-Insourcing (in-house-development) is a common approach using the professional expertise within an organization to develop and maintain the organization's information technology systems.
-outsourcing is an arrangement by which one organization provides a service or services for another organization that chooses not to perform them in-house.
-onshore outsourcingis engaging another company within the same country for services.
-nearshore outsourcing is contracting an outsourcing arrangement with a company in a nearby country.
-offshore outsourcingis using organizations from developing countries to write code and develop systems.
Outsourcing Benefits
includes:
increased quality and efficiency
reduced operating expenses
outsourcing non-core process
reduced exposure to risk
economies of scale, expertise, and best practices
access to advanced technologies
increased flexibility
avoid costly outlay of capital funds
reduced headcount and associated overhead expense
reduced time to market for products or services
Outsourcing Challenges
includes:
- contract length
difficulties in getting out of a contract
problems in foreseeing future needs
problems in reforming an internal IT department after the contract is finished
- organizations create and use teams, partnerships, and alliances to:
undertake new initiatives
address both minor and major problems
capitalize on significant opportunities
-organizations create teams, partnerships and alliances both internally with employees and externally with other organizations.
-collaboration system is to support the work of teams by facilitating the sharing and flow of information.
-core competency is an organization's key strength, a business function that it does better than any of its competitors.
-core competency strategy is organization chooses to focus specifically on its core competency and forms partnerships with other organizations to handle nonstrategic business processes.
-information partnerships occurs when two or more organizations cooperate by integrating their IT systems, thereby providing customers with the best of what each can offer.
Collaboration Systems
- an IT-based set of tools that supports the work of teams by facilitating the sharing and flow of information.
-explicit consists of anything that can be documented, archived, and codified, often with the help of IT.
-tacit is knowledge contained in people's head.
Content Management
- provides tools to manage the creation, storage, editing, and publication of information in a collaborative environment.
Working Wikis
-wikis is web-based tools to make it easy for users to add, remove and change online.
Workflow Management Systems
-workflow defines all the steps or business rules, from beginning to end, required for a business process.
-workflow management system is facilitates the automation and management of business processes and controls the movement of work through the business process.
Groupware Systems
-groupware is software that supports team interaction and dynamics including calendaring, scheduling and videoconferencing.
Web Confrencing
-blends audio, video, and document-sharing technologies to create virtual meeting rooms where people "gather" at a password-protected website.
Videoconferencing
-a set of interactive telecomunication technologies that allow two or more locations to interact via two way video and audio transmissions simultaneously.
Instant Messaging
-types of communications services that enables someone to create a kind of private chat room with another individual to communicate in real time over the internet.
Biggest benefit of the internet: how it enables organizations to perform business with anyone, anywhere, anytime.
·Ecommerce- the buying and selling of goods and services over the internet.
-It refers only to online transactions.
·Ebsuiness- derived from the term Ecommerce. It is the conducting of business on the internet, not only buying and selling, but also serving customers and collaborating with business partners.
-Also refers to online exchanges if information.
Ebusiness Models
·Ebusiness Model- is an approach to conducting electronic business on the internet
-Takes place between two major entities- business and consumers.
Business-to-business (B2B)
·Applies to business buying from and selling to each other over the internet.
·Electronic marketplaces represent a new wave in B2B ebusiness models.
·Electronic marketplaces or emarketplaces- are interactive business communities providing a central market space where multiple buyers and sellers can engage in business activities.
-They represent structures for conducting commercial exchange, consolidating supply chains, and creating new sales channels.
Business-to-business Emarketplace Overview.
·Their primary goal is to increase market efficiency by tightening and automating the relationship between buyers and sellers.
·Existing marketplaces allow access to various mechanisms in which to buy and sell almost anything, from services to direct materials.
Business-to-consumer (B2C)
·Applies to any business that sells its products or services to consumers over the internet.
Eshop
·Sometimes referred to as an estore or etailer. It is a version of a retail store where customers can shop at any hour of the day without leaving their home or office.
·These online stores sell and support a variety of products and services.
·The other online businesses channeling their goods and services via the internet only, such as Amazon.com, are called pure plays.
Types of Businesses:
·Brick-and-mortar business- a business that operates in a physical store without an internet presence.
