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LECTURE 1

INFORMATION SYSTEMS AND


ORGANISATIONS

Information systems are combinations of hardware, software, and


telecommunications networks that people build and use to collect, create,
and distribute useful data.
IT and IS are largely used synonymously today, but IT is a bit more
technical in nature while IS has a stronger managerial focus.

IS as a Discipline
-

Management Accounting
Behavioural Science
Computer Science

- Communication Technology
- Decision Sciences
- Organisation & Management

IS as a Product
Combination of 5 key elements:
1.
2.
3.
4.
5.

Hardware
Software
Telecommunications networks
Data
People

IS Process
Data

Information

- Raw numbers/facts
Personalised info, data r/s

Knowledge

- Formatted data

People: The Builders and Managers of IS


IS Job Descriptions:
IS
Activities

Job Title
Systems analyst

Develop
Programmer

Job Description
Analyses business requirements and
selecting IS that meet those needs
Coding, testing, debugging, installing

Systems
consultant
IS auditor
Maintain

Manage

Database
administrator
Webmaster
IS manager
IS security
manager
CIO

Uni professor
Study

Govt scientist

programs
Provides IS knowledge to external
clients
Audits IS and operating procedures for
compliance with internal and external
standards
Manages database and database
management software use
Manages the firms website
Manages an existing IS
Manages security measures and
disaster recovery
Highest-ranking IS manager;
responsible for strategic planning and IS
use throughout the firm
Teach students; study the use of IS in
organisations and society
R&D of IS for homeland security,
intelligence and other related
applications

IS Professional Core Competencies (pg57):


Domain

Description

Technical Knowledge and Skills


Hardware
Hardware platforms, infrastructure, virtualisation,
peripherals
Software
Operating systems, application software, drivers
Networking
Network OS, cabling and network interface cards,
local area networks, wide area networks, wireless,
Internet, security
Business Knowledge and Skills
Business
Business processes, functional areas of business and
integration,
their integration, industry characteristics
industry
Managing people
Planning, organising, leading, controlling, managing
and projects
people and projects
Social
Interpersonal, group dynamics, political
Communication
Verbal, written and technological communication and
presentation
Systems Knowledge and Skills
Systems
Connectivity, computability, integrating subsystems
integration
and systems
Development
Steps in systems analysis and design, systems

methodologies
Critical thinking
Problem solving

development life cycle, alternative development


methodologies
Challenging ones and others assumptions and ideas
Information gathering and synthesis, problem
identification, solution formulation, comparison,
choice

Organisations: The Context of IS


Organisations use IS to:
-

Be more productive and profitable


Gain a competitive advantage
Reach more customers
Improve the service to their customers

** Types of IS used table (pg60)

Organisational Decision-Making Levels

Operational

Managerial

Executive/Strategi
c

By Foreman/Supervisors

By functional (mid-level)
managers
Automate Monitoring &
Controlling of Operating
Activities
For: Organisational
Effectiveness

By Executive-level
Mangers
Aggregate Summaries
of Org-Data & Projects
for Future
For: Organisational
Strategy & Planning

Structured: Budget
Allowance, Short-term
Forecast
Semi: Budget Prep,
Project Scheduling
Unstructured:
Recruiting, Negotiating

Structured: Financial
Management

Automate Routines /
Repetitive Activities (eg.
TPS)
For: Improving
Organisational
Efficiency

Structured:
Accounts/Orders
Semi: Production
Scheduling/Inventory
Unstructured: Buying
Software

Organisational Functional Areas

Semi: Building, HR
Policies, M&As
Unstructured: R&D,
CSR Planning

A functional area represents a discrete area of an organisation that


focuses on a specific set of activities.
1.
2.
3.
4.
5.

Accounting
Financial
HR
Marketing
Operational

** Table of Organisational Functions and Related IS (pg87)


** Figure integrating decision-making and functional levels (pg88)

LECTURE 2
IS, BUSINESS PROCESSES AND
BUSINESS MODELS

A business process is:


-

Activities performed by organisations to achieve their business


outcomes and goals
Can be viewed as a series of links in which information flows
Customer-oriented / internal outcome

Order-to-Cash
-

Selling product/services to gain revenue


Can be broken down into individual subprocesses (pg312 figure)
Effectiveness and efficiency of the process is vital
o E.g. Manual input of order info will result in errors and
subsequent disputes
o An effective order-to-cash process can create customer
satisfaction, speed up collection, and provide valuable inputs
into BI and CRM applications

Procure-to-Pay
-

Acquiring goods/raw materials from external vendors (pg312 figure


for subprocesses)
An ineffective PtP process -> prevents a company from developing
close relationships with preferred vendors, and thus cannot obtain
favourable transactions
Effective PtP process -> favourable conditions, reduce transaction
costs, create customer goodwill

Make-to-Stock/Make-to-Order
-

MTS: produced based on forecasts and stocked in a warehouse


(push-based)
MTO: manufacturing begins only when sales orders are received
(pull-based)

** MTS and MTO processes breakdown (pg313)


Suppliers (SCM)

Organisation (ERP) Customers (CRM)

Impact of IS on Business Processes

Captures and disseminates information that will enable better


coordination
IT connects people over geographical boundaries and time zones
IS/IT redefines and optimises the processes

Value-add of IS
3 ways in which IS can be used to add value to an organisation:
1. Automating
- Tasks can be completed faster, cheaper, more accurately, with
greater consistency
2. Informating (Learning)
- Used to learn about processes, improve processes, support
organisational learning
3. Supporting Strategy
- Used to support an organisations strategy and to gain competitive
advantage
Business Model
A business model is a summary of a businesss strategic direction that
outlines how the objectives will be achieved. It identifies how a company
will generate revenue and identifies its product offerings, value-added
services, revenue sources and target customers.
It answers the following questions:
-

What does a company do?


How does a company uniquely do it?
In what way (or ways) does the company get paid doing it?
What are the key resources or activities involved?
How much gross margin does the company earn per average unit
sale?

The focus is on the customer and profitability.


Important Components of BM:
-

Value proposition what a firm provides to a customer and what


that customer is willing to pay for that product or service
Revenue model Describes how a firm will earn revenue, generate
profits and produce a superior return on investments
Key resources Important assets to make BM work, e.g. Taobao ->
merchants pay for advertising to stand out; Dropbox -> free basic
plan + payable subscription

** Components of a Business Model table (pg182)


IS and Business Models
-

Mass customisation, e.g. online ordering system for clothes and


books
Global reach, e.g. eCommerce companies such as Amazon, Alibaba
Transactional support, e.g. banking services, passport applications
and renewals

Freeconomics
Freeconomics is the leveraging of digital technologies to provide free
gods and services to customers as a business strategy for gain a
competitive advantage.
Any industry that utilises digital technologies will head towards
increasingly lower costs, and ultimately a price of free.
-

Eg. After Yahoo had built its e-mail environment, the cost to provide
the service for each additional person is virtually zero
Thus, the marginal cost is nearly zero while huge profits are made
when more use it
For every additional customer, Yahoo receives payments from
companies placing banner advertisements on pages within its email
service

The freeconomics value proposition includes a broad ecosystem of


many participants (e.g. advertiser on Yahoo email services) and is not
simply buyers and sellers.
** Application of freeconomics to various industries (pg116)

LECTURE 3

IS FOR COMPETITIVE ADVANTAGE (1)


GENERIC STRATEGIES AND PORTERS 5
FORCES

Diagram of the 5 five general types of organisational strategy

Cost leadership
-

Overall lowest cost in the industry, e.g. Walmart


Products/services are of comparable quality at a lower price

Product differentiation
-

Tries to provide unique products/services in the form of brand,


service, quality
Lower price sensitivity
Typically for branded goods, e.g. Porsche, BMW

Focus
-

Focuses on a particular buyer segment or market niche, e.g.


