Chapter 13 : E-business

E-BUSINESS
• The Internet is a powerful channel that presents new opportunities for an organization to:
- Touch customers
- Enrich products and services with information
- Reduce costs


• How do e-commerce and e-business differ?
– E-commerce – the buying and selling of goods and services over the Internet
– E-commerce refers only to online transactions
– E-business – the conducting of business on the Internet including, not only buying and selling, but also serving customers and collaborating with business partners
– E-business refers to online transactions, serving customers and collaborating with business partners
E-BUSINESS MODELS



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







Business types
Brick-and-mortar business - operates in a physical store without an Internet presence.
Pure-play (virtual) business - a business that operates on the Internet only without a physical store. Examples include Amazon.com and poplook.com.
Click-and-mortar business – a business that operates in a physical store and on the Internet. Examples include Cala Qisya and Barnes and Noble.




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
- Increasing 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


MASHUPS
• Web mashup - a Web site or Web application that uses content from more than one source to create a completely new service. A Web mashup is a Web site or Web application that uses content from more than one source to create a completely new service. The term is typically used in the context of music; putting Jay-Z lyrics over a Radiohead song makes something old become new. The Web version of a mashup allows users to mix map data, photos, video, news feeds, blog entries and so on.
– Application programming interface (API) - a set of routines, protocols, and tools for building software applications

– Mashup editor - WSYIWYGs (What You See Is What You Get) for mashups

Chapter 12 : Integrating the Organization from End to End – Enterprise Resource Planning

ENTERPRISE RESOURCE PLANNING (ERP)
• 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


The Evolution of ERP





INTERGRATING SCM, CRM and ERP
• SCM, CRM, and ERP are the backbone of e-business
• Integration of these applications is the key to success for many companies
• Integration allows the unlocking of information to make it available to any user, anywhere, anytime
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)
• ERP systems must integrate various organization processes and be:

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. Some organizations will begin with buying two modules, such as accounting and sales, and then will add modules, such as CRM and SCM, as they gain confidence in their current modules. (Implementing in small pieces or phases – companies do not want to buy the entire ERP and spend years implementing twenty different modules to find that it doesn’t meet their need)
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 enables an organization to:
- Provide better customer service
- Make call centers more efficient
- Cross sell products more effectively
- Help sales staff close deals faster
- Simplify marketing and sales processes
- Discover new customers
- Increase customer revenues


Recency, Frequency, and Monetary Value
• Organizations can find their most valuable customers through “RFM” - Recency, Frequency, and Monetary value
- How recently a customer purchased items (Recency)
- How frequently a customer purchased items (Frequency)
- How much a customer spends on each purchase (Monetary Value)


The Evolution of CRM
• CRM reporting technology – help organizations identify their customers across other applications
• CRM analysis technologies – help organization segment their customers into categories such as best and worst customers
• CRM predicting technologies – help organizations make predictions regarding 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 systems that do not deal directly with the customers

Customer Relationship Management Success Factors
• CRM success factors include:
1. Clearly communicate the CRM strategy – ensuring that all departments and employees understand exactly what CRM means and how it will add value to the organization is critical to the success of the implementation
2. Define information needs and flows – the organization must understand all of the different ways that information flows into and out of the organization to implement a successful CRM system. If the organization misses one of the information flows, such as a customer service Web site, then none of that information from that Web site will be integrated into the CRM system and the company will not have a complete view of its customers
3. Build an integrated view of the customer – the CRM system must support the organization's strategies and goals
4. Implement in iterations – avoid the big-bang approach and implement in small, manageable, pieces
5. Scalability for organizational growth – ensure the system can support the organization's future growth

Chapter 10 : Extending the Organization – Supply Chain Management

SUPPLY CHAIN MANAGEMENT
• The average company spends nearly half of every dollar that it earns on production
• In the past, companies focused primarily on manufacturing and quality improvements to influence their supply chains
• The supply chain has three main links:
1. Materials flow from suppliers and their “upstream” suppliers at all levels
2. Transformation of materials into semifinished and finished products through the organization’s own production process
3. Distribution of products to customers and their “downstream” customers at all levels


• Organizations must embrace technologies that can effectively manage supply chains





• Supply chain management improves ways for companies to find the raw components they need to make a product or service, manufacture that product or service, and deliver it to customers


Plan – This is the strategic portion of supply chain management. A company must have a plan for managing all the resources that go toward meeting customer demand for products or services. A big piece of planning is developing a set of metrics to monitor the supply chain so that it is efficient, costs less, and delivers high quality and value to customers.


Source – Companies must carefully choose reliable suppliers that will deliver goods and services required for making products. Companies must also develop a set of pricing, delivery, and payment processes with suppliers and create metrics for monitoring and improving the relationships.


Make – 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. This is by far the most metric-intensive portion of the supply chain, measuring quality levels, production output, and worker productivity.


