Liyana Natasha

CHAPTER 15 : OUTSOURCING IN THE 21ST CENTURY

⇒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

⇒Nearshore 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

⇒Factors driving outsourcing growth include:

1-Core competencies

-Many companies have recently begun to consider outsourcing as a means to fuel revenue growth rather than just a cost-cutting measure.

2-Financial savings

-It is typically cheaper to hire workers in China and India than similar workers in the United States.

⇒Rapid growth - an organization is able to acquire best-practices process expertise. This facilitates the design, building, training, and deployment of business processes or functions.

⇒Industry changes - High levels of reorganization across industries have increased demand for outsourcing to better focus on core competencies

⇒The Internet - The pervasive nature of the Internet as an effective sales channel has allowed clients to become more comfortable with outsourcing.

⇒Globalization - As markets open worldwide, competition heats up. Companies may engage outsourcing service providers to deliver international services

⇒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 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 include:

1-Contract length

-Most outsourcing contracts span several years and cause the issues discussed above

-Difficulties in getting out of a contract

-Problems in foreseeing future needs

-Problems in reforming an internal IT department after the contract is finished

2-Competitive edge

-Effective and innovative use of IT can be lost when using an outsourcing service provider

3-Confidentiality

-Confidential information might be breached by an outsourcing service provider, especially one that provides services to competitors 

4-Scope definition

-Scope creep is a common problem with outsourcing agreements

CHAPTER 14: CREATING COLLABORATION PARTNERSHIP

CHAPTER 14: CREATING COLLABORATION PARTNERSHIP







⇒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 form alliances 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 partnership – 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 alliances and partnerships

⇒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 e-mail

↪Structured collaboration (process collaboration) - involves shared participation in business processes such as workflow in which knowledge is hardcoded as rules

 ⇒Collaboration systems include:

↪Knowledge management systems

↪Content management systems

↪Workflow management systems

↪Groupware 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”

 ⇒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

↪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

⇒Knowledge management systems include:

↪Knowledge repositories (databases)

↪Expertise tools

↪E-learning applications

↪Discussion and chat technologies

↪Search and data mining tools

↪Social networking analysis (SNA) – a process of mapping a group’s contacts (whether personal or professional) to identify who knows whom and who works with whom

↪SNA provides a clear picture of how employees and divisions work together and can help identify key experts

⇒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 asset management system (DAM)

↪Web content management system (WCM)

⇒Supports the electronic capturing, storage, distribution, archival,  and accessing of documents

⇒Similar to DMS, generally works with binary rather than text files, such as multimedia files types

⇒Web content management system (WCM)-Adds an additional layer to document and digital asset management that enables publishing content both to intranets and to public Web sites

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

⇒Business wikis - collaborative Web pages that allow users to edit documents, share ideas, or monitor the status of a project

⇒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 e-mail 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

↪Messaging-based workflow system – sends work assignments through an e-mail 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 – software that supports team interaction and dynamics including calendaring, scheduling, and videoconferencing

⇒Videoconference - a set of interactive telecommunication technologies that allow two or more locations to interact via two-way video and audio transmissions simultaneously.

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

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

⇒Instant messaging - type 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 : CREATING INNOVATION ORGANIZATION

CHAPTER 13 : CREATING INNOVATION ORGANIZATION

Disruptive Technology

• Digital Darwinism- implies that organizations that cannot adapt to the new demands placed on them for surviving in the information age are doomed to extinction. 

Disruptive versus sustaining technology

• Disruptive technology- new ways of doing things that initially does not meet the needs of existing customers.
• Sustaining technology- produces an improved product customers are eager to buy, such as faster car or larger hard drive.

          - It provides us with better, faster, and cheaper products in established markets.

Disruptive and Sustaining Technologies

• Disruptive technologies typically cut into the low end of the marketplace and eventually evolve to displace high-end competitors and their reigning technologies. 

The Internet- Business Disruption Evolution of the internet

• Internet- a global public network of computer networks that pass information from one to another using common computer protocols.
•  Protocols- are the standards that specify the format of data as well as the rules to be followed during transmission.
• Internet Engineering Task Force (IEFT) - the protocol engineering and development arm of the internet.
• Internet Architecture Board (IAB)- responsible for defining the overall architecture of the Internet, providing guidance and broad direction to the IETF). 
• Internet Engineering Steering Group (IESG)- responsible for technical management of IETF activities and the internet standards process.

