CHAPTER 19: OUTSOURCING IN THE 21^ST CENTURY

·         Insourcing (in-house development)

o   Is a common approach using the professional expertise within an organization to develop and maintain the organization’s information technology system

·         Outsourcing

o   Is an arrangement by which one organization provides a service or service for another organization that chooses not to perform them in-house

·         3 different forms out sourcing options a project must consider are:

o   Onshore outsourcing- engaging another company within the same country for service

o   Nearshore outsourcing- contracting an outsourcing arrangement with a company in a nearby country. Often this country will share a boarder with native country

o   Offshore outsourcing- using the organizations from developing countries to write code and develop systems

·         Outsourcing benefits

o   No costly outlay of capital funds

o   Reduced operating expenses

o   Access to advance technologies

o   Reduced head count and associated overhead expense

·         Outsourcing challenges:

o   Contract length- most of the outsourced IT contracts are for a relatively long time period (several years). This is because of the high cost of transferring assets and employee as well as maintaining technological investment. The long contract causes 3 particular issues:

§  Difficulties in getting out of a contract if the outsourcing service provider turns out to be unsuitable

§  Problems in foreseeing what the business will need over the next 5 or 10 years

§  Problems in reforming an internal IT department after the contract period is finished

·         Competitive edge- effective and innovative use of IT can give an organization a competitive edge over its rivals. A competitive business advantage provided by an internal IT department that department that understand the organization and is committed to its goals can be lost in an outsourced arrangement

·         Confidentially- in some organizations, the information stored in the computer systems is central to the enterprise’s success or survival such as about information about pricing policies

·         Scope definition- most IT projects suffer from problems associated with defining the scope of the system

CHAPTER 14: E-BUSINESS

·         An E-business model is a plan that details how a company creates, delivers, and generates revenue on the internet

·         Categories E-business models:

E-business term	Definition
Business-to- business (B2B)	Applies to business buying from and selling to each other over the Internet
Business-to-consumer (B2C)	Applies to any business that sells its products or services to consumers over the Internet   -emalls   :   a number  of eshops   -eshops  :   version of retail store where customer can shop at any                       hour of the day without leaving their homes or offices   -online auction
Consumer-to-business(C2B)	Applies to any customer that sells a product or service to a business over the Internet
Consumer-to-consumer (C2C)	Applies to sites primarily offering goods and services to assists consumers interacting with each other over the Internet

·         6 E-business tools

o   Email

o   Instant messaging

§  Real-time communication occurs when a system updates information at the same rate it receives it

§  Instant messaging is a service that enables instant or real-time communication between people

o   Podcasting

§  Podcasting converts an audio broadcast to a digital music player

o   Videoconferencing

§  Videoconferencing allows people at two or more locations to interact via two-way video and audio transmission simultaneously as well as share documents, data, computer displays, and whiteboards

o   Web conferencing

§  Web conferencing or webinar is blends videoconferencing with a document sharing and allows the user to deliver a presentation over the web to a group of geographically dispersed participants

                  o   Content management system

§  Helps companies manage the creation, storage, editing, and publications of their website context

§  Taxonomy is the scientific classification of organism into groups based on similarities of structure or origin

§  Information architecture is the set of ideas about how all information in a given context should be organized

·         E-business benefits:

E-business benefits
Highly accessible	-businesses can operate 24 hours a day, 7 days a week, 365 days a year
Increased customer loyalty	-additional channels to contact, respond to, and access customers helps contribute to customer loyalty
Reduce cost	-the cost of conducting business on the Internet is substantially less than traditional forms of business communication
Improved information content	- electronic catalogs and web pages present customers with updated information in real time about goods, services and prices
Increased convenience	-Ebusiness automates and improves many of the activities that make up a buying

·         The challenges of E-business:

o   Identifying limited market segments

o   Managing consumer trust

o   Ensuring consumer protection

o   Adhering to taxation rules

CHAPTER 12: INTEGRATING THE ORGANIZATION FROM END TO END- ENTERPRISE RESOURCES PLANNING

·         The heart of and ERP system is a central database that collects information from and feeds information into all the ERP system’s individual application components (called modules), supporting diverse business functions such as accounting, manufacturing, marketing and human resources

·         Roles information plays in ERP system:

o   Its serve as the organization’s backbone in providing fundamental decision-making support

o   ERP system provide a foundation for collaboration between departments, enabling people in different business areas to communicate

o   To obtain operational efficiencies, lower costs, improve supplier and customer relations and increase revenues and market share, all units of the organization must work together harmoniously toward congruent goals

·         Application such as SCM, CRM and ERP are the backbone of Ebusiness. Integration allows the unlocking of information to make it available to any user, anywhere and anytime.

