mall – consists of a number of e shops; it serves as a gateway through which a visitor can access other e shops

Business types;

• Brick-and-mortar business
• Pure-play business
• Click-and-mortar business

Consumer-to-Business (C2B)

• Priceline.com is an example of a C2B e business model
• The demand for C2B e business will increase over the next few years due to customer’s desire for greater convenience and lower prices

Consumer-to-Consumer (C2C)

Online auctions

• Electronic auction (E auction) – Sellers and buyers solicit consecutive bids from each other and prices are determined dynamically
• Forward auction – Sellers use as a selling channel to many buyers and the highest bid wins
• Reverse auction – Buyers use to purchase a product or service, selecting the seller with the lowest bid

C2C communities

• Communities of interest – People interact with each other on specific topics, such as golfing and stamps collecting
• Communities of relations – People come together to share certain life experiences, such as cancer patients, senior,citizens, and car enthusiasts
• Communities of fantasy – People participate in imaginary environments, such as fantasy football teams and playing one-to-one with Michael Jordan

E Business benefits and challenge

• E business benefits include;

• Highly accessible
• Increased customer loyalty
• Improved information content
• Increased convenience
• Increased global reach
• Decreased cost

• E business challenges include;

• Protecting consumers
• Leveraging existing systems
• Increased liability
• Providing security

Chapter 12 - Integrating The Organization From The End To End - Enterprise Resource Planning

Enterprise Resource Planning (ERP)

• Serve as the organization's backbone in providing fundamental decision-making support.
• At the heart of all ERP systems is a database, when a user enters or updates information in one module, it is immediately and automatically updated throughout the entire system

Bringing the Organization Together

ERP enables employees across the organization to share information across a single,centralized database.

The Evolution of ERP

• to deliver automation across multiple units of an organization 
• to help facilitate the manufacturing process and address issues such as raw materials, inventory, order entry and distribution

Integrating SCM, CRM, and ERP

• SCM, CRM, and ERP are the backbone of e-business
• Allows the unlocking of information to make it available to any user, anywhere, anytime
• Integration of these applications is the key to success for many companies

Integration Tools

Many companies purchase modules from an ERP vendor, an SCM vendor, and a CRM vendor and must integrate the different modules together

• Middleware – several different types of software which sit in the middle of and provide connectivity between two or more software applications 
• Enterprise application integration (EAI) middleware – packages together commonly used functionality which reduced the time necessary to develop solutions that integrate applications from multiple vendors

Enterprise Resource Planning (ERP)

• Flexible – must be able to quickly respond to the changing needs of the organization
• Modular and open – must have an open system architecture, meaning that any module can be interface, with or detached whenever required without affecting the other modules.
•  

  Comprehensive – must be able to support a variety of organizational functions for a wide range of businesses
• Beyond the company – must support external partnerships and collaboration efforts

Chapter 11 Building a Customer-Centric Organization – Customer Relationship Management

Customer relationship management (CRM)

CRM enables an organization to;

•  Provide better customer service
•   Make call centers more efficient
•   Cross sell products more effectively
•   Helps sales staff close deals faster
•   Simplify marketing and sales processes
•   Discover new customers
•  Increase customer revenues

Recency, Frequency, and Monetary Value

An organization can find its most valuable customers by using a formula that industry insiders call FRM;

• How recently a customer purchased items (recency)
• How frequently a customer purchased items (frequency)
• How much a customer speeds on each purchased (monetary value)

The Evolution of CRM

• CRM reporting technologies help organizations identify their customers across other applications. 
• CRM analysis technologies help organizations segment their customers into categories such as best and worst customers. 
• CRM predicting technologies help organizations predict customer behavior, such as which customers are at risk of leaving. 

Using Analytical CRM to Enhance Decisions

• Operational CRM – supports traditional transactional processing for day-to-day front-office operations or systems that deal directly with the customers
• Analytical CRM – supports back-office operations and strategic analysis and includes all system that do not deal directly with the customers

Customer Relationship Management Success Factors

CRM success factors include;

• Clearly communicate the CRM strategy
• Define information needs and flows
• Build an integrated view of the customer
• Implement in iterations
• Scalability for organizational growth

Chapter 10 Extending the Organization - Supply Chain Management

Basics of Supply Chain

• SCM – the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability
• The supply chain has three main links.

