CHAPTER SIX - VALUING ORGANIZATIONAL INFORMATION

ORGANIZATIONAL INFORMATION

Information granularity refers to the extent of detail within the information (fine and detailed or coarse and abstract).

Levels, Formats, and Granularities of Organizational Information

THE VALUE OF TRANSACTIONAL AND ANALYTICAL INFORMATION

Transactional information encompasses all of the information contained within a single business process or unit of work, and its primary purpose is to support the performing of daily operational tasks. Analytical information encompasses all organizational information, and its primary purpose is to support the performing of managerial analysis tasks.  

THE VALUE OF TIMELY INFORMATION

Real-time information means immediate, up-to-date information.

Real-time systems provide real-time information in response to query requests.

Transactional versus Analytical Information

THE VALUE OF QUALITY INFORMATION

Five Common Characteristics of High-Quality Information

The four primary sources of low quality information are:

-          Online customers intentionally enter inaccurate information to protect their privacy.

-          Different systems have different information entry standards and formats.

-          Call center operators enter abbreviated or erroneous information by accident or to save time.

-          Third-party and external information contains inconsistencies, inaccuracies, and errors.

Understanding the cost of poor information

-          Inability to accurately track customers, which directly affects strategic initiatives such as CRM and SCM.

-          Difficulty identifying the organization's most valuable customers.

-          Inability to identify selling opportunities and wasted revenue from marketing to nonexistent customers and no deliverable mail.

-          Difficulty tracking revenue because of inaccurate invoices.

-          Inability to built strong relationship with customers-which increases buyer power.

CHAPTER EIGHT - ACCESSING ORGANIZATIONAL INFORMATION - DATA WAREHOUSE

Accessing Organizational Information

The company uses data warehouse information to perform the following :

Base labor budgets on actual number of guests served per hour.

Develop promotional sale item analysis to help avoid losses from overstocking or under stocking inventory.

Determine theoretical and actual cost of food and the use of ingredients.

History of Data Warehousing

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

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.

Issue of quality information.

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

Data Warehouse Fundamentals

A data warehouse is a logical collection of information – gathered from many different operational databases – that supports business analysis activities and decision making tasks.

Purpose of a data warehouse is to aggregate information throughout an organization into a single repository in such way that employees can make decisions and undertake business analysis activities.

Extraction, transformation, and loading (ETL) is 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.

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

Data mart contains a subset of data warehouse information.

Model of Typical Data Warehouse

MULTIDIMENSIONAL ANALYSIS AND DATA MINING

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

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

Dimension – a particular attribute of information.

Cube – common term for the representation of multidimensional information.

Data mining is the process of analyzing data to extract information not offered by the raw data alone.

Data-mining tool – uses a variety of techniques to find patterns and relationships in large volumes of information. 

INFORMATION CLEANSING OR SCRUBBING

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

Information cleansing or scrubbing is a process that weeds out and fixes or discards inconsistent, incorrect, or incomplete information.

Occur during ETL process and second on the information once it is in the data warehouse.

Contact information in an operational system.

Standardizing Customer name from Operational Systems.

Information cleansing activities.

Accurate and complete information.

Business Intelligence

Business intelligence (BI) refers to applications and technologies that are used to gather, provide access, analyze data, and information to support decision making effort.

ENABLING BUSINESS INTELLIGENCE

Competitive organizations accumulate business intelligence to gain sustainable competitive advantage, and they may regard such intelligence as a valuable core competence in some instances.

The principal BI enablers are technology, people, and culture. 

CHAPTER SEVEN - STORING ORGANIZATIONAL INFORMATION-DATABASE

Rational Database Fundamentals

Database maintains information about various types of objects (inventory), events (transactions), people (employees), and places (warehouse).

Hierarchical Database Model – information is organized into a tree-like structure that allows repeating information using parent/child relationship such a way that it cannot have too many relationships.

Network Database Model – flexible way of representing objects and their relationships.

Relational Database model – type of database that stores information in the form of logically related two-dimensional tables.

