Outsourcing In The 21st Century ( Chapter 19 )

OUTSOURCING PROJECTS

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

1. Onshore outsourcing - engaging another company within the same country for service.
2. Nearshore outsourcing - contracting an outsourcing arrangement with a company in a nerby country. Often this country will share a border with a native country
3. Offshore outsourcing - using organization from developing countries to write code and develop systems. In offshore outsourcing the country is geographically far away.

OUTSOURCING BENEFITS

The benefits associated with outsourcing include :

• Increased quality and efficiency of a process, service or function
• Reduced operating expenses
• Resources focused on core profit-generating competencies
• Reduced exposure to risks involved with large capital investment
• Access to outsourcing service provider's economies of sales
• Access to outsourcing services provider's expertise and best-in-class practice
• Access to advanced technologies
• Increased flexibility with the ability to respond quickly to changing markets demand
• No costly outlay capital funds
• Reduced head count and associated overhead expense
• Reduce time to market for products or service

OUTSOURCING CHALLENGES

• Contract length
• Competitive edge
• confidentiality
• Scope definition

E-Business ( Chapter 14 )

E-BUSINESS MODELS


A Business model is a plan that details how a company creates, delivers, and generates revenue. Some models are quite simple : A company produces a good or services and sell it to customer. If the company is successful, sales exceed costs and the company generates a profit. Other models are less straightforward, and sometimes it's not immediately clear who makes money and how much. Radio and network television are broadcast free to anyone with a receiver, for instance advertisers pay the costs of programming.

• Business-to-business
• Business-to-customer
• Customer-to-business
• Customer-to-customer

e-Business

BUSINESS-TO-BUSINESS ( B2B )

• Applies to businesses buying from and selling to each other over the internet.

BUSINESS-TO-CUSTOMER ( B2C )

• Applies to any business that sales its product or services to consumers over the internet

CUSTOMER-TO-BUSINESS ( C2B )

• Applies to any customer that sales a product or services to a business over the internet

CUSTOMER-TO-CUSTOMER ( C2C )

• Applies to sites primarily offering goods and services to assist consumers interacting with each other over the internet.

E-BUSINESS TOOL FOR CONNECTING AND COMMUNICATING

• Email
• Instant Messaging
• Pod casting
• Video conferencing
• Wed conferencing
• Content management systems

THE CHALLENGES OF E-BUSINESS

• Identifying limited market segments
• Managing consumer trust
• Ensuring customer protection
• Adhering to taxation rules

Integrating the Organization from End to End - Enterprise Resource Planning ( Chapter 12 )

ENTERPRISE RESOURCE PLANNING ( ERP )

WHAT IS ENTERPRISE RESOURCES PLANNING?

THE EVOLUTION OF ERP

Evolution Of ERP

INTEGRATION TOOLS

• Integration are achieved using middleware - several different types of software that sit in the middle of an provide connectivity between two or more software application. Middleware 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 link to popular enterprise application, which reduces the time necessary to develop solutions that integrate applications from multiple vendors.

Primary Users and Business Benefits of Strategic Initiatives

Building a Customer - centric Organization - Customer Relationship Management ( Chapter 11 )

CUSTOMER RELATIONSHIP MANAGEMENT


Customer Relationship Management ( CRM ) is a means of managing all aspects of customer's relationship with an organization to increase customer loyalty and relation and an organization's profitability. CRM allows an organization to gain insight into customer's shopping and buying behaviour. Every time the customer communicates with a company, the firm has a chance to built a trusting relationship with that particular customer.

WHAT IS CUSTOMER RELATIONSHIP MANAGEMENT?

OPERATIONAL AND ANALYTICAL CRM


Operational CRM support traditional transactional processing for day-to-day front-office operations or system that deal directly with the customer. Analytical CRM support back-office operations and strategic analysis and includes all system that do not deal directly with customer.

Operational CRM and Analytical CRM

Extending The Organization - Supply Chain Management ( Chapter 10 )

BASICS SUPPLY CHAIN MANAGEMENT

WHAT IS SUPPLY CHAIN MANAGEMENT?

INFORMATION TECHNOLOGY'S ROLE IN THE SUPPLY CHAIN MANAGEMENT

• Visibility
• Consumer behaviour 
• Competition
• Speed

Seven Principle Of Supply Chain Management

Enabling the Organization - Decision Making ( Chapter 9 )

MAKING BUSINESS DECISION

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TONY ROBBINS - DECISION MAKING

THE FUTURE : ARTIFICIAL INTELLIGENCE

Artificial Intelligence (AI) simulates human thinking and behaviour such as the ability to reasons and learn. Intelligent systems are various commercial application of artificial intelligent. AI system increase the speed and consistency of decision making, solve problem with incomplete information and resolve complicated issues that cannot be solved by conventional computing.