Mercedes
Out-competes rivals on a lower cost or customised needs

Best-cost provider
-

Gives customers more value for money by combining emphasis on


low cost with emphasis on upscale differentiation, e.g. Dell
Incorporates upscale product/service attributes at a lower cost

Cost Leadership
How to
achieve

Risks

- Buy from cheaper source


- Capitalise on economies of
scale
- Vertical integration
backwards to sources or
forwards to end-user
- Monitor and control every
component of firms cost
- Low cost learning by
imitation or state-of-the-art
facilities
- Emphasis on cost may
blind the firm to
market/product changes
- Technological change may
nullify past investments

Differentiation
- Technical superiority
- Better design and
performance
- Better customer service
- Quality
- Reliability

- Large cost difference


between equivalent
products
- Imitation may narrow
perceived differentiation
- Customers need for
differentiation falls

International Business Strategies


Most of todays large companies, regardless of industry, have some
international business strategy for competing in different global
markets. These companies pursue a home replication, multidomestic,
global, or transnational strategy, depending on the degree of supply chain
integration and necessary local customer responsiveness.
On one hand, businesses strive for global integration to realise EOS; but
on the other, it might be beneficial for the companys local subunits to be
able to quickly respond to changing conditions in local markets.
Organisations typically use a variety of business strategies to manage
international operations most effectively. E.g. Nestle uses a transnational
business strategy, supported by multiple distributed systems and Internetenabled applications.
** When to Use Which International Business Strategy (pg98)

Sources of Competitive Advantage


-

Having the best-made product on the market, e.g. Toyota


Delivering superior customer service, e.g. IBM
Achieving lower costs than rivals, e.g. Walmart

Having a proprietary manufacturing technology, formula, or


algorithm, e.g. CocaCola
Having shorter lead times in developing and testing new products,
e.g. Apple
Having a well-known brand name and reputation, e.g. Nike
Giving customers more value for their money, e.g. Nintendo

Porters 5 Competitive Forces (pg94)

Implication

Use of IS

Rivalry
Among
Existing Firms

Increased competition in
price, product distribution
and service

Threat Of
New Entrants

Decreased prices &


market share

Bargaining
Power of
Buyers
Bargaining
Power of
Suppliers
Threat of
Substitute
Goods

Decreased prices
Need for increased
demand quality & service
Increased costs
Reduced quality

ERP decrease costs and


improve reaction time;
implement website for better
service
Reach new customers and
differentiate products; use
inventory system to lower costs
and better manage excess
CRM serve customer better;
implement CAD to improve
product quality
Use Internet to connect better
with suppliers, form
relationships with new suppliers
DSS & customer purchase
database better access
trends & customer needs
CAD systems to design better
products

Decrease market share


Losing customers for life

Sustaining Competitive Advantage


-

An organisations background, culture, assets, customer base and


its internal strength contribute to its trade secrets
Regulatory constraints (patent rights, exclusiveness) protect
sustainability within a certain period
Inward systems are more difficult to duplicate as they are less
visible and usually involved internal structural changes

Other Response Strategies


Strategic Alliances
-

Establishing a long-term partnership with other companies

E.g. Package deal between airline, telephone carrier, car rental and
hotel service

Growth
-

Internal growth makes it possible to realise EOS


Grow by acquiring and merging with other firms, e.g. OUB & UOB,
Comfort & DelGro

Innovation
-

By generating new ways to use a product, e.g. washing machine


without soap

LECTURE 4

IS FOR COMPETITIVE ADVANTAGE (2)


IS AND THE VALUE CHAIN

The value chain refers to the set of activities that add value throughout
the organisation.
Activities include acquiring supplies in a more effective manner, improving
products, and selling more products.
Inboun
d
Logistic

Operatio
ns

Outboun
d
Logistics

Sales &
Marketin
g

Service

Product R&D, Technology, and Systems Development


Human Resources Management
General Administration

Core Activities of the Value Chain


1. Inbound Logistics
- Receiving and stocking raw materials, parts, products, e.g.
warehousing
2. Operations
- Order processing and/or manufacturing of end products, e.g.
component parts assembly to make products
3. Outbound Logistics
- Distribution of end products, e.g. delivery of goods/services to
customers
4. Sales and Marketing
- Pre-sale marketing activities, e.g. advertisements, promotional
pricing

5. Customer Service
- Post-sale activities, e.g. maintenance/warranty, recalls/returns
Supporting Activities of the Value Chain
1.
2.
3.
4.
-

Administrative activities
Support of day-to-day operations
Infrastructure activities
Implementation of required hardware and software
HR activities
Employee management (interviews, hiring, payroll, benefits)
R&D activities
Design and development of applications to support the primary
activities
5. Procurement activities
- Purchasing of goods and services (inputs for primary activities)
** Sample Uses of IS to add value (pg95)
Value chain analysis is the process of analysing an organisations
activities to determine where value is added to products/services and
what costs are incurred for doing so.
It has become a popular tool for applying IS for competitive advantage as
IS can help to automate many activities along the value chain.
Steps in Value Chain Analysis:
1.
2.
3.
4.
5.

Draw value chain


Identify where to add value
Determine cost
Benchmark 1-3 with other organisations as cross-reference
Design improvements to the value chain

Linkages within the value chain


Linkages are relationships between the way one value activity is
performed and the cost/performance of another.
They result in competitive advantage via optimisation and coordination.
Competitive scope and the value chain
Competitive scope can have a powerful effect on competitive advantage,
and it shapes the configuration and economics of the value chain.
1. Segment scope

Differences are required to serve different buyer segments, e.g. PC


buyer in a big organisation vs an individual PC buyer
2. Vertical integration (scope)
- The extent to which activities are performed in-house instead of by
independent firms such as its suppliers
- i.e. An arrangement in which the supply chain is owned by the
company
3. Geographic scope
- Range of regions/countries where a firm competes with a
coordinated strategy
4. Industry scope
- Range of related industries where a firm competes with a
coordinated strategy
** Examples of value chain of designer fashion and airline
industry (Lecture 4 notes)
A value system is a connection of a companys internal value chains,
where information flows from one companys value chain to another.
-

An upstream information flow consists of info received from another


organisation
A downstream information flow relates to the information that is
produced by a company and sent along to another organisation

These flows of external information into and from a company can be


leveraged to create additional value and competitive advantage.