ENTITIES AND ATTRIBUTES

An entity in the relational database model is a person, place, thing, transaction, or event about which information is stored.

A table in relational database model is a collection of similar entities.

Attributes also called column or fields, are characteristics or properties of an entity class.

KEYS AND RELATIONSHIPS

A primary key is a field (or group of fields) that uniquely identifies a given entity in a table.

The primary keys are important because they provide a way of distinguish each entity in a table.

A foreign key in the relational database model is a primary key of one table that appears as an attribute in another table and acts to provide a logical relationships between the to tables.

Relational Database Advantages

From a business perspective, database information offers many advantages, including :

INCREASE FLEXIBILITY

Handle changes quickly and easily.

Provide users with different views.

Have only one physical view.

The physical view of information deals with the physical storage of information on a storage device such as hard disk.

Have multiple logical views.

The logical view of information focuses on how user logically access information to meet their particular business needs.

INCREASE SCALABILITY AND PERFORMANCE

Only a database could “scale” to handle the massive volumes of information and the large number of users required for the successful.

Scalability refers to how well a system can adapt to increased demands.

Performance measures how quickly the system performs a certain process or transaction.

REDUCE INFORMATION REDUNDANCY

Redundancy is the duplication of information, or storing the same information in multiple places.

The primary problem with redundant information is that it is often inconsistent, which makes it difficult to determine which values are the most current or most accurate.

INCREASE INFORMATION INTEGRITY (QUALITY)

Information integrity – measures the quality of information.

Integrity constraint – rules that help ensure the quality of information
            - Relational integrity constraint
            - Business-critical integrity constraint

INCREASED INFORMATION SECURITY

Information is an organizational asset and must be protected

Databases offer several security features including:

Password – provides authentication of the user

Access level – determines who has access to the different types of information

Access control – determines types of user access, such as read-only access

Database Management System

A database management system (DBMS) is software through which users and application programs interact with a database.

The user sends requests to the DBMS and the DBMS performs the actual manipulation of the information in the database.

Two ways that users can interact with DBMS : (1) Directly and (2)  indirectly.

Interacting Directly and Indirectly with a Database through a DBMS

DATA-DRIVEN WEBSITES

The pages on website must change according to what a site visitor is interested to browsing.

A data-driven website is an interactive website kept constantly updated and relevant to the needs of customers through the use of a database.

Wikipedia - Data-Driven Website

Data-Driven Website Advantages

Integrating Information among Multiple Databases

Integration – allows separate systems to communicate directly with each other.

Forward integration – takes information entered into a given system and sends it automatically to all downstream systems and processes.

Backward integration – takes information entered into a given system and sends it automatically to all upstream systems and processes.

 A Forward and Backward Customer Information Integration Example

Building a central repository specifically for integrated information.

User can create, update, and delete customer information only in the central customer information database.

Integrating Customer Information among Database

CHAPTER FIVE - ORGANIZATIONAL STRUCTURES THAT SUPPORT STRATEGIC INITIATIVES

Organizational Structures

Employees across the organization must work closely together to develop strategic initiatives that create competitive advantages.

IT Roles and Responsibilities

Most organizations maintain position such as chief executive officer(CEO), chief financial officer(CFO), and chief operation officer(COO) at the strategic level. Recently, there are more IT- related strategic position such as chief information officer(CIO), chief technology officer(CTO), chief security officer(CSO), chief privacy officer(CPO) and chief knowledge officer(CKO).

The chief information officer(CIO) is responsible for :

-          Overseeing all users of information technology.

-          Ensuring the strategic alignment of IT with business goals and objectives.

 

What Concern CIOs the Most?

The chief technology officer(CTO) is responsible for :

-          Ensuring the throughput, speed, accuracy, availability and reliability of an organization’s information technology.

-          Ensuring the efficiency of IT system throughout the organization.

The chief security officer(CSO) responsible for :

-          Ensuring the security of IT system.

-          Developing strategies.

-          IT safeguards against attacks from hackers and viruses.

The chief privacy officer(CPO) responsible for :      

-          Ensuring the ethical and legal use of information within organizations.