·         These modules are NOT functional or flexible as the modules offered by industry leaders of SCM and CRM

·         To qualify as a true ERP solution, the system not only must integrate various organization process, but also must be:

o   Flexible

o   Modular and open

o   Comprehensive

o   Beyond the company

·         Primary users and business benefits of strategic initiatives:

         Enterprise application                           Primary user                           Primary business benefit      - CRM                                                - sales, marketing,                     - sales forecast, sales strategies,

                                                                 Customer service                      marketing campaign

   -SCM                                                 - customer, Resellers,                - market demand, resource and

                                                                 Partners, Suppliers                    capacity constraints, real-time

                                                                 Distributors                               scheduling

    -ERP                                                 -  Accounting, Finance,              - forecasting, planning, purchasing,

                                                                 Logistics, Production                 material management,

            Warehousing, Inventory,      

            Distribution

CHAPTER 11: BUILDING A CUSTOMER-CENTRIC ORGANIZATION-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 organization’s profitability. CRM allows an organization to gain insights into customer’s organization profitability

·         As the business world increasingly shift from product focus to customer focus

·         CRM will allow an organization to:

a)      Provide better customer service

b)      Make call centers more efficient

c)       Discover new customer

d)      Increase customer revenues

·         Operational CRM support 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 customer

·         Benefits and challenges of CRM:

o   Implementing CRM allows a company to operate more efficiency and effectively in the area of supporting customer needs

o   CRM moves far beyond technology by identifying customer needs and designing specific marketing campaigns tailored to each

o   This enables a firm to treat customers as individuals, gaining important insights into their buying preferences and shopping behaviors

o   Firms that treat their customers well reap the rewards and generally see higher profits and highly loyal customers

·         Personalization occurs when a website can know enough about a person’s likes and dislikes that it can fashion offers that are more likely to appeal to that person

·         CRM implementation strategies:

CRM implementation strategies

1.       Clearly communicate the CRM strategy

2.       Define information needs and flows

3.       Build an integrated view of the customer

4.       Implement in literation

5.       Scability for the organizational growth

CHAPTER 10: EXTENDING THE ORGANIZATION - SUPPLY CHAIN MANAGEMENT

·         Supply chain consists of all parties involved directly or indirectly. In procurement of a product or raw material

·         Supply chain management (SCM) involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability

·         The supply chain has 3 main links :

o   Materials flow from suppliers and their upstream suppliers at all levels

o   Transformation of materials into semi-finished and finished products or the organization’s own production processes

o   Distribution of products to customers and their downstream customers at all levels

·         The five basic supply chain management activities:

o   PLAN – prepare to manage all resources required to meet demand

o   SOURCE- build relationship with suppliers to procure raw materials

o   MAKE- manufacture products and create production schedule

o   DELIVER- plans for transportation of goods to customers

o   RETURN- support customers and product returns

·         Factors driving supply chain management:

o   Visibility: supply chain visibility is the ability to view all areas up and down the supply chain. Organizations can use technology tools that help them integrate upstream and downstream with both customers and suppliers. The bullwhip effect occurs when distorted product demand information passes from one entity to the next throughout the supply chain

o   Consumer behavior: behavior customers have changed the way businesses compete. Customers will leave if a company does not continually meet their expectations. Demand planning software generates demand forecasts using statistical tools and forecasting techniques. Companies can respond faster and more effectively to consumer demands through supply chain enhancement such as demand planning software

o   Competition: supply chain planning (SCP) software uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain while reducing inventory. Supply chain execution (SCE) software automates the different steps and stages of the supply chain. This could be as simple as electronically routing orders from a manufacturer to a supplier  

o   Speed: competition has focused on speed. New forms of servers, telecommunications, wireless applications and software are enabling companies to perform activities that were once never thought possible. These systems raise the accuracy, frequency and speed of communication between suppliers and customers as well as between internal users

·         3 factors fostering speed:

Factors fostering supply chain speed

1.       Pleasing customers has become something of a corporate obsession. Serving the customer in the best, most efficient, and most effective manner has become critical and information about issues such as order status, product availability, delivery schedule, and invoices has become a necessary part of the total customer service experience

2.       Information is crucial to managers’ abilities to reduce inventory and human resource requirements to a competitive level

3.       Information flows are essential to strategic planning for and development of resources

·         7 principles of supply chain management:

7 principles of supply chain management

1.       Segment customers by service need, regardless of industry and then tailor service to those particular segments

2.       Customize the logistics network and focus intensively on the service requirements and on the profitability of the preidentified customer segments

3.       Listen to signals of market demand and plan accordingly. Planning must span the entire chain to detect signals of changing demand

4.       Differentiate products closer to the customer, since companies can no longer afford to hold inventory to compensate for poor demand forecasting

5.       Strategically manage source of supply by working with key suppliers to reduce overall costs of owning materials and service

6.       Develop and supply chain information technology strategy that supports different levels of decision making and provides a clear view (visibility) of the of products, service and information

7.       Adopt performance evaluation measure that apply to every link in the supply chain and measure true profitability at every stage

·         Companies using supply chain to drive operating:

Companies using supply chain to drive operating

Dell                             : business grows 17 % per year with a $40 billion revenue base

Nokia                          : supply chain best practices are turning ideas into profitable business

Procter & gamble     : consumer driven supply chain is the defining architecture for large consumer                                        companies. Best practices in product innovation and supply chain effectiveness                                        are tops

IBM                              : hardware supply chain product development processes overhauled to the tune                                         of 70% better, faster and chain

Wal-mart stores        :everyday low prices define the customer demand driving Wal mart’s partner                                        integratred supply chain