LAST CHAPTER - OUTSOURCING IN THE 21st CENTURY

OUTSOURCING PROJECTS

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

–     Core competencies

–     Financial savings

–     Rapid growth

–     Industry changes

–     The Internet

–     Globalization

OUTSOURCING BENEFITS

–     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 finished

- Competitive edge

- Confidentiality

- Scope definition

CHAPTER 15 - CREATING COLLABORATIVE PARTNERSHIP

Web 2.0 : Advantages of Business 2.0

Web 2.0 is the next generation of internet uses is a more mature,distinctive communication platform characterized by new quality such as collaboration, sharing and free.

Business 2.0 provided a virtual environment that,for many new employees, it just as vibrant and important as the physical environment.

Characteristics of Business 2.0

1. CONTENT SHARING THROUGH OPEN SOURCING
2.  USER CONTRIBUTED CONTENT
3. COLLABORATION INSIDE THE ORGANIZATION
4. . COLLABORATION OUTSIDE THE ORGANIZATION

Networking Communities Business 2.0

Social media : refer to website that relay on user participation and users contributed content such as facebook and youtube.

Social network : application that connects people by matching profile information.

Social networking : practices of expanding your business or social content by constructing a personal network.

Social Tagging

tags : specific keywords or phrases incorporated into website content for means of classification or taxonomy.

social tagging : describe the collaborative activity of marking share online contents with keywords tag as a way to organize it for future navigation.

Business 2.0 Tools for Collaborating

- blog

- wikis

- mashups

CHAPTER 14 - E-BUSINESS

E-commerce - the buying and selling of goods and services over the internet.

E-bsuiness - the conducting of business on the internet, not only buying and selling, but also serving customers and collaborating with business partners.

Industries Using E business

E-business Models 

E-business Model- is an approach to conducting electronic business on the internet.

Business-to-business (B2B)

Electronic marketplaces or e-marketplaces- interactive business communities providing a central market space where multiple buyers and sellers can engage in business activities.

Business-to-consumer (B2C)

Applies to any business that sells its products or services to consumers over the internet.

 E-shop - a version of a 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.

Types of Businesses

  Brick-and-mortar business- a business that 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 Expedia.com

Click-and-mortar business- a business that operates in a physical store and on the internet. Examples include REI and Barnes and Noble.

Consumer-to-business (C2B)

 Applies to any consumer that sells a product or service to a business over the internet.

 An example - Priceline.com where bidders (or customers) ser their prices for items such as airline tickets or hotel rooms, and a seller decides whether to supply them.

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- an auction that sellers use as a selling channel to many buyers and the highest bid wins.

Reverse auction- an auction that 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 stamp collecting.

Communities of relations- people come together to share certain life experience, 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 challenges 

 E-business Business:

-  highly accessible

-  decreased cost

-  increase convenience

- increase global reach

Challenges :

-  protecting consumers

-  leveraging existing systems

-  increasing liability

- providing security

-  adhering to taxation rules.

CHAPTER 12 - INTEGRATING ORGANIZATION FROM END TO END - ERP

Enterprise Resource Planning (ERP) : ERP systems is a database,when a user enters or update information in one module,it is immediately and automatically update throughout the entire system.

ERP Integration Data Flow

ERP Process Flow

The Evolution Of ERP :

Integrating SCM , CRM and ERP :

• SCM,CRM and ERP are the backbone of e business.
• Integration of these application is the key to success for many companies.
• Integration allows to unlocking of information to make it available to any user, anywhere and anytime.
• General audience and purpose of SCM, CRM and ERP:

Primary Users and Business Benefits of Strategic Initiatives

Integration Tools :

Integration between SCM, CRM and ERP Applications

CHAPTER ELEVEN - BUILDING A CUSTOMER-CENTRIC ORGANIZATION - CRM

CUSTOMER RELATIONSHIP MANAGEMENT

Customer Relationship Management (CRM) is a means of managing all aspects of a customer’s relationship with an organization to increase customer loyalty and retention and an organization’s profitability.

RECENCY, FREQUENCY AND MONETARY VALUE

Organizations can find their most valuable customers through “RFM” 

- How recently a customer purchased item.

- How frequently a customer purchased item.

- How much a customer spends on each purchase. 

EVOLUTION OF CRM

Three phase in evolution of CRM:

- Reporting

- Analyzing

- Predicting

OPERATIONAL AND ANALYTICAL CRM

Operational CRM – support traditional processing day-to-day front-office operation or system that deal directly with the customers.

Analytical CRM – support back-office operation and strategic analysis and includes all systems that do not deal directly to 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 TEN - EXTENDING THE ORGANIZATION - SCM

 

SUPPLY CHAIN MANAGEMENT

The supply chain has three main links:

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

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

-  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.

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

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.

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. 

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.

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

- These system raise the accuracy, frequency, and speed of communication between supplier and customers, as well as between internal users.

CHAPTER NINE - ENABLING THE ORGANIZATION - DECISION MAKING

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

Model – a simplified representation or abstraction of reality

IT systems in an enterprise

TRANSACTION PROCESSING SYSTEM

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

DECISION SUPPORT SYSTEM

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

Three quantitative models used by DSSs include:

--       Sensitivity analysis

--       What-if analysis

--       Goal-seeking analysis

Interaction between a TPS and a DSS

EXECUTIVE INFORMATION SYSTEM

 Executive information system (EIS) - a specialized DSS that supports senior level executives within the organization.

Interaction between a TPS and an EIS

ARTIFICIAL INTELLIGENCE

Intelligent system – various commercial applications of artificial intelligence.

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

Advantages : can check info on competitor.

Four most common categories of AI include:

--       Expert system

--       Neural Network

--       Genetic algorithm

--       Intelligent agent

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

Cluster analysis – a technique used to divide 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 behavioural traits.

ASSOCIATION PROTECTION 

Association detection – reveals the degree to which variables are related and the nature and frequency of these relationships in the information.

  Market basket analysis – analyses such items as Web sites and checkout scanner information to detect customers’ buying behaviour and predict future behaviour by identifying affinities among customers’ choices of products and services.

STATISTICAL ANALYSIS

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.