CHAPTER 15 - OUTSOURCING IN THE 21ST CENTURY

- In-sourcing ( in - house development ) - is a common approach using the professional expertise within an organization to develop and maintain the organization's information technology systems.

- Outsourcing - is an arrangement by which one organization provides a service or services for another organization that chooses not to perform them in-house.

Reasons companies outsource :

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

Factors driving outsourcing growth include :

• Core competencies
• Financial savings
• Rapid growth
• Industry changes
• The internet
• Globalization

Outsourcing Benefits

• Reduced operating expenses
• Resources focused on core profit-generating competencies
• Access to outsourcing service provider's economies of scale
• Access to advanced technologies.
• No costly outlay of capital funds.
• Increased flexibility
• Reduced exposure of risk
• Economies of scale, expertise, and best practices

Outsourcing Challenges

• Contract length
• Competitive edge
• Confidentiality
• Scope definition

CHAPTER 14 - CREATING COLLABORATIVE PARTNERSHIPS

Content sharing through open sourcing

• Open system - consists of nonproprietary hardware and software based on publicity known standards that allow third parties to create add-on products to plug into or inter operate with the system.

• Source code - Contains instruction written by a programmer specifying the actions to be performed by computer software.

• Open source - any software whose source code in made available free for any third party to review and modify.

Characteristics of Business

• User-contributed content

- is created and updated by many users for many users.

- reputation system - where buyers post feedback on sellers.

• Collaboration inside the organization

- is a set of tools that supports the work of teams or groups by facilitating the sharing and flow of information.

• Explicit and Tacit knowledge

- Explicit knowledge - consists of anything that can be documented,archived,and codified,often with the help of IT.

- Tacit knowledge - is the knowledge contained in people's heads. The challenge inherent in tacit knowledge is figuring out how to recognize,generate,share, and manage knowledge that resides in people's heads.

• Collaboration outside the organization

Social tagging

• Tags - are specific keywords or phrases incorporated into website content for means of  classification or taxonomy.
• Social tagging - describe the collaborative activity of making shared online content with keywords or tags as a way to organize it for future navigation, filtering, or           search.
• Folksonomy - is similar to taxonomy except that crowd sourcing determines the tags or keyword-based classification system.
• Website bookmark - is a locally stored URL or the address of a file or Internet page saved as a shortcut.
• Social bookmarking - allows users to share,organize,search and manage bookmarks.

Business 2.0 Tools for Collaborating

1. Blogs
2. Wikis
3. Mashup

CHAPTER 13 : 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

E-Commerce & E-Business

How do e-commerce and e-business differ?

·        E-commerce – the buying and selling of goods and services over the Internet (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 (online transactions, serving customers and collaborating with business partner)

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

 Business-to-Business (B2B)

Electronic marketplace (e-marketplace) - Interactive business communities providing a central market where multiple buyers and sellers can engage in e-business activities.

Electronic Marketplace (e-marketplace)

• Electronic marketplaces, or e-marketplaces, present structures for conducting commercial exchange, consolidating supply chains, and creating new sales channels
• Their primary goal is to increase market efficiency by tightening and automating the relationship between buyers and sellers
• Existing e-marketplaces allow access to various mechanisms in which to buy and sell almost anything, from services to direct materials

Business-to-Consumer (B2C)

• e-shop - a version of a retail store where customers can shop at any hour of the day without leaving their home or office.
• Example : Hijabs by Hanami

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.
• Example : Agoda.com

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 include:

Communities of interest - People interact with each other on specific topics, such as golfing and stamp 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-on-one with Michael Jordan.

E-Business benefit :

• Highly accessible
• Increased loyalty of customers
• Improved information content
• Increased convenience
• Increased global reach
• Decreased cost

E-Business challenge :

• Identifying limited market segment
• Managing customer trust
• Ensuring consumer protection
• Managing customer loyalty

Mashups

Web Mashups - a Web site or Web application that uses content from more than one source to create a completely new service

• 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

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.

                                                     ERP Integration Data Flow

Bringing The Organization Together

- Information has traditionally been isolated within specific departments, whether on an individual database, in a file cabinet, or on an employee's PC

The Evolution Of ERP

Integrating 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 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.

Primary Users and Business Benefits of Strategic Initiatives

                 Integrations between SCM, CRM, and ERP Applications

CHAPTER 11 - BUILDING A CUSTOMER - CENTRIC ORGANIZATIONAL - CUSTOMER RELATIONSHIP MANAGEMENT

Customer Relationship Management

- Managing all aspects of a customer's relationship with an organization to increase customer loyalty and retention and an organization's profitability.

- CRM allows an organization to gain insights into customer's shopping and buying behaviors.

The Benefits of CRM

• companies that understand individual customer needs are best positioned to achieve success.
• building successful customer relationship is not a new business practise , however, implementing CRM systems allows a company to operate more efficiently and effectively in the area of supporting customer needs.