·Pure-play (virtual) business- a business that operates on the internet only without a physical store. Examples include Amazon.com and Expedia.com
·Click-and-mortar business- a business that operates in a physical store and on the internet. Examples include REI and Barnes and Noble.
Email
·Email- consists of a number of eshops. It serves as a gateway through which a visitor can access other eshops.
-It may be generalized or specialized depending on the products offered by the eshops it hosts.
-Eshops in emails benefit from brand reinforcement and increased traffic as visiting one shop on the email often leads to browsing “neighboring” shops.
Consumer-to-business (C2B)
·Applies to any consumer that sells a product or service to a business over the internet.
·An example is Priceline.com where bidders (or customers) ser their prices for items such as airline tickets or hotel rooms, and a seller decides whether to supply them.
Consumer-to-consumer (C2C)
·Applies to sites primarily offering goods and services to assist consumers interacting with each other over the internet.
·The internet’s most successful C2C online auction website, eBay, links like-minded buyers and sellers for a small commission.
·C2C online communities, or virtual communities, interact via email groups, web-based discussion forums, or chat rooms.
Online auctions:
·Electronic auction (eauction)- sellers and buyers solicit consecutive bids from each other and prices are determined dynamically.
·Forward auction- an auction that sellers use as a selling channel to many buyers and the highest bid wins.
·Reverse auction- an auction that buyers use to purchase a product or service, selecting the seller with the lowest bid.
C2C Communities:
·Communities of interest- people interact with each other on specific topics, such as golfing and stamp collecting.
·Communities of relations- people come together to share certain life experience, such as cancer patients, senior citizens, and car enthusiasts.
·Communities of fantasy- people participate in imaginary environments, such as fantasy football teams and playing one-to-one with Michael Jordan.
Ebusiness Benefits and Challenges.
Ebusiness Benefits:
·Highly Accessible- businesses can operate 24 hours a day, 7 days a week, and 365 days a year.
·Increased Customer Loyalty- additional channels to contact, respond to, and access customers helps contribute to customer loyalty.
·Improved Information Content- in the past, customers had to order catalogs or travel to a physical facility before they could compare price and product attributes. Electronic catalogs and web pages present customers with updated information in real time about goods, services, and prices.
·Increased Convenience- Ebusiness automates and improves many of the activities that make up a buying experience.
·Increased Global Reach- Business, both small and large, can reach new markets.
·Decreased Cost- the cost of conducting business on the Internet is substantially less than traditional forms of business communication.
Ebusiness Challenges:
·Protecting Consumers- consumers must be protected against unsolicited goods and communication, illegal or harmful goods, insufficient information about goods or their suppliers, invasion of privacy, and cyberfraud.
·Leveraging Existing Systems- most companies already use information technology to conduct business in non-Internet environments, such as marketing, order management, billing, inventory, distribution, and customer service. The internet represents an alternative and complementary way to do business, but it is imperative that ebusiness systems integrate existing sytsems in a manner that avoids duplicating functionality and maintains usability, performance, and reliability.
·Increasing Liability- Ebsuiness exposes suppliers to unknown liabilities because internet commerce law is vaguely defined and differs from country to country. The internet and its use in ebusiness have raised many ethical, social, and political issues, such as identity theft and information manipulation.
·Providing Security- The internet provides universal access, but companies must protect their assets against accidental or malicious misuse. System security, however, must not create prohibitive complexity or reduce flexibility. Customer information also needs to be protected from internal and external misuse. Privacy systems should safeguard the personal information critical to building sites that satisfy customer and business needs. A serious deficiency arises from the use of the internet as a marketing means. Sixty percent of internet users do not trust the internet as a payment channel. Making purchases via the internet is considered unsafe by many. The issue affects both the business and the consumer. However, with encryption and the development of secure websites, security is becoming less of a constraint for ebusinesses.
·Adhering to Taxation Rules- the internet is not yet subject to the same level of taxation as traditional businesses. While taxation should not discourage consumers from using electronic purchasing channels, it should not favor internet purchases over store purchases either. Instead, a tax policy should provide a level playing field for traditional retail businesses, mail-order companies, and internet-based merchants. The internet marketplace is rapidly expanding, yet it remains mostly free from traditional forms of taxation. In one recent study, uncollected state and local sales taxes from ebusiness were projected to exceed $60 billion in 2008.