NEURAL NETWORKS

A neural network, also called an artificial neural network, is category of AI that attempts to emulate the way the human brain works. Neural networks analyze large quantity of information to establish patterns and characteristics in situation where the logic or rules are unknow.

INTELLIGENT AGENTS

An intelligent agent is a special - purpose knowledge - based information system that accomplishes specific tasks on behalf of its users. Another application for intelligent agents is in environmental scanning and competitive intelligence.

Accessing Organizational Information - Data Warehouse ( Chapter 8 )

DATA WAREHOUSE FUNDAMENTALS

A data warehouse is a logical collection of information - gathered from many different operational databases - that supports business analysis activities and decision making task.

Model Of Typical Data Warehouse

The figure above shows the compiles information from internal databases or transactional / operational databases and external databases through extraction, transformation, and loading (ETL), which is a process that extracts information from internal and external databased information using a common set of enterprise definitions, and load the information into a data warehouse.

MULTIDIMENSONAL ANALYSIS AND DATA MINING

A cube is common term for the representation of multi dimensional information.

A Cube Of Information For Performing a Multidimensional Analysis On Three Different Stores, For Five Different Products And Four Different Promotions

Data Mining is the process of analyzing data to extract information not offered by the raw data alone.

BUSINESS INTELLIGENCE

Business Intelligent (BI) refers to application and technologies that are used to gather, provide access to and analyze data and information to support decision making efforts.

• Collecting information
• Discerning patterns and meaning in the information
• Responding to the resultant information.

ENABLING BUSINESS INTELLIGENCE

Competitive organization accumulate business intelligent to gain sustainable competitive advantage, and they may regard such intelligent as a valuable core competence in some instances.

• Technology
• People
• Culture

Storing Organization Information - Databases ( Chapter 7 )

STORING ORGANIZATION INFORMATION

Organization Information is stored in database. Application and programs, such as supply chain management system and customer relationship management systems, access the data in database so the program can consult it to answer queries.


RELATIONSHIP DATABASE ADVANTAGES

From the business perspective, database information offers many advantages, including :

• Increased flexibility
• Increase scalability and performance
• Reduced information redundancy
• Increase information integrity ( quality )
• Increase information security.

DATA - DRIVEN WEBSITES

The pages on website must change according to what a site visitor is interested in browsing. 

Interacting Directly and Indirectly with a database throug a DBMS

A data-driven website is an interactive website kept constantly update and relevant to the needs of it customer through the use of a database. Data-driven website are especially useful when the site offer a great deal of information, products or services.

INTEGRATING INFORMATION AMONG MULTIPLE DATABASE

An integration allows separate system to communicate directly with each other. A forward integration take information entered into a given system and send it automatically to all downstream system and process. A backward integration takes information entered into a given system and send it automatically to all upstream systems and processes.

A Forward And Backward Customer Information Integration Example

Figure above shows the demonstrates how this method works across the system or processes of sales, order entry, order fulfillment and bailing.

Integrating Customer Information Among Database

 The Figure above shows the provides an example of customer information integrated using this method across four different systems in organization.

Valuing Organization Information ( Chapter 6 )

ORGANIZATION INFORMATION

Information is everywhere in an organization. Organization information comes at different levels and in different formats and "granularities". Information granularity refers to the extent of detail within the information ( fine and detailed or coarse and abstract ). Employees must be able to correlate the different level, format and granularities of information when making decision.

Successfully collecting, compiling, sorting and finally analyzing information from multiple level, in varied formats, exhibiting different granularity can provide tremendous insight into how an organization is performing. Taking a hard look at organizational information can yield exciting and unexpected result such as potential new markets, new ways of reaching customer, and even new ways of doing business.

Level, Formats And Granularities Of Organization Information

THE VALUE OF TRANSACTIONAL AND ANALYTICAL INFORMATION

• Transactional Information 
• Encompasses all the information contained within a single business process or unit of work, and its primary purpose is to support the performing of daily operational tasks. Organization capture and store transactional information in database, and they use it when performing operational tasks and repetitive decision such as analyzing daily sales reports and production schedule to determine how much the inventory to carry.

•  Example : Withdrawing cash from an ATM

• Analytical Information 
• Encompasses all organization information, and its primary purpose is to support the performing of managerial analysis task. Analytical information includes transactional information along with other information such as market and industry information.

