Managing E-Business Applications

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Chapter 11

• Managing E-Business Applications

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Introduction

• Organizations are establishing intranets and
  rebuilding internal systems for e-business
• The successful use of Web-based internal systems
  positions the firm to adopt e-commerce
  applications and transact business electronically
  with suppliers and customers
• Many barriers exist within organizations that
  limit or impede e-business initiatives
  successful managers must anticipate and remove
  these barricades

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Re-engineering for E-Business

• Business Process Re-engineering (BPR)
• A process where current business processes are
  modeled from inbound processes through
  operational activities to outbound processes
• Model work and information flows
• Application of e-business technologies allows a
  firm to improve operations by restructuring
• De-optimized business processes create the
  opportunity, IT helps capture the benefits
• This is truly business process innovation

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Analysis

• First goal is to identify those activities the
  firm should not be doing
• Eliminate redundant, wasteful activities
• Second, is to find essential processes that can
  be accomplished more effectively outside the firm
• Outsource non-core business processes
• Payroll processing, desktop support

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Synthesis

• For the activities that remain, innovative new
  processes need to be devised
• These new processes must look to leverage IT and
  communication technologies
• Many times great efficiencies can be created when
  sequential processes are redesigned to work in
  parallel
• Parallelism may be created within a firm and
  between firms using IT and Internet linked
  systems

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Distributed Systems

• Distributed systems consist of powerful
  workstations attached to LANs connecting workers
  to databases, servers, and storage
• Yields operational flexibility and increased
  responsiveness to business pressures
• Replaces rigid top-down systems with local
  expertise
• More employees can have access to more and higher
  quality data

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Client/Server Operations

• Client/server operations divide the complete
  application (presentation, function, data
  management) into two parts connected via a high
  speed network
• This networked architecture changes and
  rearranges workflow
• Affects people, processes, and organizations
• Requires restructuring of hardware, software,
  telecommunications, and applications

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Client/Server Operations

• PC-based Web browsers have provided businesses
  with the universal/generic client
• Many applications have begun to incorporate Web
  portals Web functions allowing application
  usage via browsers
• Use of Web browsers leverages user interface
  familiarity to enable new workers to quickly
  learn applications

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Client/Server Operations

• Depending on the application, the client, and the
  network, configuration of the client/server
  architecture can place greater or lesser
  performance demands on the various components
• Thin clients with no local storage and modest
  computing power put greater demands on the
  network and server, but can be placed easily as
  point of sale terminals
• Full workstations with fast processors can do
  most work locally with little server support

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Building Client/Server Applications

• Successful implementation of client/server
  systems results from planning
• No one planning methodology is adequate managers
  must seek a blend based on the situation
• Client/server application development requires
  programmers with strong skills in new tools and
  techniques
• The management plan needs to be developed
  concurrently with the application

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Issues of Distributed Computing

• Software and application issues
• Hardware compatibility and maintenance issues
• Telecommunications issues
• Data and database issues
• Asset protection and security issues
• Business controls issues
• Financial concerns
• Political, cultural, and policy issues
• Staffing and personnel issues

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Compatibility

• Compatibility between commonly used applications
  significantly enhances the effectiveness of
  distributed computing
• Incompatibilities between basic programs increase
  costs, reduce ease of data sharing, and cause
  increased complexity with other applications
• Standardized hardware platforms make installation
  and support of networking and software cost
  effective

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Communication

• The firms physical network architecture,
  communication software, and protocols should be
  standardized
• Policies are needed for linking to and using
  outside databases, the Internet, and EDI

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Databases

• Firms must clarify issues of ownership, control,
  and responsibility
• Integrity issues must be addressed formally with
  controls covering uploading and downloading of
  data
• IT must create a balance for the firm between
  accessibility and security

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Security Issues

• As technology dispersion brings powerful systems
  and applications to the level of the department,
  critical IT management responsibilities migrate
  with them
• Disaster recovery planning and management
• Asset security
• Physical access controls

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Political Issues

• Migration from centralized computing to a
  client/server model shifts the firms power
  structure, giving more people the power to
  evaluate data and make decisions
• Widespread implementation of IT tends to flatten
  a firms structure this change causes
  displacement of managers and changes in power
  relationships

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Staffing and Personnel Issues

• The most critical factor
• Considerable training is required to support this
  transformation
• Not all employees can adapt and take full
  advantage of the new tools
• Leadership changes are required to effectively
  lead re-engineered departments
• Understanding and addressing these stresses in a
  formal manner is critical

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Human Support Infrastructure

• Staffing, training, and support issues are an
  ongoing challenge to IT
• For firms undergoing extensive or prolonged IT
  changes, establishing a formal department to
  support this new need is commonly done
• Called by many names Help Desk, Customer
  Support,
• It receives assistance from IT, but includes
  non-IT members as well

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Info Center

• Supports the firms IT migration by centralizing
  support, purchasing, and application licensing
• Helps to maintain compatibility across the firm
  for hardware and software
• Acts as a central maintenance depot
• Data gathered by the info center during support
  activities can be used to glean customer
  preferences and trends

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Help Desk Functions

• Conduct or provide user training
• Provide development assistance
• Evaluate new applications
• Distribute customer information
• Answer routine customer questions
• Assist in problem determination
• Gather planning information

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E-Business, The New Paradigm

• E-business represents an integrated approach to
  obtaining differentiated value by combining
  information systems and business processes with
  Internet technologies
• E-business is broader than e-commerce or
  e-marketing because when businesses are connected
  to the Internet, they are forced to restructure
  operations and capitalize on the natural
  strengths of the Web

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Intranets and Extranets

• Intranet an internal Web site containing
  company-specific information with access
  restricted to the employees of the firm
• Used to communicate information like product
  documentation, corporate policies, or procedures
• They have become much more efficient systems for
  communication
• Span of control is replaced by span of
  communication (Drucker)

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Intranets and Extranets

• Extranet private networks based on Web
  protocols and standards linking corporations
  together
• Data is secured and private, off the public
  Internet
• Web standards make it easy to create and remove
  shared content
• Use of extranets to link suppliers and their
  customers helps decrease inventory, increase
  returns, and reduce carrying cost

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Developing and Using Intranets and Extranets

• Deployment of a corporate intranet is the first
  step in preparing to deploy an e-business
• Introduce employees to digitized business
  processes
• Encourage business process redesign
• Require deployment of middleware
• Security
• Access control
• Communications systems (e-mail, IM, etc.)

