CHAPTER 19: Outsourcing 21st Century

Outsourcing Projects

- In-sourcing ( in - house development ) - is a common approach using the professional expertise within an organization to develop and maintain the organization's information technology systems.

- Outsourcing - is an arrangement by which one organization provides a service or services for another organization that chooses not to perform them in-house.

Three different forms of outsourcing options

• Onshore outsourcing - engaging another company within the same country for services.
• Near-shore outsourcing - contracting an outsourcing arrangement with a company in a nearby country. Often this country will share a border with the native country.
• Offshore outsourcing - using organizations from developing countries to write code and develop systems. In offshore outsourcing the country is geographically far away.

Factors driving outsourcing growth include :

• Core competencies
• Financial savings
• Rapid growth
• Industry changes
• The internet
• Globalization

Outsourcing Benefits

1. Reduced operating expenses
2. resources focused on core profit-generating competencies
3. Access to outsourcing service provider's economies of scale
4. Access to advanced technologies.
5. No costly outlay of capital funds.

Outsourcing Challenges

• Contract length
• Competitive edge
• Confidentiality
• Scope definition

CHAPTER 15: Creating Collaborative Partnerships

Content sharing through open sourcing

Open system - consists of nonproprietary hardware and software based on publicity known standards that allow third parties to create add-on products to plug into or inter operate with the system.
Source code - Contains instruction written by a programmer specifying the actions to be performed by computer software.
Open source - any software whose source code in made available free for any third party to review and modify.

Characteristics of Business

1. User-contributed content

- is created and updated by many users for many users.
- reputation system - where buyers post feedback on sellers.

2. Collaboration inside the organization

- is a set of tools that supports the work of teams or groups by facilitating the sharing and flow of information.

3. Explicit and Tacit knowledge
- Explicit knowledge - consists of anything that can be documented,archived,and codified,often with the help of IT.
- Tacit knowledge - is the knowledge contained in people's heads. The challenge inherent in tacit knowledge is figuring out how to recognize,generate,share, and manage knowledge that resides in people's heads.

Collaboration outside the organization

Social tagging

• Tags - are specific keywords or phrases incorporated into website content for means of  classification or taxonomy.
• Social tagging - describe the collaborative activity of making shared online content with keywords or tags as a way to organize it for future navigation, filtering, or search.
• Folksonomy - is similar to taxonomy except that crowd sourcing determines the tags or keyword-based classification system.
• Website bookmark - is a locally stored URL or the address of a file or Internet page saved as a shortcut.

Social bookmarking - allows users to share,organize,search and manage bookmarks.

Business 2.0 Tools for Collaborating
- Blogs
- Wikis
- Mashups

CHAPTER 14: Ebusiness

•  A business model is a plan that details how company creates, delivers and generates revenues.
•  An ebusiness model is a plan that details how company creates, delivery and generates revenues on the Internet.

Ebusiness 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’s sell its products or services to consumers over the Internet.
• Consumer- to- business (C2B): Applies to any consumer that sells a product or services to a business over the internet
• Consumer-to-consumer (C2C): Applies to sites primarily offering goods and services to assist consumer interacting with each other over the Internet.

Ebusiness Forms

1. Content provider: Generates revenues by providing digital content such as news ,music, photos or video.
2. Infomediaries: Provide specialized information on behalf of producers of goods and services and their potential customers
3. Online marketplaces: Bring together buyers and sellers of products and services
4. Portals: Operates central websites for users to access specialized content and other services.
5. Services providers: Provide services such as photo sharing , video sharing, online backup and storage.
6. Transaction brokers: Process online sales transaction

Ebusiness tools
1.     Email
2.     Instant messaging
3.     Pod-casting
4.     Video conferencing
5.     Web conferencing
6.     Content management system

The challenge of Ebusiness
a.     Identifying limited market segment
b.     Managing consumer trust
c.      Ensuring consumers protection
d.     Adhering to taxation rules

CHAPTER 12: Enterprise Resources Planning

ERP integration data flow

ERP process flow

Bringing the organization together
ERP enables employees across the organization to share information across a single, centralized databased.
The organization before ERP

ERP - bringing the organization together

THE EVOLUTION OF ERP

INTEGRATION SCM, CRM AND ERP
- application such as CRM,SCM and ERP are the backbone of ebusiness. integration of these application is the key to success for many company and allows the company unlocking of information to make it available to any user, anywhere, anytime.

INTEGRATION TOOLS.

