Chapter 15 – Outsourcing in the 21st Century

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

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

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

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

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 MGT 300

CHAPTER 10 MGT 300

Chapter 10 Extending the Organization – Supply Chain Management

Supply Chain Management

v  The average company spends nearly half of every dollar that it earns on production

v  In the past, companies focused primarily on manufacturing and quality improvements to influence their supply chains

Basics of Supply Chain

v  The supply chain has three main links:

Ø  Materials flow from suppliers and their “upstream” suppliers at all levels

Ø  Transformation of materials into semi-finished and finished products through the organization’s own production process

Ø  Distribution of products to customers and their “downstream” customers at all levels

v  Organizations must embrace technologies that can effectively manage supply chains

v  Plan

Ø  A company must have a plan for managing all the resources that go toward meeting customer demand for products or services.

v  Source

Ø  Companies must carefully choose reliable suppliers that will deliver goods and services required for making products.

v  Make

Ø  This is the step where companies manufacture their products or services. This can include scheduling the activities necessary for production, testing, packaging, and preparing for delivery.

v  Deliver (Logistic)

Ø  Companies must be able to receive orders from customers, fulfill the orders via a network of warehouses, pick transportation companies to deliver the products, and implement a billing and invoicing system to facilitate payments.

v  Return

Ø  This is typically the most problematic step in the supply chain. Companies must create a network for receiving defective and excess products and support customers who have problems with delivered products.

Information Technology’s Role in the Supply Chain

Factors Driving SCM

 Visibility

v  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

v  Supply chain visibility – the ability to view all areas up and down the supply chain

v  Bullwhip effect – occurs when distorted product demand information passes from one entity to the next throughout the supply chain

v  Supply chain visibility allows organizations to eliminate the bullwhip effect

Ø  To explain the bullwhip effect to your students discuss a product that demand does not change, such as diapers.  The need for diapers is constant, it does not increase at Christmas or in the summer, diapers are in demand all year long.  The number of newborn babies determines diaper demand, and that number is constant.

Ø  Retailers order diapers from distributors when their inventory level falls below a certain level, they might order a few extra just to be safe

Ø  Distributors order diapers from manufacturers when their inventory level falls below a certain level, they might order a few extra just to be safe

Ø  Manufacturers order diapers from suppliers when their inventory level falls below a certain level, they might order a few extra just to be safe

Ø  Eventually the one or two extra boxes ordered from a few retailers become several thousand boxes for the manufacturer.  This is the bullwhip effect, a small ripple at one end makes a large wave at the other end of the whip.

Consumer Behavior

v  Companies can respond faster and more effectively to consumer demands through supply chain enhances

v  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 performance

v  Demand planning software – generates demand forecasts using statistical tools and forecasting techniques

Competition

v  Supply chain planning (SCP) software– uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain

v  Supply chain execution (SCE) software – automates the different steps and stages of the supply chain

v  SCP and SCE both increase a company’s ability to compete

v  SCP depends entirely on information for its accuracy

v  SCE can be as simple as electronically routing orders from a manufacturer to a supplier

v  Competition

v  SCP and SCE in the supply chain

Speed

v  Three factors fostering speed

v  Supply Chain Management
Success Factors

v  SCM industry best practices include:

Ø  Make the sale to suppliers

Ø  Wean employees off traditional business practices

Ø  Ensure the SCM system supports the organizational goals

Ø  Deploy in incremental phases and measure and communicate success

Ø  Be future oriented

v  SCM Success Stories

v  Top reasons why more and more executives are turning to SCM to manage their extended enterprises

v  Numerous decision support systems (DSSs) are being built to assist decision makers in the design and operation of integrated supply chains

v  DSSs allow managers to examine performance and relationships over the supply chain and among:

Ø  Suppliers

Ø  Manufacturers

Ø  Distributors

Ø  Other factors that optimize supply chain performance

SUPPLY CHAIN MANAGEMENT Success Stories

CHAPTER 9 MGT 300

CHAPTER 9 MGT 300

Enabling the Organization – Decision Making

Ø  Reasons for the growth of decision-making information systems

§  People need to analyze large amounts of information

§  People must make decisions quickly

§  People must apply sophisticated analysis techniques, such as modeling and forecasting, to make good decisions

§  People must protect the corporate asset of organizational information

ØModel – a simplified representation or abstraction of reality

Ø  IT systems in an enterprise

 Transaction Processing Systems(TPS)

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

Ø  Transaction processing system - the basic business system that serves the operational level (analysts) in an organization

Ø  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

Ø  Online analytical processing (OLAP) – the manipulation of information to create business intelligence in support of strategic decision making

Ø  Decision Support Systems(DSS)

Models information to support managers and business professionals during the decision-making process.

Ø  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. 

Eg: What will happen to the supply chain if a tsunami in Sabah reduces holding inventory from 30% to 10%?