-          Enable them to understand the often complex legal issues.

The chief knowledge officer(CKO) responsible for :

-          Collecting, maintaining, and distributing the organization’s knowledge.

-          Make it easy for people to reuse the knowledge.

 

Skills Pivotal for Success in Executive  IT Roles

The Gap between Business Personnel and IT Personnel

Business personnel possess expertise in functional areas such as marketing, accounting, and sales.

IT personnel have the technological expertise.

This typically causes a communications gap between the business personnel and IT personnel.

IMPROVING COMMUNICATION

Business personnel must seek to increase their understanding of IT.

IT personnel must seek to increase their understanding of the business.

It is the responsibility of the CIO to ensure effective communication between business personnel and IT personnel.

Organization Fundamentals – Ethics and Security

Ethics – the principles and standards that guide our behavior toward other people.

Privacy is a major ethical issue. Privacy is the right to be left alone when you want to be, to have control over your own personal possessions, and not to be observed without your consent.

Issues Affected by Technology Advances 

Primary Reasons Privacy Issues Reduce Trust or Business 

Security – How Much Will Downtime Cost Your Business?

PROTECTING INTELLECTUAL ASSETS

Organizational information is intellectual capital and it must be protected.

Information security – the protection of information from accidental or intentional misuse by persons inside or outside an organization.

Ebusiness automatically creates tremendous information security risks for organizations.

Sources of Unplanned Downtime

The Cost of Downtime

CHAPTER FOUR - MEASURING THE SUCCESS OF STRATEGIC INITIATIVES

Measuring Information Technology’s  Success

It has become an important part of organizations’ strategy, competitive advantage, and profitability.

Key Performance Indicators (KPIs) are the measure that are tied to business drivers. Metrics are the detailed measures that feed those KPIs.

Efficiency And Effectiveness

Efficiency IT metrics measure the performance of the IT system itself including throughput, speed, and availability.

Effectiveness IT metrics measure the impact IT has on business process and activities including customer satisfaction, conversation rates, and self-through increase.

Benchmarking – Baseline Metrics

Benchmarking is a process of continuously measuring system results, comparing those results to optimal system performance (benchmark values), and identifying steps and procedures to improve system performance.

 

 Comparing efficiency IT and effectiveness IT metrics of Egovernment initiatives.

The Interrelationships Of Efficiency And Effectiveness IT Metrics

Efficiency IT metrics focus on the technology itself. It’s important to monitor and do not always guaranteed effectiveness.

Effectiveness IT metrics are determined according to an organization’s  goals, strategies, and objectives.

Need to consider the issue of security while determining efficiency and effectiveness IT metrics.

When an organization offers customers the ability to purchase products over the internet it must implement the appropriate security.

Metrics For Strategic Initiatives

A metric is nothing more than a standard measure to assess performance in particular area. A focus on customer and performance standard shows up in the form of metrics that assess the ability to meet customer’s needs and business objectives.

Website Metrics

-          A company can use web traffic analysis to determine the revenue generated, the number of new customers acquired, any reductions in customer service call and so on.

A few metrics manager should be familiar with to help measure website access along with organization’s strategic initiatives are :

-          Abandoned Registrations

-          Abandoned Shopping Carts

-          Click-through

-          Conversation Rate

-          Cost-Per-Thousand(CPM)

-          Page exposure

-          Total Hits

-          Unique Visitors   

Supply Chain Management (CRM) Metrics

-          Help an organization understand how it’s operating over a given period.

Common supply chain management metrics:

1.       Back order

2.       Customer order promised cycle time

3.       Customer order actual cycle time

4.       Inventory replenishment cycle time

5.       Inventory turns

Customer Relationship Management (CRM) Metrics

-          Best practice is no more than seven (plus or minus two) metrics out of hundreds possible should be used at any given management level.

Business Process Reengineering (BPR) and Enterprise Resource Planning (ERP) Metrics

-          BPR and ERP are large, organization wide initiatiaves.

-          It is extremely difficult to measure

-          One of the best method is scorecard    

Balance Scorecard

-          A management system, in addition to a measurement system that enables organizations to clarify their vision strategy an translate them into an action. 

