2. MAJOR BUSINESS INITIATIVES Gaining Competitive Advantage with IT2
Chapter 2
MAJOR BUSINESS INITIATIVES
Gaining Competitive Advantage with IT

3. OPENING CASE STUDY
GM’s Digital Loyalty Network (DLN) Makes it More Competitive
One of DLN’s principal innovations is order to deliver (OTD)
OTD reduced delivery time of ordered vehicles by 50 percent
GM’s many customer “touch points” were not being used effectively

4. OPENING CASE STUDY
GM’s BuyPower Web site gave it a better understanding of its customers
U.S. call centers went from 40 to 3
19 global customer databases were reduced to 3 data warehouses
GM won the Polk Automotive Loyalty Award for the fourth consecutive year

5. STUDENT LEARNING OUTCOMES
Describe SCM systems, their competitive advantages, challenges to their use, and IT support
Describe CRM systems, their competitive advantages, challenges to their use, and IT support
Describe BI systems, their competitive advantages, challenges to their use, and IT support

6. STUDENT LEARNING OUTCOMES
Describe ICE systems, their competitive advantages, challenges to their use, and IT support
Describe how individual systems work together to give airline companies a competitive advantage

7. INTRODUCTION Important IT applications businesses are using today
Supply chain management (SCM)
Customer relationship management (CRM)
Business intelligence (BI)
Integrated collaboration environments (ICE)

8. SUPPLY CHAIN MANAGEMENT
Distribution chain – the path followed from the originator of a product/service to the end consumer

9. What are Supply Chain Management Systems?
Supply chain management (SCM) - tracks inventory and information among business processes and across companies
Supply chain management (SCM) system - an IT system that supports supply chain management activities by automating the tracking of inventory and information among business processes and across companies

10. What are Supply Chain Management Systems?

11. What are Supply Chain Management Systems?
Just-in-time - an approach that produces or delivers a product or service just at the time the customer wants it
Logistics - the set of processes that plans for and controls the efficient and effective transportation and storage of supplies from suppliers to customers

12. Strategic and Competitive Opportunities with SCM
A well-designed supply chain management system helps by optimizing:
Fulfillment
Logistics
Production
Revenue and profit
Spend

13. Strategic and Competitive Opportunities with SCM
Collaborative planning, forecasting, and replenishment (CPFR) - a concept that encourages and facilitates collaborative processes between supply chain partners

14. Challenges to Success with Supply Chain Management
Executives must recognize its importance
Work closely with customers and suppliers
Your IT systems and the IT systems of your customers and suppliers must be integrated
Your SCM systems must continuously adapt to changing conditions

15. IT Support for Supply Chain Management
Specialized SCM software and ERP software suites
Application service provider (ASP) - supplies software applications (and often related services) over the Internet that would otherwise reside on its customers’ in-house computers.

16. IT Support for Supply Chain Management

17. CUSTOMER RELATIONSHIP MANAGEMENT
Two success stories with customer relationship management
Wells Fargo Bank sells four additional banking products to customers compared with an industry average of 2.2
The American Cancer Society is better able to target large donors

18. What are Customer Relationship Management Systems?
Customer relationship management (CRM) system - uses information about customers to gain insights into needs, wants, and behaviors in order to serve them better
Sales force automation (SFA) system - automatically tracks all the steps in the sales process

19. What are Customer Relationship Management Systems?

20. Strategic and Competitive Opportunities with CRM
More effective marketing campaigns based on customer needs and wants
Assuring the sales force is efficiently managed
Providing superior after-sale service and support

21. Strategic and Competitive Opportunities with CRM
Revenue Enhancers
Increase sales effectiveness
Improve customer retention
Increase revenue per customer
Offer new products/services
Cost Cutters
Decrease cost of sales
Decrease cost of service
Cost per service interaction
Transition to more self-service

22. Challenges to Success with Customer Relationship Management
More than 50 percent of CRM installations are seen as failures
Why many CRM installations are less than successful
The company’s goals are too broad
The company’s strategies are too generic
Implementations are often too software-centric

23. IT Support for Customer Relationship Management

24. IT Support for Customer Relationship Management
Front office systems – the primary interface to customers and sales channels
Back office systems - used to fulfill and support customer orders

25. IT Support for Customer Relationship Management
CRM software providers (e.g. Clarify, Oracle, SAP, Siebel Systems)
SFA software providers (e.g. Clarify, Siebel, Salesforce.com, Vantive)
Salesforce.com was the first to use an ASP model and others have followed

26. BUSINESS INTELLIGENCE
How FiberMark benefits from business intelligence (BI)
They used to print 1,000 page reports for each salesperson
Now salespeople get the information they want from FiberMark’s intranet
FiberMark’s BI system paid for itself in 9 months

27. What are Business Intelligence Systems?
Business intelligence (BI) – knowledge about your customers, your competitors, your business partners, your competitive environment, and your own internal operations – that gives you the ability to make effective, important, and often strategic business decisions.