Information Intensity Matrix

IIM diagram

Uses:
-

Good scope for use of IS to gain competitive advantage


High information content in the product offered
o Provides information
o Requires intensive user training or information processing
High information intensity in the value chain
o Firm directly deals with a large number of suppliers and
customers
o Product is composed of many parts long cycle time between
order and delivery

LECTURE 5

STRATEGIC IT APPLICATIONS IN OUR


WORLD (1)
E-COMMERCE

E-commerce is broadly defined as the exchange of goods and services


among firms, between firms and their customers, and between customers,
supported by communications technologies and in particular the Internet.

E-commerce vs e-business
e-Commerce

e-Business

Buying and selling between 2


parties
Use of Internet and related
technologies to support commerce

Broader meaning, including sharing


of business information, fulfilling
governmental regulations etc.
Use of nearly any IT/IS to support
every part of business

** Capabilities of the Web table (pg176)

EC Business Strategies
Physical
Virtual
<---------------------------------------------------------------------------------------------------------------->
Click only
Brick and
Click and
mortar

mortar

Brick-and-mortar
-

Traditional physical markets; does not include EC at all

Click-and-mortar
-

Continue to operate in their physical locations but add an EC


component to activities
It is imperative that they learn how to fully maximise commercial
opportunities in both domains
Challenges:

o Conducting physical and virtual operations simultaneously


business activities must be tailored to each environment for
efficiency
o Increasing IS complexity requires devt of complex computing
systems; substantial resource investments to acquire
necessary skills for support
Click-only
-

Often can compete more effectively on price as they do not need to


support the physical aspects of the click-and-mortar
Tend to be highly adept with technology and can innovate rapidly
Challenges:
o Difficult for a customer to return products to an online
company
o Consumers may not be comfortable making online purchases

Types of EC
Type of EC
Business-to-business (B2B)
Business-to-employee (B2E)
Business-to-consumer (B2C)
Consumer-to-business (C2B)
Consumer-to-consumer
(C2C)

Description
Among businesses
Between businesses and employees
Between businesses and customers
Between customers and businesses
Between people not necessarily working
together

B2B EC is, by far, the largest form of EC in terms of revenue (93% of all
EC).
B2B EC
A collection of companies and processes are involved in moving a product
from the suppliers of raw materials, to the suppliers of intermediate
components, to final production, and ultimately to the customer they are
collectively referred to as a supply chain.
** EDI refer to pg184.
An extranet is a private part of the Internet that enables >=2 firms to do
business together.
-

Information Timeliness and Accuracy


o Allows for continual update and dissemination of information

o Allows central management of documents


Technology Integration
o Web-based technologies are cross-platform (Linux, Mac,
Windows etc)
Low Cost-High Value
o Do not require large expenditures to train users as it is similar
to Internet
o Can automate transactions reduce processing costs,
shorten cycle time
o Reduce errors as data updated in one place will be reflected
throughout

** Extranet System Architecture & Extranet Applications (Portals)


pg186
B2B Marketplaces
-

Operated by 3rd-party vendors, catered towards small firms who lack


resources to do
Allows buyers and sellers to come together, offering firms access to
real-time trading with other companies in their vertical markets
They can create tremendous efficiencies for companies as they
bring together numerous participants along the supply network, e.g.
steellink.com, paperindex.com
Some B2B marketplaces are not focused on any particular industry,
e.g. Alibaba.com

Managing B2B Financial Transactions


-

75% of noncash B2B payments are made by check, which is


inefficient
Other methods: purchasing cards, letters of credit (pg188)
Risk of fraud can become a limiting factor for B2B marketplaces,
e.g. Alibaba, which allows for smaller and unknown manufactures to
participate in global B2B EC

B2E EC
An intranet consists of a private network to facilitate the secured
transmission of information within an organisation, e.g. project
management, collaboration.
Intranet pages occur behind the companys firewall but nowadays, most
companies also allow access to the intranet via VPNs.
Intranet Applications

Training
o Intranet-based training, multimedia courses (e.g. supervisor
training)
Personalised Intranet Pages
o Employees can only view content relevant to their job
Real-Time Access to Information
o Easier to manage, update, distribute and access corporate
information
o Company can disseminate news in a more timely fashion
while, at the same time, saving millions annually in
distribution costs
o Integration of enterprise search functionality easier for
employees to locate documents increase in employee
productivity
Online Entry of Information
o E.g. Processing HR-related forms; can cut costs from $20 to
$0.05 per form
o Report templates can be centrally managed and modifications
made instantly
o Online forms can be checked for accuracy when the data is
entered
Collaboration
o Facilitates quick communication of activities across different
divisional areas Reduces product development cycles and
stay ahead of market conditions
o Also used for communication outside of traditional workflow,
e.g. employee blogs, polling staff about current issues,
employee forum
o Formation of virtual teams
o Groupware
Class of software that enables people to work together
effectively
Electronic meeting systems (EMS)
** Benefits of groupware table (pg194)

o Videoconferencing
Systems are expensive range from a few thousand
dollars to $500k

B2C EC
Focuses on the retail transactions between a company and its end
customers.
Stages of B2C EC
1. E-Information
a. Dissemination of promotional and marketing material
b. Allows access of information by global users, 24/7/365
2. E-Integration
a. Customers can access dynamic, customised information, eg.
Bank statements
3. E-Transaction
a. Customers get real-time access to info on products and
services
b. Customers can conduct transactions
E-Tailing
-

Refers to the online sales of goods and services


Reverse pricing system (Name Your Own Price) customers specify
the product they are looking for and how much they are willing to
pay for it

Benefits of E-Tailing
-

Product Benefits
o No physical restrictions Can offer an unlimited
number/variety of products
o Facilitates comparison shopping for the users
Place Benefits
o Available anywhere, anytime
o Consumers can purchase on a global scale
Price Benefits
o Many consumers Higher inventory turnover Can compete
on price
o No need to rent expensive retail space Can further reduce
prices

The Long Tail


-

Refers to a focus on niche markets


Traditional brick-and-mortar companies have to focus on
mainstream needs
E-tailers can focus on long tails, i.e. products outside the
mainstream needs

Drawbacks to E-Tailing
-

Product Delivery Drawbacks


o Delay between product order and delivery
Direct Product Experience Drawbacks
o Lack of sensory information
o Lacks the social element

EC Websites: Attracting and Retaining Online Customers


Rule 1:
Rule 2:
Rule 3:
Rule 4:
return.
Rule 5:
Rule 6:

The
The
The
The

website
website
website
website

should offer something unique.


should be aesthetically pleasing.
must be easy to use and fast.
must motivate people to visit, to stay and to

You must advertise our presence on the Web.


You should learn from your website (web analytics).

