MAJOR BUSINESS OSSS INITIATIVES · Robinson College of Business, Georgia State University David S. McDonald, Ph.D. – Dir ector of Emerging Technologies Tel: 404-413-7368; e-mail:

1

Copyright © 2007Robinson College of Business, Georgia State UniversityDavid S. McDonald, Ph.D. – Director of Emerging TechnologiesTel: 404-413-7368; e-mail: [email protected]

O S SS

Chapter

2

MAJOR BUSINESS INITIATIVES

Gaining Competitive Advantage with IT

STUDENT LEARNING OUTCOMES

1. Describe how to use Porter’s Five Forces Model to evaluate theForces Model to evaluate the attractiveness of an industry.

2. Describe the role of value chains in identifying value-added and value-reducing processes.

2-2

g p3. Define SCM systems and describe their

strategic and competitive opportunities and IT support.

2


STUDENT LEARNING OUTCOMES

4. Define CRM systems and describe their strategic and competitive opportunities and IT support.

5. Define BI systems and describe their strategic and competitive opportunities and IT support

2-3

and IT support.6. Define ICEs and describe their

strategic and competitive opportunities and IT support.

Business Intelligence Is Key to the Success of the Boston Red SoxProfessional sports is very much a businessFind great players and coachesWork with ticket sales, merchandise

2-4

sales, concession sales, and stadium events

3


Business Intelligence Is Key to the Success of the Red Sox

Competitive forces are their keyThe Red Sox must know who buys tickets, when many tickets are unsold, etc

2-5

Old way – ticket information only once or twice per weekNew way (with IT) – ticket information on a daily basis

INTRODUCTIONBusinesses must be innovative to stay in business and succeedIT can be a powerful toolMust use IT within business strategy to

2-6

be successful

4


INTRODUCTIONMajor business initiatives that need IT

1. Customer relationship management (CRM)2. Supply chain management (SCM)3. Business intelligence (BI)

2-7

4. Integrated collaboration environments (ICE)

PORTER’S FIVE FORCES MODEL

Fi F M d l h l d t iFive Forces Model – helps determine the relative attractiveness of an industry and includes

1. Buyer power2. Supplier power

2-8

pp p3. Threat of substitute products and services4. Threat of new entrants5. Rivalry among existing competitors

5


PORTER’S FIVE FORCES MODEL

2-9

Buyer Power

Buyer power – high when buyers have many choices; low when there are very few choicesAs a provider of products and services –

l b

2-10

want low buyer powerAs a consumer of products and services – want high buyer power

6


Buyer Power

IT can help you (as a provider) reduce buyer powerExamples (all enabled by IT)

Loyalty program – rewards customers f d b

2-11

for repeated businessAirline industryHotelsGrocery stores

Supplier Power

Supplier power – high when buyers have few choices; low when buyers have many choicesThe opposite of buyer power

2-12

As a business, you want…High buyer power when making purchasesHigh supplier power when selling products and services

7


Supplier Power

2-13

Threat of Substitute Products or Services

Threat of substitute products or services – high when there are many alternatives; low when there are fewSwitching costs can help

2-14

Switching cost – costs that make customers reluctant to switch

8


Threat of New EntrantsThreat of new entrants – high when it is easy for new competitors to start; low when it is notEntry barrier – feature that customers

d i i id

2-15

want and new competition must provide to enter market

ATMs, online banking, etc

Rivalry Among Existing CompetitorsRivalry among existing competitors – high in a fiercely competitive market; low in a more complacent marketE l il

2-16

Example – retail grocersHighly competitiveUse IT to compete on price

9


Five Forces Model Summary

Helps determine the attractiveness of an industryShould enter or expand operations in an industry?

2-17

How can IT help? Increase/reduce buyer/supplier power? Create/eliminate an entry barrier?

VALUE CHAINS

Value chain – organization as a chain – or series – of processes, each of which either add to or reduce valueBusiness process – set of activities h li h ifi k

2-18

that accomplishes a specific taskOrdering processingSales transaction

10


VALUE CHAINS

2-19

VALUE CHAINS

Primary value processes (along bottom) – creates, delivers, markets, and sells products and servicesSupport value processes (along top) –

i l

2-20

support primary value processes

11


Identifying Processes that Add Value

Talbott – premier necktie manufacturerValue-added process – information gathered by surveying customers

Manufacturing high quality

2-21

Purchasing quality materials

Identifying Processes that Add Value

2-22

12


Identifying Processes that Reduce Value

Value-reducing processes – information gathered from same customer surveysOut of stock items (for Talbott)Goal – use IT to get timely information

2-23

to sales force

Identifying Processes that Reduce Value

2-24

13


Value Chain Summary

Gathers quantifiable information from customersIdentifies value-added and value-reducing processes