Evolution of the World Wide Web

• The internet was restricted to noncommercial activities, and its users included government employees, researchers, university professors, and students. The World Wide Web changed the purpose and use of the internet.
• World Wide Web (WWW)- a global hypertext system that uses the internet as its transport mechanism.
• Hypertext transport protocol (HTTP)- the internet standard that supports the exchange of information on the WWW. 

           - It enables web authors to embed hyperlinks in web documents      
           - It defines the  process by which a web client, called a browser, originates a request for information and sends it to a web server, a program designed to respond to HTTP requests and provide the desired information.

 Reasons for World Wide Web Growth:

• The microcomputer revolution made it possible for an average person to own a computer. 
• Advancements in networking hardware, software, and made it media possible for business PCs to be inexpensively connected to larger networks.
• Browser software such as Microsoft’s Internet Explorer and Netscape Navigator gave computer users an easy-to-use graphical interface to find, download, and display web pages.
• The speed, convenience, and low cost of email have made it an incredibly popular tool for business and personal communications. 
• Basic web pages are easy to create and extremely flexible.
• Digital divide- is when those with access to technology have great advantages over those without access to technology

Internet’s Impact on Information

• Easy to compile- searching for information on products, prices, customers, suppliers, and partners is faster and easier when using the internet. 
• Increased richness- information richness refers to the depth and breadth of information transferred between customers and businesses. Businesses and customers can collect and track more detailed information when using the internet.
• Increased reach- information reach refers to the number of people a business can communicate with, on a global basis. Businesses can share information with numerous customers all over the world.
• Improved content- a key element of the internet is its ability to provide dynamic relevant content. Buyers need good content descriptions to make informed purchases, and sellers use content to properly market and differentiate themselves from the competition. Content and product description establish the common understanding between both parties to the transaction. As a result, the reach and richness of that content directly affects the transaction. 

File Formats Offered over the WWW.Web 2.0

• A set of economic, social, and technology trends that collectively from the basis for the next generation of the internet- a more mature, distinctive medium characterized by user participation, openness, and network effects. 
• It is more than just the latest technology buzzword; it is a transformative force that is catapulting companies across all industries toward a new war of performing business.

CHAPTER 12 : INTEGRATING THE ORGANIZATION FROM THE END TO END - ENTERPRISE RESOURCE PLANNING

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

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

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

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.

 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

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 eleminates redundancies, cuts wasted time, and removes misinformation.

CHAPTER 11 : BUILDING A CUSTOMER–CENTRIC ORGANIZATION – CUSTOMER RELATIONSHIP MANAGEMENT

Customer Relationship Management 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

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)



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



Three phases in the evolution of CRM include reporting, analyzing, and predicting

THE UGLY SIDE OF CRM

CUSTOMER RELATIONSHIP MANAGEMENT'S EXPLOSIVE GROWTH

CRM Business Drivers

Forecasts for CRM Spending (in billions)

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

Operational CRM and analytical CRM

CUSTOMER RELATIONSHIP MANAGEMENT SUCCESS FACTORS

CRM success factors include:


↪Clearly communicate the CRM strategy

↪Define information needs and flows

↪Build an integrated view of the customer

↪Implement in iterations

↪Scalability for organizational growth

CHAPTER 10 : EXTENDING THE ORGANIZATION – SUPPLY CHAIN MANAGEMENT

CHAPTER 10 : EXTENDING THE ORGANIZATION – SUPPLY CHAIN MANAGEMENT

Supply Chain Management 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

BASIC SUPPLY CHAIN 

 ↪Organizations must embrace technologies that can effectively manage supply chains

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

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

3.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.

4.Deliver (Logistic)  ⇒ 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.

5.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 

visibility Supply Chain 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 Bullwhip Effect – 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



VISIBILITY
↪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 can respond faster and more effectively to consumer demands through supply chain enhances


⇒Once an organization understands customer demand and its effect on the supply chain it can begin to estimate the impact that its supply chain will have on its customers and ultimately the organizations performance


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






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

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

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

⇒SCP depends entirely on information for its accuracy

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


COMPETITION
⇒SCP and SCE in the supply chain

SPEED 

↪Three factors fostering speed

SUPPLY CHAIN MANAGEMENT SUCCESS FACTORS

Supply Chain Management industry best practices include:


⇒Make the sale to suppliers

⇒Wean employees off traditional business
practices

⇒Ensure the SCM system supports the
organizational goals

⇒Deploy in incremental phases and measure
and communicate success

⇒Be future oriented