• Materials flows from suppliers and their upstream suppliers at all levels
• Transformation of materials into semi-finished products, or the organization’s own production processes
• Distribution of products to customers and their downstream customers at all levels

Information Technology’s Role in the Supply Chain

Visibility

• Visibility – more visible models of different ways to do things in the supply chain have emerged.  High visibility in the supply chain is changing industries, as Wal-Mart demonstrated
• Supply chain visibility – the ability to view all areas up and down the supply chain
• The bullwhip effect occurs when distorted product demand information passes from one entity to the next throughout the supply chain.

Consumer Behavior

• Companies can respond faster and more effectively to consumer demands through supply chain enhances
• Once an organization understands customer demand and its effect on the supply chain it can begin to estimate the impact that its supply chain will have on its customers and ultimately the organizations performances
• Demand planning software – generates demand forecasts using statistical tools and forecasting techniques

Competition

• Supply chain planning (SCP) software – uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain
• Supply chain execution (SCE) software – automates the different steps and stages of the supply chain
• SCP and SCE both increase a company’s ability to compete
• SCP depends entirely on information for its accuracy
• SCE can be as simple as electronically routing orders from a manufacturer to a supplier
• SCP and SCE in the supply chain

Speed

• 3 factors fostering speed

Supply chain management Success factors

SCM industry best practices include:

• Make the sale to suppliers
• Wean employees off traditional business practices
• Ensure the SCM system supports the organizational goals
• Deploy in incremental phases and measure and communicate success
• Be future oriented

SCM Success stories

• Top reasons why more and more executives are turning to SCM to manage their extended enterprises
• Numerous decision support systems (DSSs) are being built to assist decision makers in the design and operation of integrated supply chains
• DSSs allows managers to examine performance and relationships over the supply chain and among:

• Suppliers
• Manufacturers
• Distributors
• Other factors that optimize supply chain performance

Chapter 9 – Enabling the Organization-Decision Making

A) Decision Making

• Reasons for Growth of Decision Making Information System

• People need to analyze large amounts of information 

• People must make decisions quickly – Time is of the essence and people simply do not have time to sift through all the information manually 

• People must apply sophisticated analysis techniques, such as modeling and forecasting, to  make good decisions – Information systems substantially reduce the time required to perform these sophisticated analysis techniques 

• People must protect the corporate asset of organizational information – Information systems offer the security required to ensure organizational information remains safe.

• Model – A simplified representation or abstraction of reality

• IT systems in an enterprise

B) Transaction Processing System

•  Moving up through the organizational pyramid users move from requiring transactional information to analytical information

• Transaction Processing System - The basic business system that serves the operational level (analysts) in an organization.
•  Online Transaction Processing (OLTP) - The capturing of transaction and event information using technology to (1) process the information according to defined business rules, (2) store the information, (3) update existing information to reflect the new information.
• Online Analytically Processing (OLAP) - The manipulation of information to create business intelligence in support of strategic decision making.

Decision support systems

• Decision support system (DSS) – models information to support managers and business professionals during the decision-making process
• Three quantitative models used by DSSs include;

• Sensitivity analysis – the study of the impact that changes in one (or more) parts of the model have on other parts of the model
• What-if analysis – checks the impact of a change in an assumption on the proposed solution
• Goal-seeking analysis – finds the inputs necessary to achieve a goal such as a desired level of outputs

Executive information system 

• Executive information system (EIS) – A specialized DSS that supports senior level executives within the organization
• Most EISs offering the following capabilities;

• Consolidation – involves the aggregation of information and features simple roll-ups to complex groupings of interrelated information
• Drill-down – enables users to get details, and details of information
• Slice-and-dice – looks at information from different perspectives

• Digital dashboard – integrates information from multiple components and presents it in a united display

Artificial intelligence (AI)

• The ultimate goal of AI is the ability to build a system that can mimic human intelligence
• Intelligent system – various commercial applications of artificial intelligence
• Artificial intelligence (AI) – simulates human intelligence such as the ability to reason and learn
• Four most common categories of AI include;

• Expert system – computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems
• Neural network – attempts to emulate the way the human brain works

• Fuzzy logic – a mathematical method of handling imprecise or subjective information

• Genetic algorithm – an artificial intelligent system that mimics the evolutionary, survival-of-the-fittest process to generate increasingly better solutions to a problem
• Intelligent agent – special-purposed knowledge-based information system that accomplishes specific tasks on behalf of its users

Data Mining

Data-mining software includes many forms of AI such as neutral networks and expert systems

Chapter 8 – Accessing Organizational Information – Data Warehouse

History of Data Warehousing

• Data warehouses extend the transformation of data into information
• The data warehouse provided the ability to support decision making without disrupting the day-to-day operations.