Evolution of CRM

1. CRM Reporting technologies  - help organizations segment their customer across other applications.
2. CRM Analysis technologies  - help organizations segment their customer into categories such as best and worst customers.
3. CRM Predicting technologies  - help organizations predict customer behavior, such as which customers are at risk of leaving

Operational And Analytical CRM

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

CHAPTER 10 - EXTENDING THE ORGANIZATION - SUPPLY CHAIN MANAGEMENT

Basics of Supply Chain

·  Supply Chain - Consists of all parties involved,directly or indirectly, in the procurement of a product or raw material.

· Supply Chain management ( SCM ) - involves 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 : -

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

·   Transformation of material into semi-finished and finished products, or the organization's own production processes.

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

Typical Supply Chain

The Five Basic Supply Chain Management Activities

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.

The Integrated Supply Chain

 Factors Driving Supply Chain Management

• VISIBILITY - The ability to view all areas up and down the supply chain Changing supply chains requires a comprehensive strategy buoyed by information technology.

•  CUSTOMER BEHAVIOR - The behavior of customers has changed the way businesses compete. Customers will leave if a company does not continually meet their expectations.

•   COMPETITION - Supply chain management software can be broken down into (1) supply chain planning software and (2) supply chain execution software.

•   SPEED - New forms of servers, telecommunications, wireless applications and software are enabling companies to perform activities that were once never thought possible.

 Supply Chain Planning And Supply Chain Execution

Supply Chain Management Success Factors

KEYS TO SCM SUCCESS

1) 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.

2) 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.

3) Ensure The SCM System Supports The Organizational Goals - Gives organizations an advantages in the areas most crucial to their business success.

4) Deploy In Incremental Phases and Measure and Communicate Success - Design the deployment of the SCM system in incremental phases.

5) Be Future Oriented - The supply chain design must anticipate the future state of the business.

CHAPTER 9 - ENABLING THE ORGANIZATION - DECISION MAKING

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.

Six - Step Decision Making

1. Problem identification : Define the problem as clearly and precisely as possible.
2. Data collection : Gather problem-related data, including who,what,where,when,why, and how. Be sure to gather facts, not rumors or opinions about the problem.
3. Solution generation : Detail every solution possible, including ideas that seem farfetched.
4. Solution test : Evaluate solutions in terms of feasibility (can it be completed?), suitability (is it a permanent or a temporary fix?), and acceptability (can all participants form a consensus?).
5. Solution selection : Select the solution that best solves the problem and meets the needs of the business.
6. Solution Implementation : If the solution solves the problem, then the decisions made were correct. If not, then the decision were incorrect and the process begins again.

OPERATIONAL

• At the operational level, employees develop, control, and maintain core business activities required to run the day-to-day operations.
• Operational decisions are considered structured decisions, which arise in situations where established processes offer potential solutions.

MANAGERIAL

•  At the managerial level, employees are continuously  evaluating company operations to hone the firm's abilities to identify, adapt to, and leverage change.
• these types of decision are considered semistructured decisions-occur in situations in which a few established processes help to evaluate potential solutions, but not enough to lead to a definite recommended decision.

STRATEGIC

• Managers develop overall business strategies, goals, and objectives as part of the company's strategic plan.
• strategic decisions are highly unstructured decisions- occuring in situations which no procedures or rules exist to guide decision makers toward the correct choices.

Enhancing Decision Making with MIS

Model - is a simplified representation or abstraction of reality.

Operational Support Systems

• Transactional information encompasses all the information contained within a single business process or unit of work.
• Its primary purpose is to support the performance of daily operational or structured decisions.

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

Decision support systems ( DSS )

- Decision support system (DSS) – models information to support managers and business professionals during the decision-making process

- 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 output

Executive information system ( EIS )

•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

Digital dashboard - integrates information from multiple component and present it in a unified display.

ARTIFICIAL INTELLIGENCE

- Artificial intelligence (AI) stimulates human thinking and behavior, such as the ability to reason and learn.

- Intelligence systems are various commercial applications of artificial intelligence. 

CATEGORIES OF AI SYSTEMS :

1. Expert systems 
   - computerized advisory programs that imitate the reasoning processess of experts in solving difficult problems.
2. Neural network
   - also called an artificial neural network, is a category of AI that attempts to emulate the way the human brain works.
   - fuzzy logic is a mathematical method of handling imprecise or subjective information.
3. Genetic algorithms
   - is an artificial intelligence system that mimics the evolutionary, survival-of-the-fittest process to generate increasingly better solutions to a problem.
4. Intelligent agents
   - is a special-purpose knowledge-based information system that accomplishes specific tasks on behalf of its users.
   - shopping bot is software that will search several retailer websites and provide a comparison of each retailer's offerings including price and availability.
5. Virtual reality
   - is a computer-simulated environment that can be a simulation of the real world or an imaginary world.