• Example : Trends, sales, product statistic and future growth project.

Transactional Versus Analytical Information

THE VALUE OF TIMELY INFORMATION

Real-time information means immediate, up-to-date information. Real-time system provide real-time information in response to query requests. Many organization use real-time system to exploit key corporate transactional information.

THE VALUE OF QUALITY INFORMATION

Five Common Characteristics Of High-Quality Information

UNDERSTANDING THE COSTS OF POOR INFORMATION

• Inability to accurately track customers, which directly affects strategic initiatives such as CRM and SCM
• Difficulty identifying the organization's most value customer.
• Inability to identify selling opportunities and wasted revenue from marketing to nonexisting customers and nondeliverable mail
• Difficulty tracking revenue because of inaccurate invoices.
• Inability to build strong relationship with customer - which increase buyer power.

Organizational Structures That Support Strategic Initiatives ( Chapter 5 )

IT ROLES AND RESPONSIBILITY

Most organization maintain positions such as chief executive officer (CEO), chief financial officer, (CFO), and chief operations officer (COO) at the strategies level. The chief information officer (CIO) is responsible for overseeing all uses of information technology and ensuring the strategic alignment of IT with business goals and objective. The CIO often report directly to the CEO.

• Manager - ensure the delivery of all IT projects, on time and within budget.
• Leader - ensure the strategic vision of IT is in line with the strategic vision of the organization.
• Communicator - advocate and communicate the IT strategy by building and maintaining strong                            executive relationship.

1. Chief Technology Officer (CTO) is responsible for ensuring the throughput, speed, accuracy, availability, and realibility of an organization's information technology.
2. Chief Security Officer (CSO) is responsible for ensure the security of IT system and developing strategies and IT safeguard against attacks from hacker and virus.
3. Chief Privacy Officer (CPO) is responsible for ensuring the ethical and legal use of information within an organization.
4. Chief Knowledge Officer (CKO) is responsible for collecting, maintaining, and distributing the organization's knowledge.

GAP BETWEEN BUSINESS PERSONNEL AND IT PERSONNEL

One of the greatest challenges today is effective communication between business personnel and IT personnel. Business personnel process expertise in functional areas such as marketing, accounting, sales and forth. IT personnel have a technological expertise. IT personnel have their own vocabularies consisting of acronyms and technical terms.

ORGANIZATION FUNDAMENTALS - ETHICS AND SECURITY

Ethics :-

• The principle and standards that guide our behavior toward other people.

Figure above shows for an overview of concept, terms, and ethics issues stemming from advances in technology.

• Privacy is one of the biggest ethical facing organization today. Trust between companies, customers, partners and suppliers is the support structure of the e-business world.

Measuring the Success of Strategic Initiatives ( Chapter 4 )

THE INTERRELATIONSHIP OF EFFICIENCY AND EFFECTIVENESS IT METRICS

Efficiency and effectiveness metrics are two primary types of metrics. Efficiency IT metrics measure the performance of the IT system itself including throughput, speed, and availability. Effectiveness IT metrics measure the impact IT has on business processes and activities including customer satisfaction, conversion rate, and sell-through increase.

Effectiveness IT Metrics

Efficiency IT Metrics

METRICS FOR STRATEGIC INITIATIVE

Different financial ratios are used to evaluate a company's performance. companies can get additional insight into their performance by comparing financial ratios against other companies in their industry. A few of the more common financial ratios include:

• Internal rate of return ( IRR ) - the rate at which the net present value of an investment equals zero.
• Return on investment ( ROI ) - indicate the earning power of the project and is measured by dividing the benefit of a project by the investment.
• Payback method - numbers of years to recoup the cost of an initiative based on project annual net cash flow.
• Break-even analysis - determines the volume of business required to make a profit at the current price charged for the products or services.

Most managers are familiar with financial but unfamiliar with information system metrics. The following metrics will hape managers measure and manage their 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

• Abandoned registrations : Number of visitor who start the process of completing a registeration page and then abandon the activity.
• Abandoned shopping carts : Number of visitor who create a shopping cart and start shopping and then abandon the activity before paying for the merchandise.
• Click-through : Count of the number of people who visit a site, click on and ad, and are taken to the side of the advertiser.
• Conversion rate : Percentage of potential customer who visit a site and actually buy something.
• Cost-per-thousand ( CPM ) : Sales dollars generated per dollar of advertising. This is commonly used to make the case for spending money to appear on a search engine.
• Page exposure : Average number of a page exposure to an individual visitor.
• Total hits : Number of visits to a website, many of which may be by the same visitor.
• Unique visitor : Number of unique visitor to a site in a given time. This is a commonly used by Nielsen/Net ratings to rankthe most popular website.