28. What are Business Intelligence Systems?
Business intelligence (BI) systems – the IT applications and tools that support the business intelligence function within an organization
Competitive intelligence - business intelligence focused on the external competitive environment

29. What are Business Intelligence Systems?

30. What are Business Intelligence Systems?
The objective of BI is to help knowledge workers understand
Capabilities available in the firm
State of the art, trends, and future directions in the market
Technological, demographic, economic, political, social, and regulatory trends
Actions of competitors

31. What are Business Intelligence Systems?
Data warehouse – a logical collection of information - gathered from many different operational databases – used to create business intelligence that supports business analysis activities and decision-making tasks
Data mart - a subset of the data warehouse in which only a focused portion of the data warehouse information is kept

32. What are Business Intelligence Systems?
Other technical components of business intelligence include such tools as
Data mining
Automatic exception detection with proactive alerting and automatic recipient determination
Automatic learning
Data-mining tool - a software tool you use to query information in a data warehouse

33. Strategic and Competitive Opportunities with BI
Strategic uses of business intelligence ranked in order of importance
Corporate performance management
Optimizing customer relations, monitoring business activity, and traditional decision support
Packaged stand-alone BI applications for specific operations or strategies
Management reporting of business intelligence

34. Strategic and Competitive Opportunities with BI
BI systems provide managers with
Actionable information and knowledge
At the right time
At the right location
In the right form

35. Strategic and Competitive Opportunities with BI

36. Challenges to Success with Business Intelligence
Deal with an important business issue
Provide customized BI information
Build discipline and precision in processes
Knowledge workers must understand how to use BI tools effectively
Understand that BI systems are complex and continually change

37. IT Support for Business Intelligence
There are many software companies in the BI field
Digital dashboard - displays key information gathered from several sources on a computer screen in a format tailored to the needs and wants of an individual knowledge worker

38. IT Support for Business Intelligence

39. INTEGRATED COLLABORATION ENVIRONMENTS
How Siemens benefits from an integrated collaboration environment
Much of its work is done by virtual teams
SiteScape’s Forum software lets teams share documents and ideas
Each team member can contribute freely from anywhere and at any time

40. What are Integrated Collaboration Environments?
Integrated collaboration environment (ICE) - the environment in which virtual teams do their work
Virtual team - a team whose members are located in varied geographic locations and whose work is supported by specialized ICE software or by more basic collaboration systems

41. What are Integrated Collaboration Environments?
Collaboration system - software that is designed specifically to improve the performance of teams by supporting the sharing and flow of information
Alliance partner – a company your company does business with on a regular basis in a collaborative fashion, usually facilitated by IT systems

42. What are Integrated Collaboration Environments?
Workflow - defines all of the steps or business rules, from beginning to end, required for a business process
Workflow system - facilitates the automation and management of business processes

43. What are Integrated Collaboration Environments?
Document management system - manages a document through all the stages of its processing
Knowledge management (KM) system – an IT system that supports the capturing, organization, and dissemination of knowledge (i.e., know-how) throughout an organization

44. What are Integrated Collaboration Environments?

45. What are Integrated Collaboration Environments?
Social network system - an IT system that links you to people you know and, from there, to people your contacts know
Build your network
Find the people you need
Make a trusted contact

46. Strategic and Competitive Opportunities with ICEs
The payoffs can be huge
The oil and gas exploration industry could save an estimated $7 billion
“If only HP knew what HP knows”

47. Challenges to Success with ICEs
Acceptance of knowledge management systems has been particularly difficult
People don’t submit their knowledge to the knowledge repository
People are reluctant to share what they know with others
People say they don’t have the time to submit information. IT can help with techniques to capture knowledge automatically

48. IT Support for Integrated Collaboration Environments
Collaboration software
Workflow systems
Document management systems
Peer-to-peer collaboration software
Knowledge management (KM) systems
Social network systems

49. IT Support for Integrated Collaboration Environments
Presence awareness - a software function which determines whether a user is immediately reachable or is in a less-available status
Peer-to-peer collaboration software - permits users to communicate in real time and share files without going through a central server

50. A VIEW OF THE INTEGRATED ENTERPRISE

51. Airline Reservation Systems
SABRE and APOLLO were very profitable for American and United
American and United had access to BI on their own as well as on their competitors’ flights
Competitors had to wait to get BI and also had to pay for it

52. Frequent Flyer Programs
Frequent flyer programs are a great example of CRM
Air travelers concentrate their travel with a single airline to get “perks”
Finnair is using BI to increase loyalty
Most information needed for frequent flyer programs is obtained from reservation systems

53. Airline Maintenance Systems
Airlines use SCM systems to be sure maintenance parts are available when needed
Integrating SCM and BI helps airlines predict where and when spare parts will be needed

54. Yield Management Systems
Yield management system - specialized kind of decision support system designed to maximize the amount of revenue an airline generates on each flight
Fares change over time for a specific flight based on number of seats sold
Objective: highest average cost per seat

55. Yield Management Systems

56. Integrated Collaboration Environments
Many airlines are global businesses with employees located all over the world
Airline employees often work in virtual teams
ICEs let them avoid travel even though it’s free
ICEs are an interesting competitive threat to airlines

57. CAN YOU…
Describe SCM systems, their competitive advantages, challenges to their use, and IT support
Describe CRM systems, their competitive advantages, challenges to their use, and IT support
Describe BI systems, their competitive advantages, challenges to their use, and IT support

58. CAN YOU…
Describe ICE systems, their competitive advantages, challenges to their use, and IT support
Describe how individual systems work together to give airline companies a competitive advantage

59. 2
CHAPTER 2
End of Chapter 2