2-25

Increases effectiveness of decision making

SUPPLY CHAIN MANAGEMENTSupply chain management (SCM) –tracks inventory and information among processes and across companiesSCM system – IT support for supply h i

2-26

chain managementDell – famous for its sell-source-ship supply chain model

14


SUPPLY CHAIN MANAGEMENT

2-27

SUPPLY CHAIN MANAGEMENT

Distribution chain – path followed by product or serviceJIT – provides product/service just when needed

2-28

Inter-modal transportation – uses multiple channels (trucks, boats, etc) of transportation

15


Strategic & Competitive Opportunities with SCM

Fulfillment – right quantity of parts at right timeLogistics – transportation costs lowProduction – production lines run

2-29

smoothly

Strategic & Competitive Opportunities with SCM

Revenue and profit – no sales are lost because of stock-outsSpend – minimizing costs of purchases of material

2-30

16


IT Support for SCM

Previously specialized providers (i2, Manugistics, etc)Now dominated by enterprise software providers

2-31

SAPOraclePeopleSoft

IT Support for SCM

Supply Chain Knowledge Base –http://supplychain.ittoolbox.comSupply Chain Management Review –www.manufacturing.net/scm

2-32

Logistics/Supply Chain –http://logistics.about.com

17


CUSTOMER RELATIONSHIP MANAGEMENT

Part of Miami Dolphins opening case studyCRM system – uses information about customers to gain insight in order to

h b

2-33

serve them betterSales force automationCustomer service and supportMarketing campaign management

CUSTOMER RELATIONSHIP MANAGEMENT

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

2-34

18


Strategic & Competitive Opportunities with CRM

More effective marketing campaignsEfficient sales processSuperior after-sale service and supportTreat customers better

2-35

ea cus o e s be eTailor offerings in response to needs

IT Support for CRM

Front office systems – primary interface to customers and sales channelsBack office systems – fulfill and

d

2-36

support customer ordersDatabases are central

19


IT Support for CRM

2-37

IT Support for CRMCRM Today – www.crm2day.comCustomer Management Community –www.insightexec.comCIO Magazine Enterprise CRM –

2-38

www.cio.com/enterprise/crm/index.html

20


BUSINESS INTELLIGENCE

Business intelligence – knowledge about competitors, suppliers, your own internal operations, etcCombined forms of information to create real knowledgeEncompasses everything that affects

2-39

Encompasses everything that affects your businessHelps you make strategic business decisions


BI system – support business intelligence function

Capabilities in the firmState of the art, trends, and future directions

2-40

directionsExternal environment affecting competitionActions of competitors

21



2-41


The focus of Chapter 3Data warehouses – collections of information (BI) from multiple operational databases

2-42

Data marts – focused portion of a data warehouse

22


Strategic and Competitive Opportunities with BI

Corporate performance managementOptimizing customer relationsTraditional decision supportManagement reporting of BI

2-43

a age e epo g oInformation right time, location, and form (personal information dimensions)

IT Support for Business Intelligence

Web supports many BI systemsMovement toward specialized BI packagesDigital dashboard – displays key

2-44

information tailored to an individual

23



2-45


Business Intelligence Knowledge Base –http://businessintelligence.ittoolbox.comBusiness Intelligence.com –

b i i lli

2-46

www.businessintelligence.comBusiness Intelligence Evaluation Center – www.bievaluation.com

24


INTEGRATED COLLABORATION ENVIRONMENTS (ICEs)

ICE – environment in which virtual teams do their workVirtual team – when team members are located in varied geographical l i

2-47

locations


Start with e-mail and get more advancedWorkflow system – facilitates automation of business processes ( l h i i l i )

2-48

(value chain implementation)Workflow – steps, from beginning to end, required for a business process

25



Knowledge management (KM) system supports capturingsystem – supports capturing, organization, and dissemination of knowledge (know-how)

Avoids reinventing the wheel

Social network system – links you to

2-49

y ypeople you know, and from there, people they know

Referral service

Strategic & Competitive Opportunities with ICEs

Joint ventures on large projects within an industryCollaborative preferred provider relationships

2-50

Sharing knowledgeMaking the most of contacts

26


IT Support for ICEs

Presence awareness – determines if person is immediately reachablePeer-to-peer collaboration software – communicate and share fil i l i i h l

2-51

files in real time without central serverSocial network systems

IT Support for ICEs

TYPE EXAMPLETYPE 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)

Documents

MAJOR BUSINESS OSSS INITIATIVES · Robinson College of Business, Georgia State University David S. McDonald, Ph.D. – Dir ector of Emerging Technologies Tel: 404-413-7368; e-mail: