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Chapter 2 MAJOR BUSINESS INITIATIVES Gaining Competitive Advantage with IT
STUDENT LEARNING OUTCOMES  <ul><li>Describe SCM systems, their competitive advantages, challenges to their use, and IT sup...
STUDENT LEARNING OUTCOMES <ul><li>Describe ICE systems, their competitive advantages, challenges to their use, and IT supp...
INTRODUCTION <ul><li>Important IT applications businesses are using today </li></ul><ul><ul><li>Supply chain management (S...
SUPPLY CHAIN MANAGEMENT <ul><li>Distribution chain  – the path followed from the originator of a product/service to the en...
What are Supply Chain Management Systems? <ul><li>Supply chain management (SCM)  - tracks inventory and information among ...
What are Supply Chain Management Systems?
What are Supply Chain Management Systems? <ul><li>Just-in-time  - an approach that produces or delivers a product or servi...
Strategic and Competitive Opportunities with SCM <ul><li>A well-designed supply chain management system helps by optimizin...
Strategic and Competitive Opportunities with SCM <ul><li>Collaborative planning, forecasting, and replenishment (CPFR)  - ...
Challenges to Success with Supply Chain Management <ul><li>Executives must recognize its importance </li></ul><ul><li>Work...
IT Support for Supply Chain Management <ul><li>Specialized SCM software and ERP software suites </li></ul><ul><li>Applicat...
IT Support for Supply Chain Management
What are Customer Relationship Management Systems? <ul><li>Customer relationship management (CRM) system  -   uses informa...
What are Customer Relationship Management Systems?
Strategic and Competitive Opportunities with CRM <ul><li>More effective marketing campaigns based on customer needs and wa...
Strategic and Competitive Opportunities with CRM <ul><li>Revenue Enhancers </li></ul><ul><li>Increase sales effectiveness ...
Challenges to Success with Customer Relationship Management <ul><li>More than 50 percent of CRM installations are seen as ...
IT Support for Customer Relationship Management
IT Support for Customer Relationship Management <ul><li>CRM software providers   (e.g. Clarify, Oracle, SAP, Siebel System...
What are Business Intelligence Systems? <ul><li>Business intelligence (BI)  – knowledge about your customers, your competi...
What are Business Intelligence Systems? <ul><li>Business intelligence (BI)   systems  – the IT applications and tools that...
What are Business Intelligence Systems?
What are Business Intelligence Systems? <ul><li>The objective of BI is to help knowledge workers understand </li></ul><ul>...
What are Business Intelligence Systems? <ul><li>Data warehouse – a logical collection of information - gathered from many ...
What are Business Intelligence Systems? <ul><li>Other technical components of business intelligence include such tools as ...
Strategic and Competitive Opportunities with BI <ul><li>Strategic uses of business intelligence ranked in order of importa...
Strategic and Competitive Opportunities with BI <ul><li>BI systems provide managers with  </li></ul><ul><ul><li>Actionable...
Challenges to Success with Business Intelligence <ul><li>Deal with an important business issue </li></ul><ul><li>Provide c...
IT Support for Business Intelligence <ul><li>There are many software companies in the BI field  </li></ul><ul><li>Digital ...
IT Support for Business Intelligence
What are Integrated Collaboration Environments? <ul><li>Integrated collaboration environment (ICE)  - the environment in w...
What are Integrated Collaboration Environments? <ul><li>Collaboration system  - software that is designed specifically to ...
What are Integrated Collaboration Environments? <ul><li>Workflow  - defines all of the steps or business rules, from begin...
What are Integrated Collaboration Environments? <ul><li>Document management system  - manages a document through all the s...
What are Integrated Collaboration Environments?
What are Integrated Collaboration Environments? <ul><li>Social network system  - an IT system that links you to people you...
Strategic and Competitive Opportunities with ICEs <ul><li>The payoffs can be huge </li></ul><ul><li>The oil and gas explor...
Challenges to Success with Integrated Collaboration Environments <ul><li>Acceptance of knowledge management systems has be...
IT Support for Integrated Collaboration Environments <ul><li>Collaboration software </li></ul><ul><li>Workflow systems </l...
IT Support for Integrated Collaboration Environments <ul><li>Presence awareness  - a software function which determines wh...
A VIEW OF THE INTEGRATED ENTERPRISE
Airline Reservation Systems <ul><li>SABRE and APOLLO were very profitable for American and United </li></ul><ul><li>Americ...