E-Banking
-

Prevalence of online banking


However, there are concerns about the security of online
transactions

E-Investing
-

People use the Internet to get stock quotes and to manage their
portfolios (online brokerage firms)

C2C EC
Opportunities
Consumers can buy/sell to broader
markets
Eliminates the middleman Lower
prices
Always available, 24/7/365

Market demand is an efficient


mechanism for setting prices in the
electronic environment
Increases the numbers of matching
buyers/sellers

Threats
No quality control
Higher possibility of fraud
Harder to use traditional
payment methods (checks,
cash, ATM cards)

E-Auctions
-

4 distinct categories of e-auctions


Forward Auctions highest bid wins
Reverse Auctions Buyers post a request for quote
Bartering typically one-to-one
Exchanges typically on B2B level

Types of E-Auction Fraud


-

Bid luring luring bidders to leave the auction to purchase outside


the auction, where return policies and buyer protection do not apply
Reproductions selling a reproduction instead of an original
Bid shielding using 2 accts to place a low and a very high bid to
force others to quit
Shipping fraud charging excessive shipping and handling fees
Payment failure buyers not paying for item
Nonshipment sellers failing to ship tem

Internet Marketing
Marketing is always essential, regardless if it is online or brick-and-mortar.
-

Search Marketing
o Paid search - Bid to appear on the first page of search results
(sponsored search) or to elevate its position in the organic
results (paid inclusion)
o Search engine optimization Companies try to optimise their
search ranking; success is usually limited but worthwhile
Display Ads
o Banner ads; can be contextualised based on the content of the
page
E-mail Marketing
o Low cost
o Effectiveness can be directly measured (via special links)
Social Media
o For interactive communication with customers
Mobile Marketing
o Placing ads in apps (freeconomics model)
Pricing Models
o Pay-per-click models, click-through rate, conversion rate
o Affiliate marketing allows owners to post ads on their pages,
in return for a share of ensuing sales or referrals
o Click Fraud
Network fake clicks to inflate own revenue earned from
advertiser

Competitive fake clicks to inflate an organisations ad


costs

C2B EC
A model where consumers sell goods/services to businesses.
-

E.g. shutterstock.com sells media from amateurs to newspapers,


publishers etc.
Crowdsourcing to obtain a scalable ad hoc workforce
Line between C2B and B2B transactions is somewhat blurry

Impact of E-Commerce
Benefits:
-

Increase revenue
o Global reach
o Bypass middleman
Reduce costs
o Reduce communication costs; holding less inventory
Changing revenue models
o Reverse pricing; focus on long tails

Challenges:
-

Technical
o Lack of universally accepted quality, security and reliability
standards
o Compatability problems in integrating with back-end
processing systems
o Different development and project management paradigm
Non-technical
o Legal, ethical issues, e.g. IP rights, fraud
o Distrust of customers
o Restructuring of business processes to go online

LECTURE 6

STRATEGIC IT APPLICATIONS IN OUR


WORLD (2)
M-COMMERCE AND E-GOVERNMENT

M-commerce is e-commerce using wireless mobile devices.

Key Drivers of m-Commerce


-

Exponential growth of consumer interest in adoption of the Internet


and EC
Increase in penetration rate of mobile devices
Real-time transfer of data over networks always-on connectivity

** M-Commerce Applications table (pg206)


Location-based m-Commerce
-

Highly personalised mobile services based on a users location


Useful locator to find family members, origin of 911 call,
advertising tools

Mobile Entertainment
-

Adopt the Internet as a viable dissemination medium


TV signal is received in the users house and relayed via the Internet
to anywhere

Securing Payments in the Digital World


One of the biggest impediments to EC and m-commerce is how to ensure
that consumers can make secure transactions on the website.
Credit and Debit Cards
-

Customers have to transmit much personal info to a possibly


unknown merchant
Many users fear being defrauded by an untrustworthy seller
Credit cards can only be used to make, and not receive, payments
Thus online shoppers (and sellers) are increasingly using 3rd-party
payment services

Payment Services
-

E.g. PayPal, Google Checkout


Private info is only shared with the payment service
PayPal allows sending and receiving money via an e-mail account

Legal Issues in EC
Taxation
For

Against

Increases tax income of


governments
Removes unfair advantage for etailers over brick-and-mortar stores
Increases accountability for e-tailers

Slows EC growth and opportunity


Creates additional compliance
burden for e-tailers
Drives EC businesses to other
countries

Digital Rights Management (DRM)


-

Allows publishers to control their digital media to limit illegal


distribution
Supporters argue that DRM allows copyright holders to minimise
sales losses
Critics argue that DRM enables publishers to infringe on existing
consumer rights and to stifle innovation
Nowadays, there are DRM-free content so that users can freely
move their media
Instead, they contain digital watermarks that identifies the original
purchaser

E-Government
E-government is the use of IS to provide citizens, organisations and
other governmental agencies with information about public services and
to allow for interaction with the government.
Model
Government-to-citizen
(G2C)
Government-to-business
(G2B)
Government-to-government
(G2G)

Description
Between government and its citizens
Between government and businesses
Among governments

G2C
G2B

E.g. Internet tax filing (e-filing)


E-voting is being proposed but there are security and manipulation
concerns
HKs smart ID cards for immigration clearance, transactions,
library card

E-procurement government streamlines its supply chain by


purchasing materials directly from suppliers
Forward auctions that allow businesses to buy seized and surplus
govt equipment
Online application for export licenses, verification of employees SSN

G2G
-

E-govt tools that allow foreign entities to find info related to


business topics
sharing of information with worldwide health organisations

** Singapore case studies- eGov2015, SGOL Portal,


CitizenConnect, Smart Work Centres, mGov (Lecture 6 notes)

Impact of e-Commerce on Governments


Benefits:
-

Better use of public resources


o Frees resources for other areas
Less bureaucracy
o Smoother interactions between citizens and govt agencies
Better transparency
o e-procurement allows vendors to have equal bidding chances

Challenges:
-

Vast variety of incompatible mobile devices with their own operating


systems
Safety and security concerns
o On top of the concerns for e-commerce, e.g. more prone to
theft/misplaced
Acceptance by all and not just the mass

LECTURE 7

STRATEGIC IT APPLICATIONS IN
ORGANISATION WORK (1)
- INFORMATION AND KNOWLEDGE
DISCOVERY

Business intelligence is the use of IS to gather and analyse information


from internal and external sources in order to make better business
decisions.

The Need for BI


Responding to Threats and Opportunities
-

As the world becomes increasingly latter, market opportunities will


expand but will also become increasingly more competitive
BI can help organisations make better decisions by analysing data
BI solutions help to quickly react to problems by providing the right
info at right time

Continuous Planning (Fig on pg268)


-

BI is needed for the execution of a continuous planning process,


which involves continual monitoring and analysis of business
processes
This affects how organisation is managed and future organisational
plans

Providing Inputs into BI Applications

Databases are collections of related data organised in a way that


facilitates data searches.
A database management system (DBMS) is an application where you can
create, store, organise and retrieve data from a single database or several
databases, e.g. MS Access.

