Haag Cummings

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(No Transcript)
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MAJOR BUSINESS INITIATIVES
Chapter
2

• Gaining Competitive Advantage with IT

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STUDENT LEARNING OUTCOMES

1. Describe how to use Porters Five Forces Model to
   evaluate the attractiveness of an industry.
2. Describe the role of value chains in identifying
   value-added and value-reducing processes.
3. Define SCM systems and describe their strategic
   and competitive opportunities and IT support.

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STUDENT LEARNING OUTCOMES

1. Define CRM systems and describe their strategic
   and competitive opportunities and IT support.
2. Define BI systems and describe their strategic
   and competitive opportunities and IT support.
3. Define ICEs and describe their strategic and
   competitive opportunities and IT support.

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Business Intelligence Is Key to the Success of
the Miami Dolphins

• Professional sports is very much a business
• Find great players and coaches
• Work with ticket sales, merchandise sales,
  concession sales, and stadium events

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Business Intelligence Is Key to the Success of
the Miami Dolphins

• Ticket sales are key
• Dolphins must know who buys tickets, when many
  tickets are unsold, etc
• Old way ticket information only once or twice
  per week
• New way (with IT) ticket information on a daily
  basis

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Business Intelligence Is Key to the Success of
the Miami Dolphins

• Class poll
• How does this help with customer relationship
  management?
• Do you receive marketing material from pro team?
  Whom?
• Top-line or bottom-line initiative?

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INTRODUCTION

• Businesses must be innovative to stay in business
  and succeed
• IT can be a powerful tool
• Must use IT within business strategy to be
  successful

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INTRODUCTION

• Major business initiatives that need IT
• Customer relationship management (CRM)
• Supply chain management (SCM)
• Business intelligence (BI)
• Integrated collaboration environments (ICE)

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INTRODUCTION

• Back to strategy
• Top-line versus bottom-line (Chapter 1)
• Run-Grow-Transform framework (Chapter 1)
• Porters Five Forces Model (Here)
• Value chains (Here)

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PORTERS FIVE FORCES MODEL

• Five Forces Model helps determine the relative
  attractiveness of an industry and includes
• Buyer power
• Supplier power
• Threat of substitute products and services
• Threat of new entrants
• Rivalry among existing competitors

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PORTERS FIVE FORCES MODEL
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Buyer Power

• Buyer power high when buyers have many choices
  low when there are very few choices
• As a provider of products and services want low
  buyer power
• As a consumer of products and services want
  high buyer power

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Buyer Power

• IT can help you (as a provider) reduce buyer
  power
• Examples (all enabled by IT)
• Loyalty program rewards customers for repeated
  business
• Airline industry
• Hotels
• Grocery stores

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Supplier Power

• Supplier power high when buyers have few
  choices low when buyers have many choices
• The opposite of buyer power
• As a business, you want
• High buyer power when making purchases
• High supplier power when selling products and
  services

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Supplier Power
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Threat of Substitute Products or Services

• Threat of substitute products or services high
  when there are many alternatives low when there
  are few
• Switching costs can help
• Switching cost costs that make customers
  reluctant to switch

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Threat of New Entrants

• Threat of new entrants high when it is easy for
  new competitors to start low when it is not
• Entry barrier feature that customers want and
  new competition must provide to enter market
• ATMs, online banking, etc

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Rivalry Among Existing Competitors

• Rivalry among existing competitors high in a
  fiercely competitive market low in a more
  complacent market
• Example retail grocers
• Highly competitive
• Use IT to compete on price

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Five Forces Model Summary

• Helps determine the attractiveness of an industry
• Should enter or expand operations in an industry?
• How can IT help?
• Increase/reduce buyer/supplier power?
• Create/eliminate an entry barrier?

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VALUE CHAINS

• Value chain organization as a chain or series
  of processes, each of which either add to or
  reduce value
• Business process set of activities that
  accomplishes a specific task
• Ordering processing
• Sales transaction

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VALUE CHAINS
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VALUE CHAINS

• Primary value processes (along bottom) creates,
  delivers, markets, and sells products and
  services
• Support value processes (along top) support
  primary value processes

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Identifying Processes that Add Value

• Talbott premier necktie manufacturer
• Value-added process information gathered by
  surveying customers
• Manufacturing high quality
• Purchasing quality materials

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Identifying Processes that Add Value
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Identifying Processes that Reduce Value

• Value-reducing processes information gathered
  from same customer surveys
• Out of stock items (for Talbott)
• Goal use IT to get timely information to sales
  force

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Identifying Processes that Reduce Value
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Value Chain Summary

• Gathers quantifiable information from customers
• Identifies value-added and value-reducing
  processes
• Increases effectiveness of decision making

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SUPPLY CHAIN MANAGEMENT

• Supply chain management (SCM) tracks inventory
  and information among processes and across
  companies
• SCM system IT support for supply chain
  management
• Dell famous for its sell-source-ship supply
  chain model

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SUPPLY CHAIN MANAGEMENT
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SUPPLY CHAIN MANAGEMENT

• Distribution chain path followed by product or
  service
• JIT provides product/service just when needed
• Inter-modal transportation uses multiple
  channels (trucks, boats, etc) of transportation

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Strategic Competitive Opportunities with SCM

• Fulfillment right quantity of parts at right
  time
• Logistics transportation costs low
• Production production lines run smoothly