Frequent Flyer Programs <ul><li>Frequent flyer programs are a great example of CRM </li></ul><ul><li>Air travelers concent...
Airline Maintenance Systems <ul><li>Airlines use SCM systems to be sure maintenance parts are available when needed </li><...
Yield Management Systems <ul><li>Yield management system  - specialized kind of decision support system designed to maximi...
Yield Management Systems
Integrated Collaboration Environments <ul><li>Many airlines are global businesses with employees located all over the worl...
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Major Business Initiatives

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  1. 1. Chapter 2 MAJOR BUSINESS INITIATIVES Gaining Competitive Advantage with IT
  2. 2. STUDENT LEARNING OUTCOMES <ul><li>Describe SCM systems, their competitive advantages, challenges to their use, and IT support </li></ul><ul><li>Describe CRM systems, their competitive advantages, challenges to their use, and IT support </li></ul><ul><li>Describe BI systems, their competitive advantages, challenges to their use, and IT support </li></ul>
  3. 3. STUDENT LEARNING OUTCOMES <ul><li>Describe ICE systems, their competitive advantages, challenges to their use, and IT support </li></ul><ul><li>Describe how individual systems work together to give airline companies a competitive advantage </li></ul>
  4. 4. INTRODUCTION <ul><li>Important IT applications businesses are using today </li></ul><ul><ul><li>Supply chain management (SCM) </li></ul></ul><ul><ul><li>Customer relationship management (CRM) </li></ul></ul><ul><ul><li>Business intelligence (BI) </li></ul></ul><ul><ul><li>Integrated collaboration environments (ICE) </li></ul></ul>
  5. 5. SUPPLY CHAIN MANAGEMENT <ul><li>Distribution chain – the path followed from the originator of a product/service to the end consumer </li></ul>
  6. 6. What are Supply Chain Management Systems? <ul><li>Supply chain management (SCM) - tracks inventory and information among business processes and across companies </li></ul><ul><li>Supply chain management (SCM) system - an IT system that supports supply chain management activities by automating the tracking of inventory and information among business processes and across companies </li></ul>
  7. 7. What are Supply Chain Management Systems?
  8. 8. What are Supply Chain Management Systems? <ul><li>Just-in-time - an approach that produces or delivers a product or service just at the time the customer wants it </li></ul><ul><li>Logistics - the set of processes that plans for and controls the efficient and effective transportation and storage of supplies from suppliers to customers </li></ul>
  9. 9. Strategic and Competitive Opportunities with SCM <ul><li>A well-designed supply chain management system helps by optimizing: </li></ul><ul><ul><li>Fulfillment </li></ul></ul><ul><ul><li>Logistics </li></ul></ul><ul><ul><li>Production </li></ul></ul><ul><ul><li>Revenue and profit </li></ul></ul><ul><ul><li>Spending </li></ul></ul>
  10. 10. Strategic and Competitive Opportunities with SCM <ul><li>Collaborative planning, forecasting, and replenishment (CPFR) - a concept that encourages and facilitates collaborative processes between supply chain partners </li></ul>
  11. 11. Challenges to Success with Supply Chain Management <ul><li>Executives must recognize its importance </li></ul><ul><li>Work closely with customers and suppliers </li></ul><ul><li>Your IT systems and the IT systems of your customers and suppliers must be integrated </li></ul><ul><li>Your SCM systems must continuously adapt to changing conditions </li></ul>
  12. 12. IT Support for Supply Chain Management <ul><li>Specialized SCM software and ERP software suites </li></ul><ul><li>Application service provider (ASP) - supplies software applications (and often related services) over the Internet that would otherwise reside on its customers’ in-house computers. </li></ul>
  13. 13. IT Support for Supply Chain Management
  14. 14. What are Customer Relationship Management Systems? <ul><li>Customer relationship management (CRM) system - uses information about customers to gain insights into needs, wants, and behaviors in order to serve them better </li></ul><ul><li>Sales force automation (SFA) system - automatically tracks all the steps in the sales process </li></ul>
  15. 15. What are Customer Relationship Management Systems?
