Chapter Nineteen

 Outsourcing in the 21st century

1. OUTSOURCING PROJECTS


- Insourcing (in-house-development) – A common approach using the professional expertise within an organization to develop and maintain the organization’s information technology systemsOutsourcing – 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”

2.  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

3. 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


4. OUTSOURCING CHALLENGES


 Outsourcing challenges include;
- Contract length
1. Difficulties in getting out of a contract
2. Problems in foreseeing future needs
3. Problems in reforming an internal IT department after the contract is finished
- Competitive edge
- Confidentiality
- Scope definition

Chapter Fifteen

 Creating collaborative partnerships

1. TEAMS, PARTNERSHIPS AND ALLIANCES


 a. Organizations create and use teams, partnerships and alliances to;
   -Undertake new initiatives

  -Address both minor and major problems
  - Capitalize on significant opportunities

b.Organizations create teams, partnerships and alliances both internally with employees and externally with other organizations

c. Collaboration system – supports the work of teams by facilitating the sharing and flow of information

Information partnerships with other organizations

c.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

d. 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

e. The internet has dramatically increased the ease and availability for IT – enabled organizational alliance and partnerships


2. COLLABORATION SYSTEMS


a.  Collaboration solves specific business tasks such as telecommuting, online meetings, deploying applications, and remote project and sales management

b.  Collaboration system – An IT- based set of tools that supports the work of teams by facilitating the sharing and flow of information.

c.  Two categories of collaboration

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

Collaborative business functions 

a.  Collaboration systems include;
- Knowledge management systems
- Content management systems
- Workflow management systems
- Groupware systems


3. 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”


4. EXPLICIT AND TACIT KNOWLEDGE


a.  Intellectual and knowledge-based assets fall into two categories;
1. Explicit knowledge – consists of anything that can be documented, archived, and codified, often with the help of IT
2. Tacit knowledge – knowledge contained in people’s heads


b.  The following are two best practices for transferring or recreating tacit knowledge
1. Shadowing – less experienced staff observe more experienced staff to learn how their more experienced counterparts approach their work
2. Joint problem solving – a novice and expert work together on a project

Reasons why organizations launch knowledge management programs 

5. CONTENT MANAGEMENT


a.  Content management system (CMS) – provides tools to manage the creation, storage, editing and publication of information in a collaborative environment
b. CMS marketplace includes;
- Document management system (DMS)
- Digital assets management system (DAM)
- Web content management system (WCM)


6. 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


7. 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


8. GROUPWARE SYSTEMS

Groupware technologies

- Groupware – software that supports teams interaction and dynamics including calendaring, scheduling and videoconferencing

9. WEB CONFERENCING



- Web conferencing – blends audio, video and document-sharing technologies to create virtual meeting rooms where people “gather” at a password-protected website

10. VIDEOCONFERENCING



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

11. INSTANT MESSAGING



- 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
- Instant messaging application

Chapter Fourteen

Ebusiness

1. The internet is a powerful channel that presents new opportunities for organization to;
 -Touch customers
 -Enrich products and services with information
 -Reduce costs


2. How do ecommerce and ebusiness 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


3. Industries using ebusiness






4. E BUSINESS MODELS

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 include;
- 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






5. EBUSINESS BENEFITS AND CHALLENGES


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
- Adhering to taxation rules


There are numerous advantages and limitations in e business revenue models including;
- Transaction fees
- License fees
- Subscription fees
- Value-added fees
- Advertising fees




6. MASHUPS



Web mash up – A Web site or Web application that uses content from more than one source to create a completely new services
- Application programming interface (API) – A set of routines, protocols, and tools for building software applications

- Mash up editor – WSYIWYGs (What You See Is What You Get) for mash ups

Chapter Twelve

Integrating the organization from end to end - enterprise resource planning

1. Enterprise Resource Planning (ERP)


-It serves as the organization’s backbone in providing fundamental decision making support.

-It enables people in different business areas to communicate. 