Balance 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. It provide feedback around both the internal business process and external outcomes in order to continuously improve strategic performance and result.

The balance scorecard views the organization from 4 perspective, and users should develop metrics, collect data, and analyze their business relative to each of this perspective:

• The learning and growth perspective
• The internal business process perspective
• The customer perspective
• The financial perspective 

Strategic Initiatives for Implementing Competitive Advantage ( Chapter 3 )

STRATEGIC INITIATIVES

• Gain competitive advantages and Business efficiencies.
• Supply chain management.
• Customer relationship management.
• Business process reengineering.
• Enterprise resources planning. 

SUPPLY CHAIN MANAGEMENT ( SCM )

Involve 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 SCM 

Effective and Efficient SCM system can enable an organization to :

• Decrease the power of its buyers.
• Increase its own supplier power.
• Increase switching costs to reduce the threat of substitute product of service.
• Create entry barriers thereby reducing the threat of new entrants.
• Increase efficiencies while seeking a competitive advantages through cost leadership.

Effective and Efficient Supply Chain Management ( SCM ) Effect on Porter's Five Force

CUSTOMER RELATIONSHIP MANAGEMENT ( CRM )

Involve managing all aspects of a customer's relationship with organization to increase customer loyalty and retention and an organization's profitability. CRM allows an organization to gain insight into customer's shopping and buying behaviours in order to develop an implement enterprise-wide strategies.

CRM Overview

BUSINESS PROCESS REENGINEERING ( BPR )

The analysis and redesign of workflow within and between enterprise.The concept of BPR traces its origins to management theories developed as early as the 19th century. The purpose of BPR is to make all business process the best-in-class.

Seven Principles of Business Process Reengeneering.

• Organize around outcomes, not tasks.
• Identify all the organization's process and prioritize them in order of redesign urgency.
• Integrate information processing work into the real work that produce the information.
• Treat geographically dispersed resources as though they were centralized.
• Link parallel activities in the workflow instead of just integrating their result.
• Put the decision point where the work is performed, and built into the process.
• Capture information once and the source.  

ENTERPRISE RESOURCE PLANNING ( ERP )

Integrate all department and function throughout an organization into a single IT system ( or integrate set of IT system ) so that employees can make decision by using enterprise-wide information on all business operations.

Enterprise Resource Planning System

Identify Competitive Advantage ( Chapter 2 )

IDENTIFYING COMPETITIVE ADVANTAGES

• Develope new product
• Entering new market
• Increasing costomer loyalty
• Attracting new customer
• Increasing sales
• Decreasing costs

THE 5 FORCE MODEL - EVALUATING INDUSTRY ATTRACTIVENESS

MICHAEL PORTER

• Knowledgeable customer can force down price by pitting rivals against each other
• Influential suppliers
• Competition can steal customer
• New market enterence can steal potential investment capital
• Subsitute products can steal customers 

Porter's Five Forces Model

• Barriers to Entry : The power of competitors to enter a market.
• Supply Power : The power of supplies to drive up prices of materials.
• Buyer Power : The power of customers to drive down prices.
• Threat of Substituted : The power of customers to purchase alternatives.

THE 3 GENERIC STRATEGIES - CHOOSING A BUSINESS FOCUS

• Broad cost leadership
• Broad differentiation
• Focus strategy

Porter's Three Generic Strategies

VALUE CHAIN ANALYSIS - EXECUTING BUSINESS STRATEGIES

Michael Porter created value chain analysis, which views firm as a series of business process that each add value to the product of service.Value chain analysis is a useful tool for determining how to create the greatest possible value for customer. The goal is to identify processes in which firm can add value for the customer and create the competitive advantage for itself, with a cost advantage or product differentiation. 

The Value Chain group a firm's activities into two categories, primary value activities and support value activities.

The Value Chain

Information Technology's Role in Business ( Chapter 1 )

Why we need to study Information technology?
Information technology is eveywhere in business.Understanding information technology provide great insight to anyone learning about business.It is easy to demonstrate info role in business by reviewing a copy of popular business magazines such as Fast Company.

INFORMATION TECHNOLOGY'S IMPACT ON BUSINESS OPERATIONS.

The business function receving the greatest benefit from information technology

COMMON DEPARTMENT IN ORGANIZATION



Functiona organization - each functional area has its own system and communicates with every other functional area.