  16. 16. Strategic and Competitive Opportunities with CRM <ul><li>More effective marketing campaigns based on customer needs and wants </li></ul><ul><li>Assuring the sales force is efficiently managed </li></ul><ul><li>Providing superior after-sale service and support </li></ul>
  17. 17. Strategic and Competitive Opportunities with CRM <ul><li>Revenue Enhancers </li></ul><ul><li>Increase sales effectiveness </li></ul><ul><li>Improve customer retention </li></ul><ul><li>Increase revenue per customer </li></ul><ul><li>Offer new products/services </li></ul><ul><li>Cost Cutters </li></ul><ul><li>Decrease cost of sales </li></ul><ul><li>Decrease cost of service </li></ul><ul><li>Cost per service interaction </li></ul><ul><li>Transition to more self-service </li></ul>
  18. 18. Challenges to Success with Customer Relationship Management <ul><li>More than 50 percent of CRM installations are seen as failures </li></ul><ul><li>Why many CRM installations are less than successful </li></ul><ul><ul><li>The company’s goals are too broad </li></ul></ul><ul><ul><li>The company’s strategies are too generic </li></ul></ul><ul><ul><li>Implementations are often too software-centric </li></ul></ul>
  19. 19. IT Support for Customer Relationship Management
  20. 20. IT Support for Customer Relationship Management <ul><li>CRM software providers (e.g. Clarify, Oracle, SAP, Siebel Systems) </li></ul><ul><li>SFA software providers (e.g. Clarify, Siebel, Salesforce.com, Vantive) </li></ul><ul><li>Salesforce.com was the first to use an ASP model and others have followed </li></ul>
  21. 21. What are Business Intelligence Systems? <ul><li>Business intelligence (BI) – knowledge about your customers, your competitors, your business partners, your competitive environment, and your own internal operations – that gives you the ability to make effective, important, and often strategic business decisions. </li></ul>
  22. 22. What are Business Intelligence Systems? <ul><li>Business intelligence (BI) systems – the IT applications and tools that support the business intelligence function within an organization </li></ul><ul><li>Competitive intelligence - business intelligence focused on the external competitive environment </li></ul>
  23. 23. What are Business Intelligence Systems?
  24. 24. What are Business Intelligence Systems? <ul><li>The objective of BI is to help knowledge workers understand </li></ul><ul><ul><li>Capabilities available in the firm </li></ul></ul><ul><ul><li>State of the art, trends, and future directions in the market </li></ul></ul><ul><ul><li>Technological, demographic, economic, political, social, and regulatory trends </li></ul></ul><ul><ul><li>Actions of competitors </li></ul></ul>
  25. 25. What are Business Intelligence Systems? <ul><li>Data warehouse – a logical collection of information - gathered from many different operational databases – used to create business intelligence that supports business analysis activities and decision-making tasks </li></ul><ul><li>Data mart - a subset of the data warehouse in which only a focused portion of the data warehouse information is kept </li></ul>
  26. 26. What are Business Intelligence Systems? <ul><li>Other technical components of business intelligence include such tools as </li></ul><ul><ul><li>Data mining </li></ul></ul><ul><ul><li>Automatic exception detection with proactive alerting and automatic recipient determination </li></ul></ul><ul><ul><li>Automatic learning </li></ul></ul><ul><li>Data-mining tool - a software tool you use to query information in a data warehouse </li></ul>
  27. 27. Strategic and Competitive Opportunities with BI <ul><li>Strategic uses of business intelligence ranked in order of importance </li></ul><ul><ul><li>Corporate performance management </li></ul></ul><ul><ul><li>Optimizing customer relations, monitoring business activity, and traditional decision support </li></ul></ul><ul><ul><li>Packaged stand-alone BI applications for specific operations or strategies </li></ul></ul><ul><ul><li>Management reporting of business intelligence </li></ul></ul>
  28. 28. Strategic and Competitive Opportunities with BI <ul><li>BI systems provide managers with </li></ul><ul><ul><li>Actionable information and knowledge </li></ul></ul><ul><ul><li>At the right time </li></ul></ul><ul><ul><li>At the right location </li></ul></ul><ul><ul><li>In the right form </li></ul></ul>
  29. 29. Challenges to Success with Business Intelligence <ul><li>Deal with an important business issue </li></ul><ul><li>Provide customized BI information </li></ul><ul><li>Build discipline and precision in processes </li></ul><ul><li>Knowledge workers must understand how to use BI tools effectively </li></ul><ul><li>Understand that BI systems are complex and continually change </li></ul>
  30. 30. IT Support for Business Intelligence <ul><li>There are many software companies in the BI field </li></ul><ul><li>Digital dashboard - displays key information gathered from several sources on a computer screen in a format tailored to the needs and wants of an individual knowledge worker </li></ul>
  31. 31. IT Support for Business Intelligence
  32. 32. What are Integrated Collaboration Environments? <ul><li>Integrated collaboration environment (ICE) - the environment in which virtual teams do their work </li></ul><ul><li>Virtual team - a team whose members are located in varied geographic locations and whose work is supported by specialized ICE software or by more basic collaboration systems </li></ul>
  33. 33. What are Integrated Collaboration Environments? <ul><li>Collaboration system - software that is designed specifically to improve the performance of teams by supporting the sharing and flow of information </li></ul><ul><li>Alliance partner – a company your company does business with on a regular basis in a collaborative fashion, usually facilitated by IT systems </li></ul>
  34. 34. What are Integrated Collaboration Environments? <ul><li>Workflow - defines all of the steps or business rules, from beginning to end, required for a business process </li></ul><ul><li>Workflow system - facilitates the automation and management of business processes </li></ul>
  35. 35. What are Integrated Collaboration Environments? <ul><li>Document management system - manages a document through all the stages of its processing </li></ul><ul><li>Knowledge management (KM) system – an IT system that supports the capturing, organization, and dissemination of knowledge (i.e., know-how) throughout an organization </li></ul>
  36. 36. What are Integrated Collaboration Environments?
