Monday, 10 March 2014

Chapter 19 : 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.



Reasons companies outsource.



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.



Big selling point for offshore outsourcing “inexpensive good work”.



Factors driving outsourcing growth include :
  • Core competencies
  • Financial savings
  • Rapid growth
  • Industry changes
  • The Internet
  • Globalization
According to Pricewaterhouse Coopers, “Businesses that outsource are growing faster, larger, and more profitable than those that do not”.

Most organizations outsource their non-core business functions, such as payroll and IT.



OUTSOURCING BENEFITS

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
  • Outsourcing challenges include : 
  1. Contract length
  2. Difficulties in getting out of a contract
  3. Problems in foreseeing future needs
  4. Problems in reforming an internal IT department after the contract is finished
  • Competitive edge
  • Confidentiality
  • Scope definition

Chapter 15 : Creating Collaborative Partnerships

TEAMS, PARTNERSHIPS & ALLIANCES

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 non-strategic 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 SYSTEMS

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 email.
  • Structured collaboration (process collaboration) - involves shared participation in business processes such as workflow in which knowledge is hardcoded as rules.
Collaborative business functions :



Collaboration systems include :
  • Knowledge management systems
  • Content management systems
  • Workflow management systems
  • Groupware systems


KNOWLEDGE MANAGEMENT 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”.


EXPLICIT & TACIT KNOWLEDGE

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.
The following are two best practices for transferring or recreating tacit knowledge.
  • 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.
Reasons why organizations launch knowledge management programs.



CONTENT MANAGEMENT

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)
Content management system vendor overview.



WORKING WIKIS

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.


WORKFLOW MANAGEMENT SYSTEMS

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 email 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 SYSTEMS

Groupware technologies.



Groupware – software that supports team interaction and dynamics including calendaring, scheduling, and video conferencing.



VIDEO CONFERENCING

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


WEB CONFERENCING

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


INSTANT MESSAGING

Email 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.

Instant messaging application.

Chapter 14 : E-Business

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
How do e-commerce and e-business differ?
  • E-commerce : the buying and selling of goods and services over the Internet.
  • E-business : the conducting of business on the Internet including, not only buying and selling, but also serving customers and collaborating with business partners.

Industries Using E-business



E-Business Models

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.



Business to Consumer (B2C)

Common B2C e-business models include :
  • 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.
Business types :
  • Brick-and-mortar business
  • Pure-play business
  • Click-and-mortar business

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.


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 Benefits & Challenges

E-business benefits include :
  • Highly accessible
  • Increased customer loyalty
  • Improved information content
  • Increased convenience
  • Increased global reach
  • Decreased cost
E-business challenges include :
  • Protecting consumers
  • Leveraging existing systems
  • Increasing liability
  • Providing security
  • Adhering to taxation rules
There are numerous advantages and limitations in e-business revenue models including :
  • Transaction fees
  • License fees
  • Subscription fees
  • Value-added fees
  • Advertising fees

Mash-ups

Web mash-up : 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.

Mash-up editor : WSYIWYGs (What You See Is What You Get) for mash-ups.

Saturday, 15 February 2014

Chapter 12 : Integrating the Organization from End to End - ERP

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 systems automate business processes :


Bringing The Organization Together




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.
  • SCM and CRM market overviews :
  • General audience and purpose of SCM, CRM and 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.
  • Middle ware – several different types of software which sit in the middle of and provide connectivity between two or more software applications.
  • Enterprise application integration (EAI) middle ware – packages together commonly used functionality which reduced the time necessary to develop solutions that integrate applications from multiple vendors.
  • Data points where SCM, CRM and ERP integrate :


Enterprise Resource Planning
  • ERP systems must integrate various organization processes and be :
  1. Flexible Modular and open
  2. Comprehensive
  3. Beyond the company

Enterprise Resource Planning's Explosive Growth

  • SAP boasts 20,000 installations and 10 million users worldwide.
  • ERP solutions are growing because : 
  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 - CRM

Customer Relationship Management
  • CRM enables an organization to :
  1. Provide better customer service.
  2. Make call centres more efficient.
  3. Cross sell products more effectively.
  4. Help sales staff close deals faster.
  5. Simplify marketing and sales processes.
  6. Discover new customers Increase customer revenues.

Recency, Frequency and Monetary Value
  • An organization can find its most valuable customers by using a formula that industry insiders call RFM :
  1. How recently a customer purchased items (recency)
  2. How frequently a customer purchases items (frequency)
  3. How much a customer spends on each purchase (monetary value)

The Evolution of CRM



The Ugly Side of CRM



Customer Relationship Management's Explosive Growth
  • CRM business drivers :


Using Analytical CRM To Enhance Decisions
  • 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 :


CRM Success Factors
  • CRM success factors include :
  1. Clearly communicate the CRM strategy
  2. Define information needs and flows
  3. Build an integrated view of the customer
  4. Implement in iterations
  5. Scalability for organizational growth

Chapter 10 : Extending The Organization - Supply Chain Management

Supply Chain Management
  • The average company spends nearly half of every dollar that it earns on production.
  • In the past, companies focused primarily on manufacturing and quality improvements to influence their supply chains.

Basics of Supply Chain
  • The supply chain has three main links :
  1. Materials flow from suppliers and their “upstream” suppliers at all levels.
  2. Transformation of materials into semi finished and finished products through the organization’s own production process.
  3. Distribution of products to customers and their “downstream” customers at all levels.
  • Organizations must embrace technologies that can effectively manage supply chains.



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
  • Supply chain visibility – the ability to view all areas up and down the supply chain.
  • Bull whip effect – occurs when distorted product demand information passes from one entity to the next throughout the supply chain.

Consumer Behaviour
  • 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
  • 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 in the supply chain :


Supply Chain Management Success Factors
  • SCM industry best practices include :
  1. Make the sale to suppliers.
  2. Wean employees off traditional business practices.
  3. Ensure the SCM system supports the organizational goals.
  4. Deploy in incremental phases and measure and communicate success.
  5. Be future oriented.

SCM Success Stories
  • Top reasons why more and more executives are turning to SCM to manage their extended enterprises.
  • Numerous decision support systems (DSSs) are being built to assist decision makers in the design and operation of integrated supply chains.
  • DSSs allow managers to examine performance and relationships over the supply chain and among :
  1. Suppliers
  2. Manufacturers
  3. Distributors
  4. Other factors that optimize supply chain performance

Chapter 9 : Enabling The Organization - Decision Making

Decision Making
  • Model – a simplified representation or abstraction of reality.
  • IT systems in an enterprise.


Transaction Processing Systems
  • 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 Systems
  • 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.
  • Interaction between TPS and DSS :


Executive Information Systems
  • Executive information system (EIS) – a specialized DSS that supports senior level executives within the organization.
  • Most EISs offering the following capabilities :
  1. Consolidation – involves the aggregation of information and features simple roll-ups to complex groupings of interrelated information.
  2. Drill-down – enables users to get details, and details of details, of information.
  3. Slice-and-dice – looks at information from different perspectives
  • Interaction between TPS and EIS :
  • Digital dashboard – integrates information from multiple components and presents it in a unified display.


Artificial Intelligence
  • Intelligent system – various commercial applications of artificial intelligence.
  • Artificial intelligence (AI) – simulates human intelligence such as the ability to reason and learn.
  • The ultimate goal of AI is the ability to build a system that can mimic human intelligence :
  • 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 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
  • Data-mining software includes many forms of AI such as neural networks and expert systems.