-ERP system helps an organization to obtain operational efficiencies, lower costs, improve supplier and customer relations, and increase revenues and market share.

-The heart of an ERP system is a central database that collects information from and feeds information into all the ERP system’s individual application components (called modules), supporting diverse business function such as accounting, manufacturing, marketing, and human resources. 

-ERP automates business processes such as order fulfillment- taking an order from a customer, shipping the purchase, and then billing for it.


ERP Integration Data Flow
ERP Process Flow

Bringing the Organization Together 

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

-With extended portal capabilities, an organization can also involve its suppliers and customers to participate in the workflow process, allowing ERP to penetrate the entire value chain, and help the organization achieve greater operational efficiency.


Organization before ERP
ERP- Bringing the Organization Together


2. The Evolution of ERP

-Although ERP solutions were developed 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, ERP was unable to extend to other functional areas of the company such as sales, marketing, and shipping. 

-It could not tie to any CRM capabilities that would allow organizations to capture customer-specific information, nor did it work with websites or portals used for customer service or order fulfillment.


3. Integrating SCM, CRM, and ERP

Integration of SCM, CRM, and ERP is the key to success for many companies. Integration allows the unlocking of information to make it available to any user, anywhere, anytime. 2 main competitors in ERP market:
1. Oracle
2. Sap


4. Primary Users and Business Benefits of Strategic Initiatives.
Integration Tools

-An integrated enterprise infuses support areas, such as finance and human resources, with a strong customer orientation. 

-Integration are achieved using: * Middleware- several different types of software that sit in the middle of and provide
connectivity between two or more software applications. It translates information between
disparate systems.
* Enterprise application integration (EAI) middleware- represents a new approach to middleware
by packaging together commonly used functionality, such as providing prebuilt links to popular
enterprise applications, which reduces the time necessary to develop solutions that integrate
applications from multiple vendors.


5. Integration between SCM, CRM, and ERP Applications

-Companies run on independent applications, such as SCM, CRM, and ERP. If one application performs poorly, the entire customer value delivery system is affected.


Enterprise Resource Planning’s Explosive Growth:
Reasons of ERP being proven to be such a powerful force:



-ERP is a logical solution to the mess of incompatible applications that had sprung up in most businesses.
-ERP addresses the need for global information sharing and reporting.
-ERP is used to avoid the pain and expense of fixing legacy systems


6. To qualify as a true ERP solution, the system not only must integrate various organization processes, but also must be:


-Flexible- an ERP system should be flexible in order to respond to the changing needs of an enterprise. 

-Modular and open- an ERP system has to have open system architecture, meaning that any module can be interfaced with or detached whenever required without affecting the other modules. The system should support multiple hardware platforms for organizations that have a heterogeneous collection of systems. It must also support third- party add-on components. 

-Comprehensive- an ERP system should be able to support a variety of organizational functions and must be suitable for a wide range of business organizations. 

-Beyond the company- an ERP system must not be confined to organizational boundaries but rather support online connectivity to business partners or customers.

-Everyone involved in sourcing, producing, delivering the company’s product works with the same information, which eliminates redundancies, cuts wasted time, and removes misinformation.

Chapter Eleven

Building a customer - centric organization - customer relationship management


1. 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


2. 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)


3. The evaluation 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.







4. The ugly side of CRM: Why CRM matters more now than ever before.








5. Customer relationship management's explosive growth.







6. Using analytical CRM to enhance decision.

-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


7. 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


8. Using analytical CRM to enhance decision.

Operational CRM and analytical CRM

Chapter Ten

Extending The Organization - Supply Chain Management

1. Supply Chain Management
- Companies that excel in supply chain operations perform better in almost every financial measure of success, according to a report from Boston-based MR Research Inc.
- These companies understand that value chain performance translates to productivity and market-share leadership.








2. Basics of Supply Chain

-A supply chain consists of all parties involved, directly or indirectly, in the procedurement of a product or raw material.
- Organization must embrace technologies that can effectively manage and oversee their supply chain.

