Computer applications in the modern enterprise Επιχειρησιακές Εφαρμογές Η/Υ Lecture 1 & 2 & 3: Introduction to Enterprise Information Systems Univ. of the Aegean Financial and Management Engineering Dpt Petros KAVASSALIS <pkavassalis@atlantis-group.gr>

What you will learn in this course A set of fundamental concepts and frameworks for understanding the potential impact of information technology (IT) on business strategy and structure Computers and Information Systems (IS) The business value chain Business integration through Enterprise Application Integration Information Systems in practice: How does the modern enterprise use “Business Intelligence” (BI) systems to improve decision-making Methods and BI examples “Hands-on” experience: create business reports by using Eclpise BIRT Reporting Tool (http://www.eclipse.org/birt/phoenix/) <pkavassalis@atlantis-group.gr>

Who am I? PhD in Economics and Management (Univ. Paris Dauphine & Ecole polytechnique) Research experience Ecole polytechnique, Paris MIT Center of Technology Policy and Industrial Development, MIT CTPID (MIT Internet Telecommunications Convergence Consortium) Current positions Univ. of the Aegean (FME): Assoc. Professor RACTI: Director of ATLANTIS Group <pkavassalis@atlantis-group.gr>

Communication tools e-mail: pkavassalis@atlantis-group.gr Course web site: see FME web site <pkavassalis@atlantis-group.gr>

+ Students evaluation Class Participation (20%) Assignments (20%) Final Exam (60%) <pkavassalis@atlantis-group.gr>

My expectations from students [I copy a colleague I respect a lot…] “Computer applications in the modern enterprise” is practical (with “hands-on” examples) but also intellectually challenging I'm not a formal person and will be as accessible as I can to all of you (through e-mail) Official office hours are proposed as Friday, from 12:00 to 15:00h But my informality doesn't mean I'm casual about what goes on in my class… I want from my students to avoid missing lectures and actively participate in the practical work (if yes: there is compensation) <pkavassalis@atlantis-group.gr>

Layers of a computer organization User (User Interface / UI) Application (Algorithms expressed in High Level Language) Database System software (Compiler, OS, etc.) Hardware <pkavassalis@atlantis-group.gr>

Computers are everywhere: @home – @business Computers are pervasive in today's firms Investment in computers is for many firms the largest capital investment, often exceeding 50% of capital expenditure Computers generate value via digitization Enterprise Applications digital information Databases <pkavassalis@atlantis-group.gr>

Computers in the context of an enterprise: Information Systems <pkavassalis@atlantis-group.gr>

Information Systems: more than computers An Information System (IS) is a set of people, procedures and resources that collects data which it disseminates and transforms It is a system of communication between people and machines (computers) Data transformation and dissemination IS Knowledge Data Information Person’s prior learning and experience Source: U. Fuller (2008) http://www.cs.kent.ac.uk/teaching/08/modules/CO/3/21/lectures.html <pkavassalis@atlantis-group.gr>

Information Systems (IS) An Information System (IS) [source Wikipedia] is the system of persons, data records and activities that process the data and information in a given organization, including manual processes or automated processes. Usually the term is used erroneously as a synonym for computer-based information systems, which is only the Information technologies component of an Information System The study of Information Systems originated as a sub-discipline of computer science, in an attempt to understand and rationalize the management of technology within organizations. It has matured into a major field of management, that is increasingly being emphasized as an important area of research in management studies, and is taught at all major universities and business schools in the world. Today, Information and Information technology have become the fifth major resource available to executives for shaping an organization, alongside people, money, material and machines. Many companies have created a position of Chief Information Officer (CIO) that sits on the executive board with the Chief Executive Officer (CEO), Chief Financial Officer (CFO), Chief Operating Officer (COO) and Chief Technical Officer (CTO).The CTO may also serve as CIO, and vice versa… <pkavassalis@atlantis-group.gr>

Information Systems in their context <pkavassalis@atlantis-group.gr>

Enterprise Information Systems Information technology is the hardware and software a business uses to achieve its objectives An information system consists of components that support decision making and control, and help with analysis, visualization, product design and creation and management of operations and processes <pkavassalis@atlantis-group.gr>

Data versus Information Data is one or more symbols that are used to represent something (technically speaking, they are streams of raw facts representing events and occurrences). They may or may not mean something to the observer. Give examples of data 6,602,224,175 Information is data that has been processed to have meaning and value to the recipient. It refers to data shaped into a meaningful and useful form. <pkavassalis@atlantis-group.gr>

About data… you know something New concepts in this course Information and Knowledge <pkavassalis@atlantis-group.gr>

(Business) Information is… See New York City website: CPR Agency Performance Reporting http://www.nyc.gov/html/ops/cpr/html/about/about.shtml <pkavassalis@atlantis-group.gr>

Digital Information is a key business resource (Business Digital) Information is data that are processed to be useful Provides answers to "who", "what", "where", and "when" questions Fuels firms’ operational life and can be the critical factor in determining the success or failure of a business Information has enabled radically lower cost structures, new levels of customer service, new products, new markets etc Needs to be managed correctly Managing computer-generated information differs from handling manually produced data. Information is: Stored in relational databases Used to understand relations: information becomes evident when we organize the clean raw data into charts, summaries, averages and ranked lists that help us understand the problem and make decisions <pkavassalis@atlantis-group.gr>