Data Warehouse Fundamentals

• Data warehouse is a logical collection of information gathered from many different operational databases that supports business analysis activities and decision making tasks.

• The primary purpose of a data warehouse is to aggregate information throughout an organization into a single repository for decision - making purposes

• all of information have in data - warehouse

• Extraction, transformation, and loading (ETL)

 a process that extracts information from internal and external databases, transforms the information using a common set of enterprise definitions, and loads the information into a data warehouse.

• Data mart

contains a subset of data warehouse information

Multidimensional Analysis and Data Mining

• Databases contain information in a series of two-dimensional tables
• In a data warehouse and data mart, information is multidimensional, it contains layers of columns and rows

• dimension - a particular attribute of information 

• Cube - common term for the representation of multidimensional information

• Data mining - the process of analyzing data to extract information not offered by the raw data alone.
• To perform data mining users need data-mining tools

• data-mining tool - uses a variety of techniques to find patterns and relationships in large volumes of information and infers rules that predict future behavior and guide decision making

Information Cleansing or Scrubbing

An organization must maintain high-quality data in the data warehouse

• accurate
• complete
• uniqueness

Information cleansing or scrubbing - a process that weeds out and fixes or discards inconsistent, incorrect, or incomplete information. Contact information in an operational system.


Business Intelligence

• information that people use to support their decision-making efforts

• principle BI enablers include:

• technology
• people
• culture

Chapter 7 Storing Organizational Information - Database

Relational Database Fundamentals

• Information is everywhere in an organization
• Information is stored in databases

• Database – maintains information about various types of objects (inventory), events (transactions), people (employees), and places (warehouses).

• Hierarchical database model – information is organized into a tree-like structure (using parent/child relationships) in such a way that it cannot have too many relationships.

• Network database model – a flexible way of representing objects and their relationships.

• Relational database model – stores information in the form of logically related two-dimensional tables.

Hierarchical Structure

Network Structure

Relational Structure

Entities and Attributes

• Entity is a person, place, thing, transaction, or event about which information is stored (The rows in each table contains the entities).

• Attributes is characteristics or properties of an entity class (The columns in each table contain the attributes).

Keys and Relationships

Primary keys and foreign keys identify the various entity classes (tables) in the database

• Primary key – a field (or group of fields) that uniquely identifies a given entity in a table.
• Foreign key – a primary key of one table that appears an attribute in another table and acts to provide a logical relationship among the two tables.

Relational Database Advantages

A) Increased flexibility

A well-designed database should;

• Handle changes quickly and easily
• Provide users with different views
• Have only one physical views
• Physical view – deals with the physical storage of information on a storage device
• Have multiple logical views
• Logical view – focuses on how users logically access information

B) Increased scalability and performance

A database must scale to meet increased demand, while maintaining acceptable performance levels

• Scalability – refers to how well a system can adapt to increased demands
• Performance – measures how quickly a system performs a certain process or transaction

C) Reduced information redundancy

Databases reduce information redundancy

• Redundancy – the duplication of information or storing the same information in multiple places
• Inconsistency is one of the primary problems with redundant information

D) Increased information integrity (quality)

• Information integrity – measures the quality of information
• Integrity constraint – rules that help ensure the quality of information
• Relational integrity constraint-rule that enforces basic and fundamental information-based constraints
• Eg. Users cannot create an order for a nonexistent customer ; An order cannot be shipped without an address

E) Increased information security

• Information is an organization asset and must be protected 
• Databases offer several security features including;

• Password – provides authentication of the user
• Access level – determines who has access to the different types of information
• Access control – determines types of user access, such as read-only access

Database Management Systems

A database management systems (DBMS) is software through which users and application programs interact with a database.

Data-Driven Websites

A data-driven website is an interactive website keep constantly updated and relevant to the needs of its costumer through the use of a database.

Data-Driven Website Advantages

• Development : Allows the website owner to make changes any time
• Content management : A static website requires a programmer to make updates.
• Future expandability : Having a data-driven website enables the site to grow faster than would be possible with a static site.
• Minimizing human error 
• Cutting production and update costs
• More efficient
• Improved stability

Integrating Information among Multiple Databases

An integration allows separate systems to communicate directly with each other.