Advantages of the Database Approach


Advantages
Program-data
independence
Minimal data
redundancy
Improved data
consistency
Improved data
sharing
Application
development
Enforcement of
standards
Increased security
Improved data
quality
Improved data
accessibility
Reduced program
maintenance

Description
Separates program and data Easier to evolve
and alter software
Single copy of data Storage requirements are
minimised
Lower redundancy Reduced inconsistency
Centralised system Easier to share data
Data standards simplify program development
Centralised system standardises standards and
rules
Simplifies enforcement of access restrictions
Due to centralised control, minimised redundancy
and improved data consistency
Centralised system Easier to provide access
Data changed in the central database replicate
seamlessly

Managing a Database
-

Data
o
o
o
o

Model
A map/diagram that represents entities and their relationships
Captures the structure of the data
Can be represented by an entity-relationship diagram
Each attribute is of a certain data type, which helps the DBMS
to organise and sort the data, complete calculation and
allocate storage space
o Normalisation ensures that each table contains only attributes
related to the entity Eliminates data duplication
o If tables are well-designed, they will be easier to update and
vial information can be extracted faster

Data Dictionary
o Contains the format of the data after the data model is
created
o Explains each attribute and the need, how often it should be
updated etc.
o Can be used to enforce business rules e.g. who has the
authority to update a piece of data

Data Entry
-

Manual: phone conversations, paper forms, historical records


Automatic: transactional data from POS terminal, web forms

Data Query
-

Structured Query Language (SQL) is often used to interface with


databases
Query by Example (QBE) is an easier way, by filling out a
grid/template

Online Transaction Processing (OLTP)


-

Refers to immediate automated responses to the requests of users


Gathers info Transforms info Updates info in the system
E.g. Receiving user info Processing orders Generating sales
receipts
Large part of interactive e-commerce applications on the Internet

Operational Systems and BI


-

Operational systems can generate a wealth of data for useful input


into BI apps
Informational systems are the systems designed to support decision
making based on current/historical data
Operational vs informational systems:
Characterist
ic
Primary
purpose
Type of data
Primary users

Operational System

Informational System

Run the business on a


current basis
Current representation
of state of the business
Online customers,

Support managerial
decision making
Historical or point-in-time
Managers, business

Scope of
usage
Design goal

clerks, salespersons,
administrators
Narrow and simple
updates and queries
Performance

analysts and customers


Broad and complex
queries and analyses
Ease of access and use

Master Data Management


-

Master data is the data deemed most important in the operation of


a business
Important that there is a single version of the truth
Includes data about customers, suppliers, inventory, employees etc.

Data Warehouses
-

Integrates multiple large database and other sources into a single


repository
Purpose is to put key business info in the hands of more decision
makers
Extraction, transformation and loading before data is placed in the
warehouse
** Sample Industry Uses of Data Warehousing (pg277)

Data Marts
-

A data warehouse limited in scope, which contains a subset of the


data for a single aspect of a companys business
Each separate data mart is customised accordingly

BI Component 1: Information and Knowledge Discovery


Information and knowledge discovery tools are used to extract information
(sometimes hidden) from existing data.
Business users formulate hypotheses and test them against existing data.
Ad Hoc Queries and Reports
-

Info is typically presented as reports


Ad-hoc query tools provide an easy interface to use
Type
Scheduled Report
Key-Indicator

Description
Produced at predefined intervals to support
routine decisions
Summary of critical info on a recurring schedule

Report
Exception Report
Drill-down Report
Ad-hoc Queries

Highlight situations that are out of normal range


Great details to analyse key-indicators/exception
query
Answer unplanned info requests to support nonroutine decisions; typically not saved to be run
again

Online Analytical Processing (OLAP)


-

Process of quickly conducting complex, multidimensional analyses


of data, typically using graphical software tools
Running such multidimensional queries require a deeper
understanding of the underlying data
Measures (facts) values for analysis, e.g. sum of sales
Dimensions organised hierarchy, e.g. region, time
Drill down (state->county->city->store) or roll up
OLAP cube analyses data by multiple dimensions
Slicing and dicing analysing the data on subsets of the dimensions

Data Mining
-

Complements OLAP; searches for hidden predictive r/s in the data


Main uses include:
Association discovery
o Used to find associations among sets of items
o Typically contain 2 numbers a percentage indicating support,
and a confidence level indicating the reliability
Sequence discovery
o Used to discover associations over time
Clustering
o Groups related records together
Classification
o Groups are known beforehand and records are placed
accordingly

Unstructured Data Analysis


-

Important to analyse unstructured data as well


Text mining
o Analytical techniques to extract info from text documents
o Can provide insights into business performance, competitors
activities or regulatory compliance
o Use to identify spam mails (classification) and plagiarism
situations (clustering)
Web content mining

o Extracting textual information from Web documents by using a


Web crawler to collect sites and documents
o Uses of analysing textual documents in organisations ref
pg283
Web usage mining
o Used to determine patterns in customers usage data
o Analyse users clickstream data to assess the pages
stickiness
o Use to identify navigation patterns (sequencing) and detect
hacker attacks (clustering & classification)

LECTURE 8

STRATEGIC IT APPLICATIONS IN
ORGANISATION WORK (2)
- BUSINESS ANALYTICS & INFORMATION
VISUALISATION

BI Component 2: Business Analytics


Business analytics uses predictive analysis to help identify trends or
predict business outcomes, and is thus used to support decision making.
This is in contrast to information and knowledge discovery, which focuses
on past and current performance.

Business Analytics
-

Applications of predictive analysis in industries:


Retail/Marketing
o Identify who to include in mailing lists to obtain the highest
response rate
o Find associations among customer demographics
characteristics
o Analyse user traffic through websites for interactive marketing
Banking
o Detects fraudulent credit card use based on purchase patterns
and trend
o Predicts customers likely to change their credit card affiliations
Insurance/Healthcare
o Identify behaviour patterns of risky customers
o Predict which customers are more likely to buy new policies

Decision Support System (DSS)


-

Provides decision-making support for recurring problems


Supports human semi-structured and unstructured decision making
Mainly used by managerial-level employees
Interactive decision aid
o What-if analysis analyse results for hypothetical changes
o Optimisation analysis to seek optimal allocation of resources
o Goal seeking analysis determines problem data required for
a given result
o Statistical analysis analyse past figures to predict future
growth

Architecture of a DSS
o Consists of input, process and output components
o Within the process component, models are used to manipulate
data
o ** Common DSS Models table & Architecture of a DSS
figure (pg286)

Intelligent Systems
-

Artificial intelligence (AI) is the science of enabling information


technologies to simulate human intelligence
Intelligent systems are developed using AI, based on human
expertise, knowledge and reasoning patterns
2 main types of intelligent systems that are relevant in business
contexts:
Expert System (ES) ref pg288
o Uses reasoning methods to provide advice
o Manipulates knowledge rather than information
o System asks a series of questions and matches the responses
with predefined rules (if-then format)
o Fuzzy logic represents rules using approximations
o Applications:
Forward chaining begins with a problem and logically
follows the steps to obtain a resolution, e.g. credit
approvals, contracts and trusts
Backward chaining begins with a solution and goes
backward to determine the start, e.g. medical diagnosis,
legal case analysis
Intelligent Agent Systems
o A program that works in the background to provide some
service when a specific event occurs
o Types of intelligent agents:
o User agents
Performs a task automatically for the user
o Buyer agents
Searches for the best price
o Monitoring and sensing agents
Keeps track of info and notifies the user when it changes
o Data mining agents
Continually analyses data warehouses to detect changes
o Web crawlers
Continuously browses the Web for specific information
o Destructive agents
Designed to farm e-mail addresses or deposit spyware

Knowledge Management Systems (KMS)