CHAPTER THREE - STRATEGIC INITIATIVES FOR IMPLEMENTING COMPETITIVE ADVANTAGES

Supply Chain Management (SCM)

• Supply chain management involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability.
• There are four basic components of supply chain management : 

1.  Supply Chain Strategy – managing all the resources required to meet customer demand for all product and services.

2. Supply Chain Partner – the partners chosen to deliver finished goods, raw materials, services including pricing, delivery and payment process along with partner relationship monitoring metrics.

3.   Supply Chain Operation – the schedule for production activities.

4.   Supply Chain Logistic – the product deliver processes and elements.

Customer Relationship Management  (CRM)

·         Customer relationship management involves managing all aspects of a customer’s relationship with an organization to increase customer loyalty and retention and organization’s profitability.

·         Customer relationship management allows an organization to gain customer’s shopping and buying behaviors to develop and implement enterprise wide strategy.

·         Organizations such as Kaiser Permanente have obtained great success through CRM system.

·         Customer can contact an organization through various type of technology such as call centers, web access, email, faxes and direct sales that provide access to CRM information within different system from Accounting System, Order Fulfillment System, Inventory System and Customer Service System.

·         CRM allow us to :

1.      Communicate effectively with each customer

2.      Understand customer product and service.

·    CRM Strategy – CRM s not just technology but also strategy an organization must embrace on an enterprise level.

·        Implementing a CRM system :

1.      Help an organization identify customer

2.      Design specific marketing campaign

3.      To treat customer as an individual

4.      Understand customer buying behaviors

Business Process Reengineering (BPR)

·         A business process is a standardized set of activities that accomplish a specific task, such as processing a customer’s order.

·         Business process reengineering is the analysis and redesign of workflow within and between enterprises.

·         Creating value for the customer is leading factor for instituting BPR, and information technology often plays an important enabling role.

Enterprise Resources Planning (ERP)

·         ERP integrates all departments and functions throughout an organization into a single IT sytem so that employees can make decisions.

ERP systems collect data from across an organization and correlate the data generating an enterprise wide view.

Chapter Two - Competitive Advantage

What is Competitive Advantage ?

• A product or service that an organization’s customers place a greater value on than similar offerings from a competitor.

There are three(3) common tools used industry to analyze and develop competitive advantage include:

  

1. Porter’s Five Forces Model
2. Porter's Three Generics Strategies 
3. Value chains

     The Five Force Model

• Porter’s Five Forces Model determines the relative attractiveness of an industry

       Buyer Power

• High when buyers have many choices of whom to buy from and low when their choices are 
•  Low when their choices are few reduce buyer power.

       Supplier Power

• High when buyers have few choices of whom to buy from and low when their choices are many 
• Low when their choices are many 
• Supply chain – consists of all parties involved in the procurement of a product or raw material

       Threat of Substitute  Product and Services 

•  High when there are many alternatives to a product or service
•  Low – when there are few alternatives from which to choose

     

       Threat of New Entrants 

•  High – when it is easy for new competitors to enter a market
•  Low – when there are significant entry barriers to entering a market

      

       Rivalry among Existence competitors 

•  High when competition is fierce in a market
•  Low – when competition is more complacent

The Three Generics Strategies 

         Cost Leadership

•  Becoming a low - cost producer in the industry allows the company to lower prices to customers
•  Competitors with higher costs cannot afford to compete with the low-cost leader on price

         Differentiation

•   Create competitive advantage by distinguishing their products on one or more features important to their customers
•  Unique features or benefits may justify price differences or stimulate demand

         Focus Strategy

•   Target to a niche market
•  Concentrates on either cost leadership or differentiation

Relationships Between Business Process and Value Chain 

      

         The Value Chains - Targeting Business Process 

•  Supply Chain - a chain or series of processes that adds value to product & service for customer
•  Add value to its products and services that support a profit margin for the firm

       

        Supply Chain Diagram

                     A chain or series of processes that adds value to product & service for customer

 

         

•