Transaction Processing Systems (TPS) Office Automation Systems (OAS) IS: Categorization Transaction Processing Systems (TPS) Office Automation Systems (OAS) Knowledge Work Systems (KWS) Management Information Systems (MIS) Decision Support Systems (DSS) Expert Systems (ES) Executive Support Systems (ESS) Group Decision Support Systems (GDSS) Computer-Supported Collaborative Work Systems (CSCWS) <pkavassalis@atlantis-group.gr>

A list with no end… New technologies, such as ecommerce, Enterprise or Enterprise Resource Planning (ERP), Customer Relationships Management (CRM), Business Process Management Systems (BPMS), Document Management Systems (DMS) etc. are being integrated into traditional systems and so on… E-commerce uses the Web to perform business activities Enterprise Resource Planning (ERP) has the goal of integrating many different information systems within the corporation, using a “single” software Customer Relationships Management (CRM) supports customer information handling Business Process Management Systems (BPMS) is software that is Is driven by explicit “process representations” to coordinate the enactment of business processes Document Management Systems (DMS) provide an information for document storage, versioning and collaborative authoring <pkavassalis@atlantis-group.gr>

The role of ISs in the modern enterprise Information systems provide value in organizations by supporting organizational (or business) objectives Achieving operational excellence Managing business processes Developing new products and services Attaining customer intimacy and service Improving decision making Promoting competitive advantage Ensuring survival through change management <pkavassalis@atlantis-group.gr>

Firms, Functions and Information Systems Organizations are complex systems composed of interrelated and interdependent subsystems (Functional Areas) Information Systems support the operation of these “interrelated and independent” enterprise functions Information Systems are described as either open, with free flowing information, or closed with restricted access to information. Information Systems usually extend beyond enterprise frontiers to support e-business activities <pkavassalis@atlantis-group.gr>

DELTA Operating Model Source: MIT, Sloan School, CISR <pkavassalis@atlantis-group.gr>

IS relate to firm’s value chain The enterprise’s activity breaks down to different business functions with the objective to analyze their contribution to market success Enterprises’ value chains interconnect each other <pkavassalis@atlantis-group.gr>

Case: UPS Source: MIT, Sloan School, CISR <pkavassalis@atlantis-group.gr>

UPS: a brief overview Headquarters: Atlanta, GA Company Profile: The company is the world's largest package delivery company and a leading global provider of specialized transportation and logistics services 2000: UPS had grown to become the world’s largest integrated package delivery company, delivering an average of 13.6 million packages a day sent by 1.8 million shippers to 7 million consignees UPS employs approximately 359,000 people in 200 countries around the world Core functional units include U.S. operations, International Operation (both of which had regional offices as well), Sales and Marketing, Finance, Legal, Human Resources, and UPS Airlines UPS always emphasized efficiency in its delivery services. But it had not always emphasized IT in the delivery of its services. This came in late 80s and 90s, through a massive investment program of digitization Case: http://dspace.mit.edu/bitstream/handle/1721.1/1572/United+Parcel+Service+4356-01.pdf?sequence=1 Visit: http://www.ups.com/ (country: Greece) <pkavassalis@atlantis-group.gr>

IT@UPS (1) Introductory case: package tracking We thought, “Why do they care about tracking? We know we deliver them all. It’s really only a creature comfort, because we deliver every package every day. We’re so effective that there’s no reason to track these packages.” Mike Eskew, Vice Chairman and Executive Vice President <pkavassalis@atlantis-group.gr>

IS@UPS (2) In 1985 The company was generating revenues of about $8 billion, the corporate IT unit numbered approximately 100 people and had a budget of approximately $50 million (total IT spending was about $75 million) Between 1986 and 1996 UPS Invested more than$11 billion in information technology Growing the IT unit to more than 4,000 people by 1997 Package tracking has been the locomotive for IT development (due to the competitive pressure) “Look, we don't have anything in place to do tracking. We have no network. We have no databases. We have no repository for packaging. We are several years away from a sophisticated tracking system”, Frank Erbrick, CIO By 1990 UPS had a global network called UPS Net, three centralized databases (people, customers, packages), and a centralized data processing facility It began to build applications around this infrastructure, starting with package tracking and billing <pkavassalis@atlantis-group.gr>

IS@UPS: Phase 1 (80s and 90s) The centralized IT infrastructure supports deployment of enterprise-wide applications In 1993 UPS introduced the DIAD 4 (Delivery Information Acquisition Device) Captured a customer signature with every delivery and uploaded data in real time to the package information database. The device was estimated to save each driver thirty minutes per day by automatically summarizing the day’s results By capturing delivery data on every package, UPS enhanced its package database with information that it could use to better understand the profitability of individual customers and packages This information could be used to make routing and pricing decisions, and, ultimately, to provide its customers with information on their individual shipping habits <pkavassalis@atlantis-group.gr>