-

Processes an organisation uses to gain the greatest value from its


knowledge assets
Knowledge assets
o Skills, routines, practices, principles, formulas, methods,
heuristics
o Used to improve efficiency, effectiveness and profitability
Explicit knowledge assets
o Can be documented, archived and codified
Tacit knowledge assets
o Located in a persons mind on how to effectively perform a
task
o Often reflects an organisations best practices
o Identifying how to recognise, generate, store, share and
manage this tacit knowledge is the primary objective for
deploying a KMS

Benefits and Challenges of KMS


Benefits
Free flow of ideas Enhanced
innovation and creativity
Sharing of best practices
Improved customer service, shorter
product devt, streamlined
operations
Enhanced employee retention by
recognising the value of employees
knowledge
Improved organisational
performance

Challenges
Getting employee buy-in to share
their personal tacit knowledge
assets linked to company culture
Must identify the knowledge first
what, who, why

Must be linked to a specific business


objective Ensures that system is
providing value in a relevant area
Must be easy to use, for both
putting knowledge in and getting
out Ongoing process of updating,
amending and removing obsolete
knowledge must occur

In summary, to gain the greatest benefits from an investment in a KMS,


the organisation must take care to overcome various challenges.
** How Companies Utilise KMS (pg292), e.g. Web-based
knowledge portals
KMS implementation issues

Huge spending
Having a KMS does not guarantee success in knowledge
management itself
Factors to consider:
o Technological factors KMS may not guarantee success in
knowledge management itself
o Social factors Employees are reluctant or forget to share
Motivations to share:
o Usage of KMS should be integrated into the firms operations
o Organisational incentives encourage/acknowledge/reward
users who learn, teach and share

BI Component 3: Information Visualisation


Visualisation refers to the display of complex data relationships using
graphical methods.

Digital Dashboards
-

Presents the data in the most user-friendly way


Commonly used to present KPI and other info used by execs to make
decisions
Typically supports 3 usage models:
o Push reporting - Overview of KPI and other key
statistics/trends
o Exception reporting and alerts - Alerts of any items that
requires immediate attention
o Pull reporting - If the user wants to analyse the root causes of
an exception or conduct other analyses, he/she can drill down
or perform ad hoc queries
Executives require hard and soft data
o Soft data textual news stories or other non-analytical
information
o Hard data facts and numbers
Data is typically provided in a highly aggregated form, but the
executive also has the capability to drill down and see the details if
necessary

Visual Analytics
-

Interpreting complex output from BI systems is challenging

Visual analytics combines various analysis techniques and


interactive visualisation to solve complex problems
Combination of:
o Human intelligence and reasoning capabilities
o Technologys retrieval and analysis capabilities
Helps to make sense of noisy data or unexpected patterns

Geographical Information System (GIS)


-

A system for creating, storing, analysing & managing geographically


referenced info
Users can add their own info to a map to create models
Analysts can combine geographic, demographic and other data to
locate ideal locations to set up shop or to determine the right
product mix at different locations
Can also perform market share and competitor analysis
Increasingly used by govt and organisations to communicate with
stakeholders
** Various Industry Uses of GIS table (pg298)

LECTURE 9

ENTERPRISE-LEVEL STRATEGIC IS (1):


ENTERPRISE SYSTEMS

AND ERP

Different functional areas within a company need to share data in order to


efficiently conduct the core business processes.

The Rise of Enterprise Systems


Current situation:
-

Stand-alone applications
o Not designed to communicate with other systems
o Enable departments to conduct daily business activities
efficiently, but are not helpful for other areas of the firm
Proprietary systems
o Purchased from software vendors; not designed to share data
with other vendors systems
o Results in the problem of knitting together a messy portfolio of
discordant proprietary applications into an integrated system
Legacy system
o An old stand-alone system that is approaching or beyond the
end of their useful life
o Can prove problematic when info from multiple departmental
systems is required to support business processes
o If the data is not integrated, it might require 2 separate
applications or a custom interface to pull information from
both systems
o Results in a highly inefficient process for operations personnel
o ** Information flows using legacy systems table
(pg320)

Why do organisations not try to solve their legacy systems problems?


-

Companies may not have the opportunity o are unwilling to invest in


a complete re-design or change
Valuable information and processes are embedded in the systems
and staff are already well-versed in using them
It is highly complex and difficult it is a risky task with high failure
rates to make such a revolutionary change
Other implications efficiency issues, risks in copying with drastic
changes (staff training and morale)

An enterprise-wide information system (enterprise system) is an


integrated suite of business applications for virtually every department,
process, and industry, allowing companies to integrate information across
operations on a company-wide basis using one large database.
Instead of storing information in separate places throughout the
organisation, enterprise systems provide a central repository common to
all corporate users.

Supporting Business Processes


The Need for Integrated Enterprise Systems
-

To take advantage of integrated systems ERP applications


Requires a central point of access and conversion of information
from legacy systems
Systems that facilitate interorganisational communications focus on
the upstream and downstream information flows
o CRM applications concentrate on customer-related activities
and providing customer service and nourishing long-term
relationships
o SCM applications integrates the value chains of business
partners within a supply chain, improving the coordination of
suppliers and product service
Integrated enterprise systems can be very valuable for companies
operating in global markets

Improving Business Processes through Enterprise Systems


-

Packaged software
o Written by 3rd-party vendors for many different users and
organisations
o Useful for standardised, repetitive tasks
o Cost-effective as the developmental costs are spread over a
number of users
o E.g. Microsoft Office
Custom software
o Developed exclusively for a specific organisation
o Much higher developmental costs due to the customisation
o Needs to be maintained internally when changes are required
Managers must consider if packaged software can meet the
business and requirements, and if not, conduct a cost-benefit

analysis to ensure that the custom software will prove worthwhile to


the company
Enterprise systems come in a variety of shapes and sizes, each designed
to accommodate certain transaction volumes, industries and business
processes.
Enterprise systems offer different modules, where each module is
designed to replace a legacy system; the modules are tightly integrated in
the system.
** Key Capabilities of SAPs ERP System table (pg325)
1. Vanilla vs Customised Software
-

Vanilla version
o Contains features and modules that an enterprise system
comes with out of the box
o Certain processes might not be supported
Customised version
o Contains additional software or changes to the vanilla version
o Can be costly and maintaining it is troublesome new vanilla
versions must be continually upgraded to accommodate
company-specific customisations

2. Best Practices-Based Software


-

Most enterprise systems vendors build best practices into their


applications
o Helps identify business activities that need to be streamlined
o Future updates will be smoother if companies changes their
business processes to fit with the enterprise systems
However, adopting the best practices might not always be ideal
If companies have a competitive advantage from their unique
business processes, forcing best practices might hurt instead

3. Business Process Management (BPM)


-

A systematic, structured improvement approach


o Involves all or part of an organisation
o Critical rethink and redesign of business processes to achieve
dramatic improvements in one or more performance measures
IS is seen as a key enabler for such radical change
Basic steps in BPM:

1. Develop a vision for the organisation that specifies business


objectives.
2. Identify the critical processes that are to be redesigned.
3. Understand and measure the existing processes as a baseline for
future improvements.
4. Identify ways that IS can be used to improve processes.
5. Design and implement a prototype of the new processes.
-

BPM is similar to quality improvement approaches in that they are


intended to be cross-functional processes to improve an
organisation
Differs in one fundamental way quality improvement approaches
focus on incremental change and gradual improvement, while BPM
focuses on radical redesign and drastic improvement of processes
Conditions that lead to a successful BPM:
o Support by senior management
o Shared vision by all organisational members
o Realistic expectations
o Participants empowered to make changes
o The right people participating
o Sound management practices
o Appropriate funding

Enterprise Resource Planning


Enterprise resource planning systems are applications that integrate
business activities across departmental boundaries.
It integrates legacy information on a company-wide basis.
Integrating Data to Integrate Applications
ERP applications make accessing information easier by providing a central
information repository.
Rather than having information flow from one department to the next, it
can be accessed and updated at will, which means the information is
always accurate and up-to-date.
ERP applications that access the database are designed to have the same
look and feel regardless of the unique needs of a particular department.