• A forward integration takes information entered into a given system and sends it automatically to all downstream processes.

• A backward integration takes information entered into a given systems and sends it automatically to all upstream systems and processes

Chapter 6 – Valuing Organizational Information

Organizational Information

• Information is everywhere in an organization.
• Employees must be able to obtain and analyze the many different levels, formats and granularity of organizational information to make decisions.
• Successfully collecting, compiling, sorting and analyzing information can provide tremendous insight into how an organization is performing.
•  Levels, formats and granularity of organizational information.

The Value of Transactional and Analytical Information 

The Value of Timely Information 

• Real-time information – immediate, up-to-date information.
• Real-time system – provides real-time information in response to query requests.

The Value of Quality Information 

• Business decisions are only as good as the quality of the information used to make the decisions.
• You never want to find yourself using technology to help you make a bad decision faster.

Characteristics of high-quality information

• Accuracy - are all the values correct? For example, is the name spelled correctly? Is the dollar   amount recorded properly?

• Completeness - are any of the values missing? For example, is the address complete including street, city, state, and zip code?

• Consistency - aggregate or summary information in agreement with detailed information?For   example, do all total fields equal the true total of the individual fields?

• Uniqueness - each transaction, entity, and event represented only once in the information?For   example, are there any duplicate customers?

• Timeliness - the information current with respect to the business requirements? For example, is information updated weekly, daily, or hourly?

Low quality information example

Understanding the Costs of Poor Information

 The four primary sources of low quality information include;

• Online customers intentionally enter inaccurate information to protect their privacy.
• Information from different systems have different entry standards and formats. 
• Call center operators enter abbreviated or erroneous information by accident or to save time.
• Third party and external information contains inconsistencies, inaccuracies and errors.

 Potential business effects resulting from low quality information include;

• Inability to accurately track customers.
• Difficulty identifying valuable customers. 
• Inability to identify selling opportunities. 
• Marketing to nonexistent customers. 
• Difficulty tracking revenue due to inaccurate invoices. 
• Inability to build strong customer relationships.

Understanding the Benefits of Good Information 

• High quality information can significantly improve the chances of making a good decision.
• Good decisions can directly impact an organization's bottom line.

Chapter 5 Organizational Structures that Support Strategic Initiatives

Organizational Structures

Organizational employees must work closely together to develop strategic initiatives that create competitive advantages. Ethics and security are two fundamental building blocks that organizations must base their businesses upon. Well designed organizational structures will produce efficient communication channels and encourage fast, clean decisions. To develop strategic initiatives that create competitive advantages organizational employees must work closely together.

IT Roles and Responsibilities

a. Chief Information Officer (CIO) – oversees all uses of IT and ensures the strategic alignment of IT with business goals and objectives

• Broad CIO functions ;

• Manager – ensuring the delivery of all IT projects, on time and within budget.

• Leader – ensuring the strategic vision of IT is in line with the strategic vision of     the organization.

• Communicator – building and maintaining strong executive relationships.

b. Chief Technology Officer (CTO) – responsible for ensuring the throughput, speed, accuracy,          availability, and reliability of IT.

c. Chief Security Officer (CSO) – responsible for ensuring the security of IT systems.

d. Chief Privacy Officer (CPO) – responsible for ensuring the ethical and legal use of information. 

e. Chief Knowledge Office (CKO) - responsible for collecting, maintaining, and distributing the          organization’s knowledge.

The Gap Between Business Personnel and IT Personnel 

• Business personnel possess expertise in functional areas such as marketing, accounting, and sales.
• IT personnel have the technological expertise.  
• This typically causes a communications gap between the business personnel and IT personnel.

Improving Communications

• Business personnel must seek to increase their understanding of IT.
• IT personnel must seek to increase their understanding of the business.
• It is the responsibility of the CIO to ensure effective communication between business personnel and IT personnel.

Organizational Fundamentals – Ethics and Security

Ethics

• Ethics means the principles and standards that guide our behavior toward other people.

• Privacy is a major ethical issue

• Privacy – the right to be left alone when you want to be, to have control over your own personal possessions, and not to be observed without your consent.

• Issues affected by technology advances

• Intellectual property - Intangible creative work that is embodied in physical       form.

• Copyright - The legal protection afforded an expression of an idea, such as a song,video game, and some types of proprietary documents

• Fair use doctrine - In certain situations, it is legal to use copyrighted material.

