CHAPTER 13 - CREATING INNOVATIVE 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. 

CHAPTER 12 : INTERGRATING ORGANIZATION FROM END TO END - ENTERPRISE RESOURCE PLANNING

ENTERPRISE RESOURCE PLANNING (ERP)

-ERP systems automate business processes.

•ERP systems automate business processes, for example, order fulfillment.
- When a CSR takes an order from a customer, he or she has all the information necessary to complete the order (the customer’s credit rating and order history, the company’s inventory levels, and the delivery schedule).
- Since the company is using an ERP, everyone else in the company will automatically see the information that the CSR types into the ERP system.
- When one department finishes with the order, it is automatically routed via the ERP system to the next department.
-To determine where an order is at any point in time, a user only needs to login to the ERP system and track it down.

THE EVOLUTION OF ERP

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.

ERP systems must integrate various organization processes and be: 
1. Flexible

Must be able to quickly respond to the changing needs of the organization.

2. 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.

3. Comprehensive 

Must be able to support a variety of organizational functions for a wide range of businesses.

4. Beyond the company

Must support external partnerships and collaboration efforts.

FACTORS AFFECTING ERP SOLUTION'S GROWTH 
1. ERP is a logical solution to the mess of incompatible applications that had sprung up in most businesses.
2. ERP addresses the need for global information sharing and reporting.3. ERP is used to avoid the pain and expense of fixing legacy systems.

CHAPTER 11 - BUILDING A CUSTOMER - CENTRIC ORGANIZATION - CUSTOMER RELATIONSHIP ORGANIZATION

CUSTOMER RELATIONSHIP MANAGEMENT (CRM)

CRM enables an organization to;

Ø  Provide better customer service

Ø  Make call centers more efficient

Ø  Cross sell products more effectively

Ø  Helps sales staff close deals faster

Ø  Simplify marketing and sales processes

Ø  Discover new customers

Ø  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;

Ø  How recently a customer purchased items (recency)

Ø  How frequently a customer purchased items (frequency)

Ø  How much a customer speeds on each purchased (monetary value)

THE EVALUATION OF CRM

CRM reporting technologies help organizations identify their customers across other applications. CRM analysis technologies help organizations segment their customers into categories such as best and worst customers. CRM predicting technologies help organizations predict customer behavior, such as which customers are at risk of leaving. 

THE UGLY SIDE OF CRM: WHY CRM MATTERS MORE NOW THAN EVER BEFORE

CUSTOMER RELATIONSHIP MANAGEMENT’S EXPLOSIVE GROWTH

USING ANALYTICAL CRM TO ENHANCE DECISION 

Ø  Operational CRM – supports traditional transactional processing for day-to-day front-office operations or systems that deal directly with the customers

Ø  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;

Ø  Clearly communicate the CRM strategy

Ø  Define information needs and flows

Ø  Build an integrated view of the customer

Ø  Implement in iterations

Ø  Scalability for organizational growth

USING ANALYTICAL CRM TO ENHANCE DECISION

Operational CRM and analytical CRM

CHAPTER 10 – EXTANDING THE ORGANIZATION – SUPPLY CHAIN MANAGEMENT

BASICS OF SUPPLY CHAIN

SCM – the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability

The supply chain has three main links.

1.       Materials flows from suppliers and their upstream suppliers at all levels

2.       Transformation of materials into semi-finished products, or the organization’s own production processes

3.       Distribution of products to customers and their downstream customers at all levels

INFORMATION TECHNOLOGY’S ROLE IN THE SUPPLY CHAIN

 Information technology’s primary role in SCM is creating the integrations or tight process and information linkages between functions within a firm such as marketing, sales, finance, manufacturing, and distribution – and between firms, which allow the smooth, synchronized flow of both information and product between customers, suppliers and transportation providers across the supply chain

VISIBILITY 

·         Supply Chain Visibility is the ability to view all areas up and down the supply chain. Changing supply chains requires a comprehensive strategy buoyed by information technology. Organizations can use technology tools that help them integrate upstream and downstream, with both customers and suppliers.

·         The bullwhip effect occurs when distorted product demand information passes from one entity to the next throughout the supply chain.

CUSTOMER BEHAVIOR

·         The behavior of customers has changed the way businesses complete. Customers will leave if a company does not continually meet their expectations. They are more demanding because they have information readily available, they know exactly what they want, and they know when and how they want it.

·         Demand planning software generates demand forecasts using statistical tools and forecasting techniques. Companies can respond faster and more effectively to consumer demands through supply chain enhancements such as demand planning software.

·         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 organization’s performance.

COMPETITION

·         Supply chain planning (SCP) software uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain while reducing inventory. SCP depends entirely on information for its accuracy.

·         Supply chain execution (SCE) software automates the different steps and stages of the supply chain. This could be as simple as electronically routing orders from a manufacturer to a supplier.

SPEED 

·         These systems raise the accuracy, frequency and speed of communication between suppliers and customers, as well as between internal users.

·         Another aspect of speed is the company’s ability to satisfy continually changing customer requirements efficiently, accurately and quickly.

SUPPLY CHAIN MANAGEMENT SUCCESS FACTORS

·         To succeed in today’s competitive markets, companies must align their supply chain with the demands of the markets they serve.

·         Supply chain performance is now a distinct competitive advantage for companies proficient in the SCM area.

MAKE THE SALE TO SUPPLIERS

The hardest part of any SCM system is its complexity because a large part of the system extends beyond the company’s walls. Not only will the people in the organization need to change the way they work, but also the people from each supplier that is added to the network must change. Be sure suppliers are on board with the benefits that the SCM system will provide.