  37. 37. What are Integrated Collaboration Environments? <ul><li>Social network system - an IT system that links you to people you know and, from there, to people your contacts know </li></ul><ul><ul><li>Build your network </li></ul></ul><ul><ul><li>Find the people you need </li></ul></ul><ul><ul><li>Make a trusted contact </li></ul></ul>
  38. 38. Strategic and Competitive Opportunities with ICEs <ul><li>The payoffs can be huge </li></ul><ul><li>The oil and gas exploration industry could save an estimated $7 billion </li></ul><ul><li>“If only HP knew what HP knows” </li></ul>
  39. 39. Challenges to Success with Integrated Collaboration Environments <ul><li>Acceptance of knowledge management systems has been particularly difficult </li></ul><ul><ul><li>People don’t submit their knowledge to the knowledge repository </li></ul></ul><ul><ul><li>People are reluctant to share what they know with others </li></ul></ul><ul><ul><li>People say they don’t have the time to submit information. IT can help with techniques to capture knowledge automatically </li></ul></ul>
  40. 40. IT Support for Integrated Collaboration Environments <ul><li>Collaboration software </li></ul><ul><li>Workflow systems </li></ul><ul><li>Document management systems </li></ul><ul><li>Peer-to-peer collaboration software </li></ul><ul><li>Knowledge management (KM) systems </li></ul><ul><li>Social network systems </li></ul>
  41. 41. IT Support for Integrated Collaboration Environments <ul><li>Presence awareness - a software function which determines whether a user is immediately reachable or is in a less-available status </li></ul><ul><li>Peer-to-peer collaboration software - permits users to communicate in real time and share files without going through a central server </li></ul>
  42. 42. A VIEW OF THE INTEGRATED ENTERPRISE
  43. 43. Airline Reservation Systems <ul><li>SABRE and APOLLO were very profitable for American and United </li></ul><ul><li>American and United had access to BI on their own as well as on their competitors’ flights </li></ul><ul><li>Competitors had to wait to get BI and also had to pay for it </li></ul>
  44. 44. Frequent Flyer Programs <ul><li>Frequent flyer programs are a great example of CRM </li></ul><ul><li>Air travelers concentrate their travel with a single airline to get “perks” </li></ul><ul><li>Finnair is using BI to increase loyalty </li></ul><ul><li>Most information needed for frequent flyer programs is obtained from reservation systems </li></ul>
  45. 45. Airline Maintenance Systems <ul><li>Airlines use SCM systems to be sure maintenance parts are available when needed </li></ul><ul><li>Integrating SCM and BI helps airlines predict where and when spare parts will be needed </li></ul>
  46. 46. Yield Management Systems <ul><li>Yield management system - specialized kind of decision support system designed to maximize the amount of revenue an airline generates on each flight </li></ul><ul><li>Fares change over time for a specific flight based on number of seats sold </li></ul><ul><li>Objective: highest average cost per seat </li></ul>
  47. 47. Yield Management Systems
  48. 48. Integrated Collaboration Environments <ul><li>Many airlines are global businesses with employees located all over the world </li></ul><ul><li>Airline employees often work in virtual teams </li></ul><ul><li>ICEs let them avoid travel even though it’s free </li></ul><ul><li>ICEs are an interesting competitive threat to airlines </li></ul>
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