• Pirated software - The unauthorized use, duplication, distribution, or sale of         copyrighted software. 

• Counterfeit software - Software that is manufactured to look like the real thing   and sold a such.

Security

Organizational information is intellectual capital must be protected . Information security is the protection of information from accidental or intentional misuse by persons inside or outside an organization. E-business automatically creates tremendous information security risks for organizations.

Chapter 4 – Measuring the Success of Strategic Initiatives

Measuring Information Technology's Success

• Key performance indicator – measures that are tied to business drivers.
• Metrics are detailed measures that feed KPIs.
• Performance metrics fall into the nebulous area of business intelligence that is neither technology, nor business centered, but requires input from both IT and business professionals.

Efficiency and Effectiveness

• Efficiency IT metric – measures the performance of the IT system itself including throughput, speed, and availability.
• Effectiveness IT metric – measures the impact IT has on business processes and activities including customer satisfaction, conversion rates, and sell-through increases.

Benchmarking - Baseline Metrics

Benchmarking – a process of continuously measuring system results, comparing those results to optimal system performance (benchmark values), and identifying steps and producers to improve system performance.

The Interrelationship of Efficiency and Effectiveness IT Metrics

Common types of efficiency IT metric;

• Throughput - the amount of information that can travel through a system at any point.
• Transaction speed - the amount of time a system takes to perform a transaction.
• System availability - the number of hours a system is available for users.
• Information accuracy - the extent to which a system generates the correct results when       executing the same transaction numerous times.
• Web traffic - includes a host of benchmarks such as the number of page views, the number of    unique visitors, and the average time spent viewing a Web page.
• Response time - the time it takes to respond to user interactions such as a mouse click.

Common types of effectiveness IT metrics

• Usability - The ease with which people perform transactions and/or find information. A popular usability metric on the Internet is degrees of freedom, which measures the number of clicks required to find desired information.

• Customer satisfaction - Measured by such benchmarks as satisfaction surveys, percentage of existing customers retained, and increases in revenue dollars per customer.

• Conversion rates - The number of customers an organization “touches” for the first time and persuades to purchase its products or services. This is a popular metric for evaluating the effectiveness of banner, pop-up, and pop-under ads on the Internet.

• Financial - Such as return on investment (the earning power of an organization’s assets), cost-benefit analysis (the comparison of projected revenues and costs including development, maintenance, fixed, and variable), and break-even analysis (the point at which constant revenues equal ongoing costs).

Interrelationships between efficiency and effectiveness. 

 Metrics for Strategic Initiatives

• Website metrics.
• Supply chain management (SCM) metrics
• Customer relationship management (CRM) metrics
• Business process reengineering (BPR) metrics
• Enterprise resource planning (ERP) metrics

 Website metrics

Supply Chain Management (SCM) Metrics

Customer Relationship Management (CRM) Metrics

Business Process Re engineering (BPR) and Enterprise Resource Planning (ERP) Metrics

Balanced scorecard  is a management system, in addition to a measurement system, that enables organizations to clarify their vision and strategy and translate them into action.

Chapter 3 Strategic initiatives for implementing competitive advantage

Strategies initiatives

• Organizations can undertake high-profile strategic initiatives including;

• Supply chain management (SCM) 

• Customers relationship management (CRM)

• Business process re engineering (BPR)

•  Enterprise resources planning (ERP)

a) Supply Chain Management (SCM)


 It involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability

 Four basic components of supply chain management;

• Supply chain strategy   – strategy for managing all resources to meet customers demand.
• Supply chain partner    – partners throughout the supply chain that deliver finished products,                                              raw materials and services.
• Supply chain operation – schedule for production activities
• Supply chain logistics    – product delivery process

Effective and efficient SCM systems 

• Decrease the power of its buyers
• Increase its own supplier power
• Increase switching costs to reduce the threat of substitute products or services
• Create entry barriers thereby reducing the threat of new entrants
• Increase efficiency while seeking a competitive advantages through cost leadership

b) Customers Relationship Management (CRM)

   

 Its involves managing all aspects of a customer’s relationship with an organization to increase customer loyalty and retention and an organization’s profitability, Many organizations, such as Charles Schwab and Kaiser Permanente, have obtained great success through the implementation of CRM systems. CRM is not just technology, but a strategy, process and business goal that an organization must embrace on an enterprise wide level

CRM can enable an organization to;

• Identify types of customers
• Design individual customer marketing campaign
• Treat each customer as a individual
• Understand customer buying behaviors

c) Business Process Re-engineering (BPR)

It is a standardized set of activities that accomplish a specific task, such as processing a customer’s order. The analysis and redesign of workflow within and between enterprises. The purpose of BPR is to make all business processes best in class.