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Strategic Competitive Opportunities with SCM

• Revenue and profit no sales are lost because of
  stock-outs
• Spend minimizing costs of purchases of material

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IT Support for SCM

• Previously specialized providers (i2,
  Manugistics, etc)
• Now dominated by enterprise software providers
• SAP
• Oracle
• PeopleSoft

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IT Support for SCM

• Supply Chain Knowledge Base http//supplychain.i
  ttoolbox.com
• Supply Chain Management Review
  www.manufacturing.net/scm
• Logistics/Supply Chain http//logistics.about.co
  m

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CUSTOMER RELATIONSHIP MANAGEMENT

• Part of Miami Dolphins opening case study
• CRM system uses information about customers to
  gain insight in order to serve them better
• Sales force automation
• Customer service and support
• Marketing campaign management

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CUSTOMER RELATIONSHIP MANAGEMENT

• Sales force automation (SFA) systems track all
  steps in sales process

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Strategic Competitive Opportunities with CRM

• More effective marketing campaigns
• Efficient sales process
• Superior after-sale service and support
• Treat customers better
• Tailor offerings in response to needs

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IT Support for CRM

• Front office systems primary interface to
  customers and sales channels
• Back office systems fulfill and support
  customer orders
• Databases are central

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IT Support for CRM
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IT Support for CRM

• CRM Today www.crm2day.com
• Customer Management Community
  www.insightexec.com
• CIO Magazine Enterprise CRM www.cio.com/enterpri
  se/crm/index.html

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BUSINESS INTELLIGENCE

• Business intelligence knowledge about
  competitors, suppliers, your own internal
  operations, etc
• Combined forms of information to create real
  knowledge
• Encompasses everything that affects your business
• Helps you make strategic business decisions

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BUSINESS INTELLIGENCE

• BI system support business intelligence
  function
• Capabilities in the firm
• State of the art, trends, and future directions
• External environment affecting competition
• Actions of competitors

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BUSINESS INTELLIGENCE
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BUSINESS INTELLIGENCE

• The focus of Chapter 3
• Data warehouses collections of information (BI)
  from multiple operational databases
• Data marts focused portion of a data warehouse

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Strategic and Competitive Opportunities with BI

• Corporate performance management
• Optimizing customer relations
• Traditional decision support
• Management reporting of BI
• Information right time, location, and form
  (personal information dimensions)

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IT Support for Business Intelligence

• Web supports many BI systems
• Movement toward specialized BI packages
• Digital dashboard displays key information
  tailored to an individual

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IT Support for Business Intelligence
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IT Support for Business Intelligence

• Business Intelligence Knowledge Base
  http//businessintelligence.ittoolbox.com
• Business Intelligence.com www.businessintelligen
  ce.com
• Business Intelligence Evaluation Center
  www.bievaluation.com

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INTEGRATED COLLABORATION ENVIRONMENTS (ICEs)

• ICE environment in which virtual teams do their
  work
• Virtual team when team members are located in
  varied geographical locations

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INTEGRATED COLLABORATION ENVIRONMENTS (ICEs)

• Start with e-mail and get more advanced
• Workflow system facilitates automation of
  business processes (value chain implementation)
• Workflow steps, from beginning to end, required
  for a business process

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INTEGRATED COLLABORATION ENVIRONMENTS (ICEs)

• Knowledge management (KM) system supports
  capturing, organization, and dissemination of
  knowledge (know-how)
• Avoids reinventing the wheel
• Social network system links you to people you
  know, and from there, people they know
• Referral service

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Strategic Competitive Opportunities with ICEs

• Joint ventures on large projects within an
  industry
• Collaborative preferred provider relationships
• Sharing knowledge
• Making the most of contacts

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IT Support for ICEs

• Presence awareness determines if person is
  immediately reachable
• Peer-to-peer collaboration software communicate
  and share files in real time without central
  server
• Social network systems

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IT Support for ICEs
TYPE EXAMPLE
Collaboration LiveMeeting (www.microsoft.com)
Workflow Metastorm (www.metastorm.com)
Document Management FileNet (www.filenet.com)
Peer to Peer Groove (www.groove.net)
Knowledge Management IBM Knowledge (www.ibm.com)
Social Network Linkedin (www.linkedin.com)
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BACK TO THE BEGINNING

• It all starts with business strategy
• Strategy determines IT use and support
• Top-line or bottom-line
• Do you want to increase revenue or cut costs?

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BACK TO THE BEGINNING

• Run-Grow-Transform framework
• How will you allocate IT dollars to initiatives?
• Five Forces Model
• How will you use technology to affect aspects of
  this model?

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BACK TO THE BEGINNING

• Value chain
• How can you increase value-added processes?
• How can you decrease value-reducing processes?
• How will IT help?

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CAN YOU

1. Describe how to use Porters Five Forces Model to
   evaluate the attractiveness of an industry.
2. Describe the role of value chains in identifying
   value-added and value-reducing processes.
3. Define SCM systems and describe their strategic
   and competitive opportunities and IT support.

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CAN YOU

1. Define CRM systems and describe their strategic
   and competitive opportunities and IT support.
2. Define BI systems and describe their strategic
   and competitive opportunities and IT support.
3. Define ICEs and describe their strategic and
   competitive opportunities and IT support.