-Supply chain management involves the management of information flow between and among stages in a supply chain to maximize total supply chain effectiveness and profitability.



3. Information Technology's Role in the Supply Chain

-The notion of virtually seamless information links within and between organizations is an essential element of integrated supply chain.
-Information technology's primary role in SCM is creating the integration or tight process and information linkages between functions within a firm.
-Considerable evidence shows that this type of supply chain integration results in superior supply chain capabilities and profits.

4. Visibility.

-Supply chain visibility is the ability to view all areas up and down the supply chain.
-Bullwhip effect occurs when distorted products demand information passes from one entity to the next through the supply chain.
*Information technology allows additional visibility in the supply chain.


5. Consumer behavior.  

-Demand planning software generates demand forecasts using statistical tools and forecasting techniques.
-Ones an organization understand customer demand and its effect on the supply chain it can begging to estimate the impact that its supply chain will have on its customers and ultimately the organization's performance.


6. Competition.

-Supply chain management can be broken down in"
-Supply chain planning software: uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain while reducing inventory. SCP depends entirely on information for its accuracy.
-Supply chain executive (SCE) software automates the different stems and stages of the supply chain.


7. Speed. 

-During the past decade, competition has focused on speed. New forms of severs, telecommunications enabling companies to perform activities that were once never thought possible.
-Another aspect of speed is the company's ability to satisfy continually changing customer requirements efficiently, accurately, and quickly.


8. Supply Chain Management Success Factors

-To succeed in today's competitive markets, companies must align their supply chains with the demands of the markets key serve.
-To achieve success such as reducing operation costs, improving asset productivity, and compressing order cycle time, and organization should follow the seven principles of SCM outlines.
-One of the benefits is to know immediately what is being transacted at the customer and of the supply chain instead of waiting days or weeks for the information to flow.
-Organizations should study industry best practices to improve their chances of successful implementation of SCM systems. The following are keys to SCM success.



9. Make the sale to supplies.  

-The hardest part of any SCM system is its complexity because a large part of the system extends beyond the company's walls.


10. Wean employees of traditional business practices.  

-Operations people typically deal with phone calls, faxes, and orders scrawled on paper and will most likely want to keep it that way.

11. Ensure the SCM system supports the organizational goals.  

-It is important to select SCM software that give organizations and advantage in the areas most crucial to their business success.


12. Deploy in incremental phases and measure and communicate success.   

-Design the deployment of the SCM system in incremental phases.


13. Be future oriented.   

-The supply chain design must anticipate the future state of the business.

Chapter NIine

Enabling the organization - decision making


1. Decision making.

Reasons for growth of decision making information.

-People need to analyze large amounts of information – Improvements in technology itself, innovations in communication, and globalization have resulted in a dramatic increase in the alternatives and dimensions people need to consider when making a decision or appraising an opportunity.

-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

2. Transaction processing system.  

-Moving up through the organizational pyramid users move from requiring transnational information to analytically information


-Transaction processing system – the basic business system that serves the operational level (analysis) 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 analytical processing (OLAP) – the manipulation of information to create business intelligence in support of strategic decision making

3. 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;
1. Sensitivity analysis – the study of the impact that changes in one (or more) parts of the model have on other parts of the model
2. What-if analysis – checks the impact of a change in an assumption on the proposed solution
3. Goal-seeking analysis – finds the inputs necessary to achieve a goal such as a desired level of outputs

WHAT IF ANALYSIS

GOAL SEEKING ANALYSIS

4. Executive information system.

-Executive information system (EIS) – A specialized DSS that supports senior level executives within the organization.
-Interaction between a TPS and an EIS






Interaction between a TPS and a DSS




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;
1. Expert system – computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems
2. Neural network – attempts to emulate the way the human brain works
o Fuzzy logic – a mathematical method of handling imprecise or subjective information
3. Genetic algorithm – an artificial intelligent system that mimics the evolutionary, survival-of-the-fittest process to generate increasingly better solutions to a problem
4. 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