Finding Opportunity Using BPR

• A company can improve the way it travels the road by moving from foot to horse and then horse to car
• BPR looks at taking a different path, such as an airplane which ignore the road completely
• Types of change an organization can achieve, along with the magnitudes of change and the potential business benefit.

d) Enterprises Resource Planning (ERP)

• It  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. 
• Keyword in ERP is “enterprise”. 
• ERP systems collect data from across an organization and correlates the data generating an enterprise wide view.

Chapter 2 Identifying Competitive Advantages

What is competitive advantage?

 A product or services that an organization’s customers place a greater value on than similar           offerings from a competitor.

What is First-mover advantages ?

Occurs when an organization can significantly impact its market share by being first to market with a competitive advantage.

What is Environmental scanning ?

The acquisition and analysis of events and trends in the environment external to an organization.

Three Common tools

• Porter's five forces model
• Porter's three generic strategies
• Value chains

Porter’s Five Forces Model 

Porter’s Five Forces Model determines the relative attractiveness of an industry.

• Buyer power - high when buyers have many choices of whom to buy from and low when their choices are few.

• Loyalty program  - rewards customers based on the amount of business they do with a particular organization.
• Switching costs   - costs that can make customers reluctant to switch to another product or service.

• Supplier power - high when buyers have few choices of whom to buy from and low when their choices are many.

• Supply chain - consist of all parties involved in the procurement of a product or raw material.

•  Business to Business (B2B) marketplace - an Internet-based service that brings together many buyers and sellers.

•  Private exchange – a single buyer posts its needs and then opens the bidding to any supplier who would care to bid.

•  Reverse auction – an auction format in which increasingly lower bids are solicited from organizations willing to supply the desired product or service at an increasingly lower price.

•  Threat of substitute products or services - high when there are many alternatives to a product or services and low when there are few alternatives from which to choose.

Switching cost - costs that can make customers reluctant to switch to another product or service.

• Threat of new entrants - high when it is easy for new competitors to enter a market and low when there are significant entry barriers to entering a market.

Entry barrier -  is a product or service feature that customers have come to expect from organizations in a particular industry and must be offered by an entering organization to compete and survive.

•  Rivalry among existing competitors - high when competition is fierce in a market and low when competition is more complacent.

The overall trend is increased competition in just about every industry.

Three Generic Strategies 

Value Creation

Value chain determine the success or failure of its chosen strategy

• Business process – a standardized set of activities that accomplish a specific task, such as processing a customer’s order,

• Value chain – views an organization as a series of processes, each of which adds value to the product or service for each customer.

Chapter 1 Business Driven Technology

 Information Technology (IT)?

IT is everywhere in business. Understanding IT provides great insight to anyone learning about business.

Information Technology’s Impact on Business Operations

•  Organization typically operate by functional areas or functional silos
•  Functional areas are interdepent

Information Technology Basics

•  Information technology (IT) – A field concerned with the use of technology in managing and processing information. IT is an important enabler of business success and innovation

•  Management information system (MIS) – A general name for the business function and academic discipline covering the application of people, technologies and procedures to solve business problems. 

•  When beginning to learn about information technology it is important to understand

-Data, information and business intelligence-IT resources-IT cultures

 Data, information and business intelligence

•   Data is a raw facts that describe the characteristics of an event Information is a data converted into a meaningful and useful context.
•  Business intelligence is an applications and technologies that are used to support decision          making efforts.
• Information is data converted into a a meaningful and useful context.

 IT Resources

•  People use
•  Information technology to work with
•  Information

 IT Cultures

Organizational information cultures include;

• Information-Functional Culture – Employees use information as a means of exercising influence or power over others. For example, a manager in sales refuses to share information with marketing. This causes marketing to need the sales manager’s input each time a new sales manager’s input each time a new sales strategy is developed.

• Information-Inquiring Culture – Employees across departments search for information to better understand the future and align themselves with current trends and new directions.

• Information-Discovery Culture – Employees across departments are open to new insight about crisis and radical changes and seek ways to create competitive advantages.

• Information-Sharing Culture – Employees across departments trust each other to use information (especially about problems and failures) to improve performance.