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Developing and Using Intranets and Extranets

• The second step is to connect the intranet to the
  Internet
• Allows employees to
• obtain external information
• correspond with external customers
• Helps grow the culture of electronic interaction,
  digitized processes, and streamlined processes
• The third step is to link employees to ERP
  systems over the intranet

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Developing and Using Intranets and Extranets

• Finally, an extranet is created linking
  suppliers, select customers, and internal staff
  an embryonic B2B implementation is created
• Place orders
• Receive invoices
• Funds transfers
• Check stocking levels

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B2C

• Permits millions of customers to select and order
  products, make payments, or return merchandise
• These are sophisticated systems requiring all the
  preceding technologies and business practices to
  be implemented and mastered
• B2C operations open new possibilities with data
  mining, marketing, and product branding

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Management Issues

• E-business places greater demands on the firms
  managers and technical personnel
• New tools are used XML, HTML, JAVA
• New processes are needed
• Uptime, reliability, and disaster recovery must
  be impeccable
• IT managers must focus on the firms e-business
  goals, and other dept. managers must understand
  IT operations

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Managing Web-Hosting

• Companies lacking internal resources or needing
  rapid time to market may choose to outsource
  their Web operations
• Businesses are trusting their online presence to
  another firm, and must carefully screen their new
  business partner
• Level of experience and commitment
• Depth of financial resources
• Physical assets
• Availability and uptime
• Stability

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Application Hosting

• Application programs are supplied to a business
  on a lease type basis
• The applications continue to reside at the
  hosting company and are accessed via the Internet
• Payroll, inventory, order fulfillment, billing
• As firms re-evaluate core activities, ASP
  solutions can take over most of IT functions
• Radiology departments outsource storage of images
  and reports
• Retailers outsource data warehousing / mining

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E-Sourcing

• At the extreme, firms would transfer physical IT
  assets (hardware, software, people, networks) to
  the e-sourcing firm
• A large e-sourcing firm can offer scalability,
  flexibility, and economies of scale
• Trades ownership of assets for increased access
  to data warehousing, IT expertise, and management
  skills
• Confirms the concept of computing as a utility

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Implementing E-Business Systems

• Implementing client/server or Internet technology
  poses many unique and difficult challenges to IT
  managers
• Organizational factors
• Information infrastructure issues
• Systems management issues
• Other management issues

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Organizational Factors

• When implementing networked / e-business systems,
  management must have a unified strategic vision
• Most new business processes cause a flattening of
  corporate structure
• Senior management must understand and be ready to
  transition redundant managers and management
  levels into new areas of responsibility

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Information Infrastructure

• Most firms have some pre-existing infrastructure
  new equipment must mesh with existing equipment
• Some vendors supply hardware, software, and
  networks as a package integration with existing
  systems must also be provided
• Claims of interoperability and open design must
  be scrutinized
• IT staff must have the skills and training to
  support the new systems

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Systems Management

• When transitioning from centralized to
  distributed systems, physical asset management
  must be addressed
• Workstation security
• Password management
• License requirements
• Software installation and control
• Configuration management

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Management Issues

• Quantifying benefits of networked systems to
  organizations is difficult because they most
  often have their greatest impact on
  organizational effectiveness
• Most firms classify these investments as
  strategic with a return anticipated in the future
• Commonly these systems do not result in cost
  savings to the firm but increased revenue
• E-business investments must be directed from the
  highest levels of the firm

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Policy Considerations

• Hardware and software compatibility
• Presents a tradeoff between ease of data
  interchange, economies of scale in procurement,
  training and support vs. overall capability
• Middleware standards
• E-mail infrastructure, network management
  systems, authentication services
• Ownership and responsibility for distributed
  hardware, applications, data

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People Considerations

• Effective intranets, extranets, and other
  e-business systems directly affect traditional
  reporting relationships
• Increasing employees span of communication shift
  their perspective of their place in the firm
• Loyalties move from the immediate manager to the
  department, or other individuals in the hierarchy
• Managers must constantly focus on building good
  communication with employees

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Managing Expectations

• Installation of distributed systems must be done
  in a stepwise process
• Use of prototype test-beds and an iterative
  approach helps ease technology transitions
• Prototyping helps to ground plans on real world
  interactions
• Human factors must be addressed
• Ease of use and interface design can make or
  break a project

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Change Management

• Three phases
• First during prototyping, the next target group
  of users should be informed and brought up to
  speed on the project
• Second as new users are introduced to the
  system, they should be paired with experienced
  users additional staff needs to be available
• Third feedback from the new users needs to be
  incorporated into the application

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Summary

• Networked application systems are one of the most
  important developments in IT history
• Managers must select and implement systems that
  work in their specific environments and be
  capable of managing the resulting profound
  changes that ensue
• Distributed computing has high potential payoff,
  and can create a win win situation