WEAN EMPLOYEES OFF TRADITIONAL BUSINESS PRACTICES

Operations people typically deal with phone calls, faxes and orders scrawled on paper and will most likely want to keep it that way. Unfortunately, an organization cannot disconnect the telephones and fax machines just because it is implementing a supply chain management system. If the organization cannot convince people that using the software will be worth their time, they will easily find ways to work around it, which will quickly decrease the changes of success for the SCM system.

ENSURE THE SCM SYSTEM SUPPORTS THE ORGANIZATION GOALS

It is important to select SCM software that gives organizations an advantage in the areas most crucial to their business success. If the organizational goals support highly efficient strategies, be sure the supply chain design has the same goals.

DEPLOY IN INCREMENTAL PHASE AND MEASURE AND COMMUNICATE SUCCESS

Design the development of the SCM system in incremental phases. For instance, instead of installing a complete supply chain management system across the company and all suppliers at once, start by getting it working with a few key suppliers, and then move on to the other suppliers. Along the way, make sure each step is adding value through improvements in the supply chain’s performance. While a big-picture perspective is vital to SCM success, the incremental approach means the SCM system should be implemented in digestible bites and also measured for success one step at a time.

BE FUTURE ORIENTED 

The supply chain design must anticipate the future state of the business. Because the SCM system likely will last for many more years than originally planned, managers need to explore how flexible the systems will be when (not if) changes are required in the future. The key is to be certain that the software will meet future needs, not only current needs. 

CHAPTER 9 – ENABLING THE ORGANIZATION - DECISION MAKING

Decision Making 

Ø  Reasons for Growth of Decision Making Information System

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

-          People must make decisions quickly – Time is of the essence and people simply do not have time to sift through all the information manually

-          People must apply sophisticated analysis techniques, such as modeling and forecasting, to  make good decisions – Information systems substantially reduce the time required to perform these sophisticated analysis techniques

-          People must protect the corporate asset of organizational information – Information systems offer the security required to ensure organizational information remains safe.

Ø  Model – A simplified representation or abstraction of reality

Ø  IT systems in an enterprise

Transaction Processing System

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 (analysis) 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

Decision support systems

Ø  Decision support system (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

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

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

What-if analysis

Goal-seeking analysis

Executive information system 

Ø  Executive information system (EIS) – 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

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

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

Ø  Interaction between a TPS and an EIS

Ø  Interaction between a TPS and a DSS

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

Artificial intelligence (AI)

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

Ø  Intelligent system – various commercial applications of artificial intelligence

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

Ø  Four most common categories of AI include;

1.       Expert system – computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems

2.       Neural network – attempts to emulate the way the human brain works

o   Fuzzy logic – a mathematical method of handling imprecise or subjective information

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

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

Data Mining

Ø  Data-mining software includes many forms of AI such as neutral networks and expert systems

CHAPTER 8 – ACCESING ORGANIZATIONAL INFORMATION – DATA WAREHOUSE

What is Data Warehouse?

Ø  Defined in many different ways, but not rigorously

-          A decision support database that is maintained separately from the organization’s operational database.

-          A consistent database source that bring together information from multiple sources for decision support queries.

-          Support information processing by providing a solid platform of consolidated, historical data for analysis.

History of Data Warehousing

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

Ø  The data warehouse provided the ability to support decision making without disrupting the day-to-day operations, because;

-          Operational information is mainly current – does not include the history for better decision making

-          Issues of quality information

-          Without information history, it is difficult to tell how and why things change over time

Data warehouse fundamentals

Ø  Data warehouse – A logical collection of information – gathered from many different operational databases – that supports business analysis activities and decision-making takes

Ø  The primary purpose of a data warehouse is to combined information throughout an organization into a single repository for decision-making purposes – data warehouse support only analytical processing

Data warehouse model

Ø  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.

Ø  Data warehouse then send subsets of the information to data mart.

Ø  Data mart – contains a subset of data warehouse information.

Multidimensional Analysis and Data Mining 

Ø  Relational Database contains information in a series of two-dimensional tables.

Ø  In a data warehouse and data mart, information is multidimensional, it contains layers of columns and rows

-          Dimension – A particular attribute of information

Ø  Cube – common term for the representation of multidimensional information

Ø  Once a cube of information is created, users can begin to slice and dice the cube to drill down into the information.

Ø  Users can analyze information in a number of different ways and with number of different dimensions.

Ø  Data Mining – the process of analyzing data to extract information not offered by the raw data alone. Also known as “knowledge discovery” – computer-assisted tools and techniques for sifting through and analyzing vast data stores in order to finds trends, patterns and correlations that can guide decision making and increase understanding

Ø  To perform data mining users need data-mining tools

-          Data-mining tool – uses a variety of techniques to finds patterns and relationships in large volumes of information. Eg: retailers and use knowledge of these patterns to improve the placement of items in the layout of a mail-order catalog page or Web page.

Information Cleansing or Scrubbing

Ø  An organization must maintain high-quality data in the data warehouse

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

Ø  Occurs during ETL process and second on the information once if is in the data warehouse

Ø  Contract information in an operational system

Ø  Standardizing Customer  name from Operational Systems

Ø  Information cleansing activities

-          Missing Records or Attributes

-          Redundant Records

-          Missing Keys or Other Required Data

-          Erroneous Relationships or References

-          Inaccurate Data

Ø  Accurate and complete information

Business Intelligence 

Ø  Business Intelligence – refers to applications and technologies that are used to gather, provides access, analyze data and information to support decision making efforts

Ø  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

Ø  Eg; Excel, Access