Choosing an ERP System

ERP applications come as packaged software, so management must


carefully select an ERP application and consider a number of factors
in the ERP selection
2 most important concerns are:
ERP Control
o Centralised control vs control within specific business units
o Based on the level of detail in the info that must be provided
to management
o ERP applications vary widely in their allowance for control
ERP Business Requirements
o Involves selection of modules to be implemented
o 2 major categories of ERP components:
o ERP core components
Supports the internal activities of the organisation
E.g. Financial management, ops management, HR
management
o ERP extended components
Supports the primary external activities of the
organisation
Focuses primarily on CRM and SRM
** ERP system figure (pg331)

Enabling Business Processes Using ERP Core Components


ERP vendors typically package the various modules that enable industryspecific processes and offer such systems as industry solutions. This
way, organisations spend less effort in selecting the needed modules and
can more easily implement the ERP system.
-

Order-to-Cash
o Process varies greatly on the industry simple for retail, not
for distributor
o Different modules of the financial and operations
management components must work together
o Financial checking credit limits, billing, processing incoming
payments
o Operations sales, price quotation, stock allocation, pricing,
shipping etc.
Procure-to-Pay (pg333)
Make-to-Stock/Make-to-Order
o MTS typically used for commodities
o MTO used for highly customisable goods
Other Business Processes
o ERP systems typically enable a variety of other generic as well
as industry-specific business processes

ERP Installation
-

Any organisation considering an ERP system has to carefully


evaluate the overall systems as well as the industry-specific
solutions
Configuration of the ERP system is also important
System must be configured to reflect business processes and
associated rules
Setting up the database is key to a successful ERP implementation
Many organisations typically hire business analysts or outside
consultants to assist with the implementation

ERP Limitations
-

Falls short in communicating across organisational boundaries


Not well suited for managing value system activities as they are
designed primarily to service internal business activities
Not built for integration of value chains with the business activities
of suppliers, business partners and customers
Other systems can work with ERP together (SCM and CRM)

ERP Implementation
Big Bang
-

Entire suite of enterprise applications is implemented throughout at


the same time
o All relevant processes are chosen and implemented
o All modules are tested individually beforehand
o Old system is turned off and new system takes over
Very efficient and can achieve immediate effectiveness
However, it is a very risky affair

Phased
-

Implements targeted functionality in phases by module, by


geography, or business unit
Sequential implementations that consist of designing, developing,
testing and installing the different modules
Costly and time-consuming, but a safer approach

Risks of Implementing ERP Systems


-

Extremely difficult organisational challenges

o Major change in business processes and technology


o Affects employees drop in performance and morale during
implementation
Extremely complex system with relatively few highly qualified
consultants
Cost of implementation is typically 2-10 times more than the cost of
product

The Formula for Enterprise System Success


1.
2.
-

Secure executive sponsorship.


Most failures are due to lack of top-level management support.
Get help from outside experts.
Consultants are specifically trained and can aid to speed up
implementation.
3. Thoroughly train users.
- Training can prevent dissatisfaction, but is frequently overlooked.
4. Take a multidisciplinary approach to implementations.
- Include end users from all functional areas in the implementation.
5. Initiate evolving the ERP architecture.
- Move to a service-oriented architecture (SOA)
o Business processes are broken down into individual services
o Services are designed to achieve the desired results for the
consumer
o By breaking down into individual services, organisations can
react more swiftly to changing business needs
- 3 main service principles:
o Reusability usable in many different applications
o Interoperability should work with any other service
o Componentisation should be simple and modular
- An SOA approach helps to increase flexibility, but the integration of
various services can be very complex and beyond the means of
small enterprises
- Large ERP vendors (Oracle) have introduced platforms enabling the
transition to SOA
- Allows gradual migration from ERP to SOA without having to retire
ERP immediately
- Also, these solutions allow the use of services from other systems or
vendors, increasing an organisations flexibility
- ** SOA figure (pg338)

LECTURE 10
SCM AND CRM

ENTERPRISE-LEVEL STRATEGIC IS (2)

Supply Chain Management


A supply chain is a collection of companies and processes involved in
moving a product from the suppliers of raw materials, through the
intermediaries and ultimately to the customer.
There are typically many suppliers upstream and many different
customers downstream.

Diagram of a supply network


Benefits of Effectively Managing Supply Chains
Just-In-Time (JIT) Production
-

Keeping inventor is costly and does not add value


Companies using JIT optimise their ordering quantities such that
parts or raw material arrive just when they are needed for
production
Esp relevant for tech due to the fast rate of obsolescence of
electronics components
Using a JIT method is heavily dependent on tight cooperation
between all partners in the supply network

Vendor-Managed Inventory (VMI)


-

A business model where the suppliers manage the manufacturers


inventory levels based on pre-established service levels
The manufacturer allows the supplier to monitor stock levels and
ongoing sales data
Reduces manufacturers inventory Saves costs and minimises
stockout situations

Supplier benefits from the intense data sharing Produce more


accurate forecasts, reduces ordering errors, helps prioritise
shipment fof goods

Bullwhip Effect
-

Ripple effect as a result of safety buffer timings


Implementing integrated business processes allows a company to
better coordinate the entire supply network and reduce the bullwhip
impact

Corporate Social Responsibility


-

Product Recalls
o Many opportunities where shortcuts are being taken and
quality standards are not met along the supply network
o Important to have a clear picture of the supply chain so that
the problem can be identified as quickly as possible
o Singling out the source helps to save goodwill and limit costs
of a recall
Sustainable Business Practices
o Growing emphasis, e.g. ethical treatment, environmental
practices
o Other companies try to portray a green image requires a
clear view of their supply chain to provide convincing numbers
to support their claim

Optimising the Supply Chain Through SCM


Supply chain management (SCM) refers to information systems
focused on improving supply chains to accelerate product development
and innovation and to reduce costs.
SCM helps in reducing inventory costs and enhancing revenue through
improved customer service.
SCM is often integrated with ERP to leverage internal and external
information for better collaboration with suppliers.
SCM packages are also delivered in the form of modules for companies to
select accordingly.
Functions that Optimise the Supply Network
Module
Demand planning

Key Uses
Forecast and plan demand for products

and forecasting
Safety stock
planning
Distribution
planning
Supply network
collaboration
Materials
management
Manufacturing
execution
Order promising
Transportation
execution
Warehouse
management
Supply chain
analytics

