Major Business Initiatives

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