Many companies purchase modules from an ERP vendor, an SCM vendor, and a CRM vendor and must integrate the different modules together
                 - Middleware – several different types of software which sit in the middle of and provide connectivity between two or more software applications
                 - Enterprise application integration (EAI) middleware – packages together commonly used functionality which reduced the time necessary to develop solutions that integrate applications from multiple vendors.

Primary users and business benefits of strategic initiatives.

Integration between SCM, CRM and ERP application

CHAPTER 11: 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 an organization’s profitability.

The Benefits of CRM

• companies that understand individual customer needs are best positioned to achieve success.
• building successful customer relationship is not a new business practise , however, implementing CRM systems allows a company to operate more efficiently and effectively in the area of supporting customer needs.

 Evolution of CRM

1. CRM Reporting technologies - help organizations segment their customer across other applications.
2. CRM Analysis technologies - help organizations segment their customer into categories such as best and worst customers.
3. CRM Predicting technologies - help organizations predict customer behavior, such as which customers are at risk of leaving

Operational And Analytical CRM

- Operational CRM supports traditional transactional processing for day to day front office operations or systems that deal directly with the customers.

CHAPTER 10: Extending The Organization - Supply Chain Management

  A supply chain consists of all parties involved, directly or indirectly, in the 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 three main links:
1.    Material flow from suppliers and their upstream suppliers at all levels.
2.    Transformation of materials into semi-finished and finished products, or the organization’s own production processes
3.    Distribution of products to customers and their downstream customers at all levels.

The five basic supply chain management activities
1.    Plans – prepare to manage all resources required to meet demand
2.    Sources – build relationships with suppliers to procure raw materials
3.    Make – manufacture products and create production schedules
4.    Deliver – plan for transportation of goods to customers
5.    Returns – support customers and product returns

Information technology’s role in the supply chain
·      Information technology’s primary role in SCM is creating the integrations or tight process and information linkages between functions within a firms and between firms, which allow the smooth, synchronized flow of both information and product between customers, suppliers, and transportation providers. Information technology also integrates planning, decisions-making processes, business operating processes and information sharing for business performance management.

Factor Driving Supply Chain Management

1.    VISIBILITY - supply chain visibility is the ability to view all areas up and down the supply chain.

2.    CONSUMER BEHAVIOR - Demand planning software generates demand forecasts using statistical tools and forecasting technique.

3.    COMPETITION - Supply chain management software can be broken into supply chain planning software and supply chain execution software-both increase a company’s ability to compete. Supply chain planning software uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain while reducing inventory. Supply chain execution 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.

4.    SPEED - New forms of serves, telecommunications, wireless application, and software are enabling companies to perform activities that were once never thought possible. These systems raise accuracy, frequency, and speed of communication between suppliers and customers, as well as between internal users.

Factor fostering supply chain speed

A.   Pleasing customers has become something of 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 schedules, and invoices has become a necessary part of the total customer service experience.
B.   Information is crucial to manager’s abilities to reduce inventory and human resource requirements to a competitive level.
C.    Information flows are essential to strategic planning for and deployment of resources.

Seven principles of supply chain management

1. Segment customers by service needs, regardless of industry, and then tailor services to those particular segments.
2. Customize the logistic 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 play accordingly. Planning must span the entire chain to detect signals of changing demand.
4.Differentiate product closer to the customer, since companies can no longer afford to hold inventory to compensate for poor demand forecasting.
5.  Strategically manage sources of supply, by working with key suppliers to reduce overall costs of owning materials and services.
6. Develop a supply chain information technology strategy that supports different levels of decisions making and provides a clear view (visibility) of the flow of products, services, and information.
7.  Adopt performance evaluation measures that apply to every link in the supply chain and measure true profitability at every stage.

CHAPTER 9: Enabling The Organization - Decision Making

Managerial decision making challenges

1.    Managers need to analyze large amount of information

·      Innovation in communication and globalization have resulted in a dramatic increase in the variables and dimensions people need to consider when making a decision, solving a problem, or appraising an opportunity.

2.    Manager must make decision quickly

·      Time is of the essence and people simply do not have time to sift through all the information manually.

3.   Managers must apply sophisticated analysis technique, such as Porter’s strategies or forecasting, to make strategic decisions.

·      Due to the intensely competitive global business environment, companies must offer far more than just a great product to succeed.

Operational
Employees develop, control and maintain core business activities required to run day to day operations. Operational decisions are considered structured decisions, which arise in situation where establish processes potential solutions. Structured decision are made frequently and are almost repetitive in nature.