Assign optimal safety and target stock levels


Optimise the allocation of available supply to meet
demand
Works with partners across the supply network
Ensures materials required are available when
needed
Support production processes, esp. regarding
account capacity and material constraints
Provides answers to CRM queries
Manage logistics between company locations or
company to customers
Support receiving, storing and picking of goods in a
warehouse
Monitor KPI to assess performance across the supply
chain

Challenges
-

Employees have to use it and move away from traditional ways


Distrust among partners in the supply chain
Companies do not wish to disclose excessive info regarding their
suppliers
Reluctance to share data along the supply chain due to growing IP
theft
Getting all partners in the supply chain to adopt an SCM system

SCM Architecture
Supply chain planning (SCP) involves the development of various
resource plans to support the efficient and effective production of goods
and services. 4 key processes: (ref pg354 fig)
1. Demand Planning and Forecasting
- Historical data is examined to develop the most accurate forecasts
- Supports collaborative demand and supply planning between
companies
- Leads to the development of the overall demand forecast
2. Distribution Planning
- Focuses on delivering products or services to consumers as well as
warehousing, delivering, invoicing, and payment collection
- Leads to the development of the overall transportation schedule
3. Production Scheduling

Focuses on the coordination of all activities needed to create the


product
- Leads to the development of the production plan
4. Inventory and Safety Stock Planning
- Focuses on the development of inventory estimates suppliers can
then be chosen
- Leads to the development of a sourcing plan
Supply chain execution (SCE) is the execution of SCP. It puts the SCM
planning into motion and involves the management of 3 key elements of
the supply chain. (ref pg355 figure)
1. Product Flow
- Movement of goods from the supplier to production, from production
to distribution, and from distribution to the consumer
- An effective SCM system should support the production process, and
also efficiently receive excessive/defective products from customers
2. Information Flow
- Movement of information along the supply chain; can flow up or
down
- Central database of info All partners have access to current info
3. Financial Flow
- Movement of financial assets throughout the supply chain
- Linkages to financial institutions allow automatic flow of payments
as well
Supply chain visibility refers to the ability to track products as they
move through the supply chain but also to foresee external events.
-

Useful to track a shipment, esp for JIT methods


Knowing the location of a suppliers facilities can aid in planning for
unforeseen circumstances, e.g. natural disasters, political issues
Such levels of info sharing requires tremendous trust among the
partners

Supply chain analytics refers to the use of KPI to monitor the


performance of the entire supply chain.
-

Enables filtering out of bottlenecks and under-par suppliers

Developing an SCM Strategy


It requires balancing the efficiency (cost minimisation) and effectiveness
(customer service maximisation) of the supply chain.
The design should consider natural trade-offs and should reflect the
companys overall competitive strategy to reap the greatest benefits.

** Supply chain strategy figure (pg357)


Emerging SCM Trends
Key Trends
-

Supplier portals
Customer portals
B2B marketplaces
These provide an alternative to proprietary supply linkages, e.g.
using EDI

Key enabling technologies


-

Extensible Markup Language (XML) sharing data across


applications over the Web
o Complex; requires knowledge of XML and expertise in
distributed database design and management
Radio Frequency Identification (RFID) Transmits info between a
reader and a tag
o Alternative to bar codes does not require line-of-sight
reading
o RFID tags are programmable
o Used to track goods and to manage supply chains
o Systems are expensive, and no clear set of data standards

Customer Relationship Management


CRM is a corporate-level strategy to create and maintain, through the
introduction of reliable systems and procedures, lasting relationships with
customers by concentrating on the downstream information flows.
There are 3 main objectives to attract potential customers, to create
customer loyalty, and to portray a positive corporate image.
This is achieved via obtaining access to customer interactions throughout
the organisation.
Successful implementation of CRM
- Greater customer satisfaction, increased productivity of sales/service
personnel Increases companys profitability
- Focus on driving revenue in addition to reducing costs
** Benefits of a CRM system table (pg364)

Developing a CRM Strategy


The closer an organisation is to the end customer, the more important
CRM becomes.
It is not simply purchasing and installing CRM software, instead it requires
enterprise-wide changes:
-

Policy and Business Process Changes


o Organisational policies need to reflect a customer-focused
culture
Customer Service Changes
o Business needs changed to reflect customer-focused
measures
Employee Training Changes
o Employees must focus on valuing customer service and
satisfaction
Data Collection, Analysis and Sharing Changes
o All aspects of the customer experience must be tracked,
analysed and shared to optimise the benefits of the CRM

Architecture of a CRM System


3 primary components:
1. Operational CRM - automates interaction processes with the
customer
2. Analytical CRM analyses customer behaviour to provide BI
3. Collaborative CRM Provides effective & efficient communication
with the customer

Operational CRM
-

Systems used to enable customer interaction and service provides


personalised and highly efficient customer service
In this environment, all departments will be able to see all prior and
current interactions with the customer regardless of where it
originally occurred
To facilitate the sharing, 3 separate modules are utilised:
1. Sales Force Automation (SFA) ref pg367
o Systems that support the daily sales activities
o Increases time efficiency for sales personnel and provides
improved information for sales mgrs, improved effectiveness
of marketing function

2. Customer Service and Support (CSS)


o Systems that automate service requests, complaints, info
requests
o Customer Interaction Centre (CIC) optimises customers
communication automatic call distribution systems, virtual
hold technology
o Goal is to provide customer service while keeping
service/support costs low
3. Enterprise Marketing Management (EMM)
o Improves the management of promotional campaigns via
email, telephone, Facebook, Twitter etc.
o Provides extensive analytical capabilities that can help to
analyse the effectiveness of marketing campaigns
Analytical CRM
-

Enables organisations to customise marketing campaigns easily


Increase cross- or up-selling products, retains customers by having
personalised info
Used to spot sales trends and specific target markets within an area
Obtain a 360-degree view of the customer collected info + social
media using fuzzy logic-based algorithms to merge into one identity

Collaborative CRM
-

Facilitates the sharing of info across the various departments, which


provides more streamlined customer service with fewer handoffs
Greater customer focus
o Understanding customer history and current needs
Lower communication barriers
o Utilise the communication methods and preferences of the
customer
Increased information integration
o Sharing of customer information across the organisation;
customers can get status updates from any organisational
touch point
Flexible supports both routine and non-routine events

Ethical Concerns with CRM


-

Invades customer privacy and facilitates coercive sales practices


Over-reliance on the systems profile of a customer
Risk of communication and service becoming too personal

CRM Implementation
-

55%-75% of CRM projects failed to meet the objective

Obstacles
o Technology Difficult to use due to its complexity
o Social Employees need to shift from product-oriented to
customer-oriented
o Personal Failure of staff to log correctly
Solutions
o Provide training for employees in new roles, responsibilities
and skills
o Develop methods of measuring and compensating job
performance
o Follow-up resolution tracking

Summary
SCM and CRM can be stand-alone systems or integrated into an enterprise
system.
A tight ERP/SCM/CRM integration can reap great benefits.
ERP systems optimise business processes within the organisation.
SCM improves business processes that span organisational boundaries.
CRM keeps track of customers through orders and related information
from SCM and payments from ERP.