2.       What-if analysis – checks the impact of a change in an assumption on the proposed solution. 

Eg: Repeatedly changing revenue in small increments to determine it effects on other variables.

3.       Goal-seeking analysis – finds the inputs necessary to achieve a goal such as a desired level of output. 

Eg: Determine how many customers must purchase a new product to increase gross profits to $5 million.

    What-if analysis

                           Goal-seeking analysis

Interaction between a TPS and a DSS

Ø  Executive Information Systems

A specialized DSS that supports senior level executives within the organization

Ø  Most EISs offering the following capabilities:

§  Consolidation – involves the aggregation of information and features simple roll-ups to complex groupings of interrelated information.

 Eg: Data for different sales representatives can be rolled up to an office level. Then state level, then a regional sales level.

§  Drill-down – enables users to get details, and details of details, of information. 

Eg: From regional sales data then drill down to each sales representatives at each office.

§  Slice-and-dice – looks at information from different perspectives. 

Eg: One slice of information could display all product sales during a given promotion, another slice could display a single product’s sales for all promotions.

Interaction between a TPS and an EIS

Ø  Digital dashboard – integrates information from multiple components and presents it in a unified display

Ø  Intelligent system – various commercial applications of artificial intelligence

Ø  Artificial intelligence (AI) – simulates human intelligence such as the ability to reason and learn

§  Advantages: can check info on competitor

 The ultimate goal of AI is the ability to build a system that can mimic human intelligence

Ø  Four most common categories of AI include:

• Expert system – computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems. Eg: Playing Chess.
• Neural Network – attempts to emulate the way the human brain works. Eg: Finance industry uses neural network to review loan applications and create patterns or profiles of applications that fall into two categories – approved or denied.

Fuzzy logic – a mathematical method of handling imprecise or subjective information. Eg: Washing machines that determine by themselves how much water to use or how long to wash

•             Genetic algorithm – an artificial intelligent system that mimics the evolutionary, survival-of-the-fittest process to generate increasingly better solutions to a problem.

             Eg: Business executives use genetic algorithm to help them decide which combination of projects a firm should invest.

•              Intelligent agent – special-purposed knowledge-based information system that accomplishes specific tasks on behalf of its users

•          Multi-agent systems

•          Agent-based modeling

             Eg:  Shopping bot: Software that will search several retailers’ websites and provide a comparison of each retailers’ offering including prive and availability.

• Data Mining
• Data-mining software includes many forms of AI such as neural networks and expert systems
  
• Common forms of data-mining analysis capabilities include:
• Cluster analysis
• Association detection
• Statistical analysis
• Cluster analysis – a technique used to divide an information set into mutually exclusive groups such that the members of each group are as close together as possible to one another and the different groups are as far apart as possible

• CRM systems depend on cluster analysis to segment customer information and identify behavioral traits
• Eg: Consumer goods by content, brand loyalty or similarity

• Association detection – reveals the degree to which variables are related and the nature and frequency of these relationships in the information
• Market basket analysis – analyzes such items as Web sites and checkout scanner information to detect customers’ buying behavior and predict future behavior by identifying affinities among customers’ choices of products and services

Eg: Maytag uses association detection to ensure that each generation of appliances is better than the previous generation.

• Statistical analysis – performs such functions as information correlations, distributions, calculations, and variance analysis
• Forecast – predictions made on the basis of time-series information
• Time-series information – time-stamped information collected at a particular frequency

Eg: Kraft uses statistical analysis to assure consistent flavor, color, aroma, texture, and appearance for all of its lines of foods

CHAPTER 8 MGT 300

CHAPTER 8 MGT 300

Accessing Organizational Information—Data Warehouse

HISTORY OF DATA WAREHOUSING

·         Data warehouses extend the transformation of data into information

·         In the 1990’s executives became less concerned with the day-to-day business operations and more concerned with overall business functions

·         The data warehouse provided the ability to support decision making without disrupting the day-to-day operations

DATA WAREHOUSE FUNDAMENTALS

·         Data warehouse – 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

DATA WAREHOUSE FUNDAMENTALS

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 multi-dimensional; 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

Information cleansing or scrubbing – a process that weeds out and fixes or discards inconsistent, incorrect, or incomplete information

·         Contact information in an operational system

·         Standardizing Customer name from Operational Systems

·         Information cleansing activities

·         Accurate and complete information

BUSINESS INTELLIGENCE

·         Business intelligence – refers to applications and technologies that are used to gather, provide access, analyze data, and information to support decision making effort.

these systems will illustrate business intelligence in the areas of customer profiling, customer support, market research, market segmentation, product profitability, statistical analysis, and inventory and distribution analysis to name a few

Eg: Excel, Access

Principle BI enablers include:

·         Technology

·         People

·         Culture