IS@UPS: Phase 2 (90s up to today)_1 In the mid-1990s The company assigned a small team to study Web technologies, and UPS became one of the first companies to create its own web page e-commerce 80% of UPS’ revenues were generated by businesses shipping goods to other businesses and individual customers. If businesses increasingly used the Internet to sell directly to end customers rather than to wholesalers and distributors, the Internet would prove to be a business opportunity UPS’ goals in e-commerce were to enable more business and to establish a branded presence in global commerce solutions. From the beginning, management believed that electronic linkages with customers would allow UPS to get more deeply into their customers’ businesses. <pkavassalis@atlantis-group.gr>

IS@UPS: Phase 2 (90s up to today)_2 To establish tighter linkages with customers, UPS developed tools that could be embedded into customers’ applications Tracking The IT unit built a web front-end onto the existing tracking system as well as an API (what is an API?) that individual companies or vendors could integrate into their applications Putting the tracking tool on the UPS web site generated immediate benefits by reducing call center traffic… Only that? “We’ve gotten into customers’ systems and shown that we can save them money, because if your customer calls and asks a question about your order, nine times out of ten, customer service can’t answer it. They have to call shipping and shipping often calls somebody else. So now that one call is generating a minimum of two other calls. If we assume the $2.00 rule, now you’ve got $6.00 in cost, where if I can give you a tracking number when you order—which we can do in our system—and send you to our page, you can self -service. So the customer gets better service.”, Joe Pyne, Senior VP, Marketing and Corporate Development <pkavassalis@atlantisgroup.gr>

IS@UPS: Phase 2 (90s up to today)_3 Although many customers were able and willing to integrate UPS’ tracking API into their home-grown software, many others purchased software, including ERP systems (what is it?) To meet the needs of these customers, UPS established alliances with key vendors (Oracle, Peoplesoft, Harbinger, IBM, SAP built the UPS tracking API into their software) UPS followed three principles in developing alliances with software vendors: The APIs would be developed by UPS They would be embedded into the software of the alliance partner The service would be branded—when individual customers accessed UPS systems, the UPS logo would be on their screens “A lot of vendors wanted us to pay them to get the tools into their software, and we said no, we’re giving you the value of our brand. We’re increasing the functionality. Your customers will see greater value in what you’re offering”, Joe Pyne Open standards (please comment it) [More on Open Standards: T. McGrath, 2009, Open Standards make for better business] <pkavassalis@atlantis-group.gr>

IS@UPS: Phase 2 (90s up to today)_4 New Services Following the launch of the Tracking API, UPS introduced a Rates and Services tool that allowed UPS customers to link their own customers to a menu of UPS shipping options and costs By late 2000, UPS had six OnLine Tools available to customers for downloading, and had compiled a list of 30 services, some functional, others informational, that the company intended to make available through UPS Online Tools In addition to its OnLine Tools, UPS developed a wide range of web-supported products and services UPS Document Exchange allowed firms to transfer large electronic files in a secure, encrypted environment, with full visibility real-time tracking and confirmation of delivery. UPS Returns Services supported the return process for shippers who wanted to make their customers’ return process hassle-free UPS shippers could enter package information on-line and receive the same services as firms that had downloaded the OnLine Tools <pkavassalis@atlantis-group.gr>

Successful outcome These products and services were intended to bring UPS deeper into its customers’ businesses (!) and increasingly provide global commerce solutions By mid-2000 More than 50,000 firms had downloaded UPS’ OnLine Tools and integrated them into their shipping or accounting applications On December 19, 2000, UPS received 6.5 million tracking requests, approximately double the number of tracking requests on the busiest day in 1999 In 1995, UPS had received only 100,000 tracking requests during the entire month of December “The surge in online tracking requests is a clear indication of the rapidly growing use of Internet technology, by UPS and its customers, to manage the “supply chains” of everyone from Fortune 500 companies to individual consumers.”, UPS Press Release <pkavassalis@atlantis-group.gr>

New business opportunities UPS e-Venture UPS believed that the Internet offered new opportunities to provide global commerce solutions for its customers. To identify these “out of the box” opportunities, UPS e-Ventures, a wholly owned subsidiary of UPS UPS e-Logistics Provided a complete menu of “behind the scene” services that would manage the entire back-end logistics process from the time an order was placed on a customer’s web site to the time the order was delivered. Services included warehousing, inventory management, order fulfillment (pick, pack and ship), shipping and delivery, management reporting, returns management, customer care, and telephone support <pkavassalis@atlantis-group.gr>

IT development: prioritize Modularity and re-usability With the Internet, tracking was the first application, and that was just reusing mainframe-based technology? (what is it?). We wrote an interface module that was used originally to interface customer service to our tracking environment. Then we extended it to the Internet, and then extended it for IVR (what is it?). It's just a query entrance, so basically here’s the API, do a query, submit this data. It will go out, peruse all the databases in two different data centers, pull the data together, present it back in this file format, and your application just uses it.”, Jim Medeiros, UPS IS IT focus on supporting cross-functional processes within the firm Customer Relationship Management Customer Information Management Package Management Product Management <pkavassalis@atlantis-group.gr>