Managerial
Employees are continuously evaluating company operations to hone the firm’s abilities to identify, adapt to, and leverage change. A company that has a competitive advantage needs to constantly adjust and revise its strategy to remain ahead of fast-following competitors. Managerial decisions cover short and medium-range plans, schedules and budgets along with policies, procedures, and business objectives for the firm. They also allocate resources and monitor the performance of organizational subunits, including departments, divisions, process teams, project teams, and other work groups. Types of decision are considered semi-structured decisions, they occurs in situations in which a few established processes help to evaluate potential solutions, but not enough to lead to a definite recommended decision.

Strategic
Managers develop overall business strategies, goals, and objectives as part of the company’s strategic plan. They also monitor the strategic performance of the organization and its overall direction in the political, economic, and competitive business environment. Strategic decisions are highly unstructured decisions, occurring in situations in situations in which no procedures or rules exist to guide decisions makers toward the correct choices. They are infrequent, extremely important, and typically related to long-term business strategy.

Decision-making process
1.    Problem Identification: define the problem as clearly and precisely as possible.
2.    Data Collection: gather problem-related data, including who, what, where, when, why, and how. Be sure to gather facts, not rumors or opinions about the problem
3.    Solution generation: detail every solution possible, including ideas that seem farfetched.
4.    Solution test: evaluate solutions in terms of feasibility (can it be completed?), suitability (is it a permanent or a temporary fix?), and acceptability (can all participants form a consensus?).
5.    Solution Selection: select the solution that best solves the problem and meets the needs of the business.
6.    Solution Implementation: if the solution solves the problem, then the decisions made were correct. If not, then the decisions were incorrect and the process begins again.

Support: enhancing decision making with MIS

- A model is a simplified representation or abstraction of reality. Model helps managers calculate risks, understand uncertainty, change variables, and manipulate time to make decision. MIS support systems rely on models for computational and analytical routine that mathematically express relationship among variable.

Operational support systems
·      Transactional information encompasses all the information contained within a single business process or unit of work, and its primary purpose is to support the performance of daily operational or structured decisions. Transactional information is created, for example, when a customer purchasing stocks, making an airline reservation, or withdrawing cash from ATM. Manager use transactional information when making structured decisions at the operational level, such as when analyzing daily sales reports to determine how much inventory to carry.
·      Online transaction processing (OLTP) is the capture of transaction and events information using technology to (1) process the information according to defined business rules, (2) stores the information, (3) update existing information to reflect the new information. During OLTP, the organization must capture every details of transactions and events. A transaction processing system (TPS), is the basic business system that serves the operational level and assists in making structured decisions.

Managerial support system
·      Analytical informations, encompasses all organizational information, and its primary purpose is to support the performance of managerial analysis or semi-structured decisions. Online analytical processing (OLAP) is the manipulation to create business intelligence in support of strategic decisions making. Decisions supports systems (DSSs) model information using OLAP, which provides assistance in evaluating and choosing among different course of action. DSSs enable high-level mangers to examine and manipulate large amounts of detailed data from different internal and eternal sources.
·      What-if analysis checks the impact of a change in a variable or assumption on the models.
·      Sensitivity analysis a special case of what-if analysis, is the study of the impact on other variables when one variable is changed repeatedly.
·      Goal-seeking analysis find the inputs necessary to achieve a goal such as a desired level of output.
·      Optimization analysis an extension of goal seeking analysis, finds the optimum value for target variable by repeatedly changing other variable, subject to specified constraints.

Strategic support systems

•      An executive information system (EIS) is a specialized DSS that supports senior-level executives and unstructured, long-term, non-routine decisions requiring judgment, evaluation, and insight.
•      Consolidation is the aggregation of data from simple roll-ups to complex groupings of interrelated information.
•      Drill-down enables users to view details, and details of details, of information. This is the reserve of consolidation; a user can view regional sales data and then drill down all the way to each sales representative’s data at each office. Drill-down capability lets managers view monthly, weekly, daily, or even hourly information.
•      Slice-and-dice is the ability to look at information from different perspectives. One slice of information could display all product sales during a given promotion. Another slice could display a single product’s sale for all promotions.

The future: artificial intelligence

•   Intelligent system are various commercial applications of artificial intelligence.
•   Expert system are computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems.
•   Neural network also called an artificial neural network, is a category of AI that attempts to emulate the way the human brain works