Deliver – This step is commonly referred to as logistics. Logistics is the set of processes that plans for and controls the efficient and effective transportation and storage of supplies from suppliers to customers. During this step, 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.



Return – 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

• IT’s primary role is to create integrations or tight process and information linkages between functions within a firm







Factors Driving SCM







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
• Bullwhip effect – occurs when distorted product demand information passes from one entity to the next throughout the supply chain
• Supply chain visibility allows organizations to eliminate the bullwhip effect
• 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.
• Retailers order diapers from distributors when their inventory level falls below a certain level, they might order a few extra just to be safe
• Distributors order diapers from manufacturers when their inventory level falls below a certain level, they might order a few extra just to be safe
• Manufacturers order diapers from suppliers when their inventory level falls below a certain level, they might order a few extra just to be safe
• Eventually the one or two extra boxes ordered from a few retailers becomes 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
• companies must respond to demanding customers through supply chain enhancements


• Companies can respond faster and more effectively to consumer demands through supply chain enhances
• Demand planning software – generates demand forecasts using statistical tools and forecasting techniques


Competition
• increased competition makes any organization that is ignoring its supply chain at risk of becoming obsolete


• 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


Speed
as the pace of business increases through electronic media, an organization's supply chain must respond efficiently, accurately, and quickly

• Three factors fostering speed

Chapter 9 : Enabling the Organization – Decision Making

Reasons for growth of decision-making information systems
1. 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.
2. People must make decisions quickly—Time is of the essence and people simply do not have time to sift through all the information manually.
3. 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.
4. 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. Models can calculate risks, understand uncertainty, change variables, and manipulate time


IT systems in an enterprise









• Decision support system (DSS) – models information to support managers and business professionals during the decision-making process
• Executive information system (EIS) – a specialized DSS that supports senior level executives within the organization
• Artificial intelligence (AI) – simulates human intelligence such as the ability to reason and learn
• Data mining – typically includes many forms of AI such as neural networks and expert systems. Data mining tools apply algorithms to information sets to uncover inherent trends and patterns in the information.


TRANSACTION PROCESSING SYSTEMS

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





• The structure of a typical organization is similar to a pyramid
• Organizational activities occur at different levels of the pyramid
• People in the organization have unique information needs and thus require various sets of IT tools (see Figure)
• At the lower levels of the pyramid, people perform daily tasks such as processing transactions
• Moving up through the organizational pyramid, people (typically managers) deal less with the details (“finer” information) and more with meaningful aggre­gations of information (“coarser” information) that help them make broader decisions for the organization
• Granularity refers to the extent of detail in the information (means fine and detailed or “coarse” and abstract 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 analytical processing (OLAP) – the manipulation of information to create business intelligence in support of strategic decision making
• Analysts typically use TPS to perform their daily tasks
• What types of TPS are used at your college?
• Payroll system (Tracking hourly employees)
• Accounts Payable system
• Accounts Receivable system
• Course registration system
• Human resources systems (tracking vacation, sick days)
DECISION SUPPORT SYSTEMS
• Decision support system (DSS) – models information to support managers and business professionals during the decision-making process
• In a DSS, data is first queried and collected from the knowledge database
• Results from the query are then checked and analyzed against decision models
• Once checked against the decision models, the results are then generated for review to find a “best” solution for the situation
• One national insurance company uses DSSs to analyze the amount of risk the company is undertaking when it insures drivers who have a history of driving under the influence of alcohol. The DSS discovered that only 3 percent of married male homeowners in their forties received more than one DUI. The company decided to lower rates for customers falling into this category, which increased its revenue while mitigating its risk.
• 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. Sensitivity analysis – studies the impact on a single change in a current model. For example – if we continually change the amount of inventory we carry, how low can our inventories go before issues start occurring in other parts of the supply chain? This would require changing the inventory level and watching the model to see “how sensitive” it is to inventory levels.
What-if analysis – checks the impact of a change in an assumption on the proposed solution. What-if analysis – determines the impact of change on an assumption or an input. For example – if the economic condition improves, how will it affect our sales?
Goal-seeking analysis – finds the inputs necessary to achieve a goal such as a desired level of output. Goal-seeking analysis – solves for a desired goal. For example – we want to improve revenues by 30 percent, how much does sales have to increase and costs have to decrease to meet this goal?


EXECUTIVE INFORMATION SYSTEMS
• 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 details, of information

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



Interaction between a TPS and an EIS





Why would you need interaction between a TPS and EIS?
§ The EIS needs information from the TPS to help executives make decisions
§ Without knowing order information, inventory information, and shipping information from the TPSs, it would be very difficult for the CEO to make strategic decisions for the organization


• Digital dashboard – integrates information from multiple components and presents it in a unified display. As digital dashboards become easier to use, more executives can perform their own analysis without inundating IT personnel with queries and request for reports