Mashups
·Web mashup- a website or web application that uses content from more than one source to create a completely new service.
·The web version of a mashup allows users to mix map data, photos, video, news feeds, blog entries and so on.
·Application Programming Interface (API)- set of routines, protocols, and tools for building software applications. A good API makes it easier to develop a program by providing all the building blocks.
·Mashup editors- they are WYSIWYGs (What You See Is What You Get) for mashups. They provide a visual interface to build a mashup, often allowing the user to drag and drop data points into a web application.
·It serves as the organization’s backbone in providing fundamental decision making support.
·It enables people in different business areas to communicate.
·ERP system helps an organization to obtain operational efficiencies, lower costs, improve supplier and customer relations, and increase revenues and market share.
·The heart of an ERP system is a central database that collects information from and feeds information into all the ERP system’s individual application components (called modules), supporting diverse business function such as accounting, manufacturing, marketing, and human resources.
·ERP automates business processes such as order fulfillment- taking an order from a customer, shipping the purchase, and then billing for it.
ERP Integration Data Flow
ERP Process Flow
Bringing the Organization Together
·ERP enables employees across the organization to share information across a single, centralized database.
·With extended portal capabilities, an organization can also involve its suppliers and customers to participate in the workflow process, allowing ERP to penetrate the entire value chain, and help the organization achieve greater operational efficiency.
Organization before ERP
ERP- Bringing the Organization Together
The Evolution of ERP
·Although ERP solutions were developed to deliver automation across multiple units of an organization, to help facilitate the manufacturing process and address issues such as raw materials, inventory, order entry, and distribution, ERP was unable to extend to other functional areas of the company such as sales, marketing, and shipping. It could not tie to any CRM capabilities that would allow organizations to capture customer-specific information, nor did it work with websites or portals used for customer service or order fulfillment.
Integrating SCM, CRM, and ERP
·Integration of SCM, CRM, and ERP is the key to success for many companies.
·Integration allows the unlocking of information to make it available to any user, anywhere, anytime.
·2 main competitors in ERP market:
§Oracle
§Sap
Primary Users and Business Benefits of Strategic Initiatives.
Integration Tools
·An integrated enterprise infuses support areas, such as finance and human resources, with a strong customer orientation.
·Integration are achieved using:
§Middleware- several different types of software that sit in the middle of and provide connectivity between two or more software applications. It translates information between disparate systems
·Enterprise application integration (EAI) middleware-represents a new approach to middleware by packaging together commonly used functionality, such as providing prebuilt links to popular enterprise applications, which reduces the time necessary to develop solutions that integrate applications from multiple vendors.
Integration between SCM, CRM, and ERP Applications.
·Companies run on independent applications, such as SCM, CRM, and ERP. If one application performs poorly, the entire customer value delivery system is affected.
Enterprise Resource Planning’s Explosive Growth:
Reasons of ERP being proven to be such a powerful force:
·ERP is a logical solution to the mess of incompatible applications that had sprung up in most businesses.
·ERP addresses the need for global information sharing and reporting.
·ERP is used to avoid the pain and expense of fixing legacy systems
To qualify as a true ERP solution, the system not only must integrate various organization processes, but also must be:
·Flexible- an ERP system should be flexible in order to respond to the changing needs of an enterprise.
·Modular and open- an ERP system has to have open system architecture, meaning that any module can be interfaced with or detached whenever required without affecting the other modules. The system should support multiple hardware platforms for organizations that have a heterogeneous collection of systems. It must also support third- party add-on components.
·Comprehensive- an ERP system should be able to support a variety of organizational functions and must be suitable for a wide range of business organizations.
·Beyond the company- an ERP system must not be confined to organizational boundaries but rather support online connectivity to business partners or customers.
Operational CRM - supports traditional transactional processing for day-to-day front-office operations or systems that deal directly with the customers.
Analytical CRM - supports back-office operations and strategic analysis and includes all systems that do not deal directly with the customers.
