CHAPTER 5 : ORGANIZATIONAL STRUCTURES THAT SUPPORT STRATEGIC INITIATIVES.

IT Roles and Responsibilities

There are 5 important roles in IT department.

1. Chief information officer (CIO), its responsible for overseeing all uses of IT and ensuring the strategic alignment  of IT with business goals and objectives. The CIO often reports directly to the CEO. CIO must be concerned with more than IT. Broad functions of CIO include:

1. Manager - Ensure the delivery of all IT projects on time and within budget.
2. Leader - Ensure the strategic vision of IT is in line with the strategic vision of the organization.
3. Communication - Advocate and communicate the IT strategy by building and maintaining strong executive relationships.

2. Chief technology officer (CTO) is responsible for ensuring the throughput, speed, accuracy, availability, and reliability of an organization's information technology. CTOs similarto CIOs but except that CIOs responsib for effectiveness of ensuring that IT is aligned with the organization's strategic initiatives. CTOs have direct responsible for ensuring the efficiency of IT systems throughput the organization. CTOs possess well-rounded knowledge of all aspects of IT, including hardware, software, and telecommunications.

3. Chief Security officer (CSO) responsible for ensuring the security of IT systems and developing strategies and IT safeguards against attacks from hackers and viruses. If there are no CSO, many hackers easy to hacks the  website and collect the data from the website.

4. Chief privacy officer (CPO)  is responsible foe ensuring the ethical and legal use of information within an organization. CPOs are the newest senior executive position in IT. Many CPOs are lawyers by training, enabling them to understand the often complex legal issues surrounding the use of information.

5. Chief knowledge officer (CKO) is responsible for collecting, maintaining, and distributing the organization's knowledge. The CKO design programs and systems that make it easy for people to reuse the knowledge. These systems create repositories of organizational documents, methodologies, tools and practices, and they establish methods for filtering the information. The CKO must continuously encourage employee contributions to keep the systems up-to-date.

 The Gap between Business Personnel and IT Personnel

One of the greatest challenges today is effective communication between business personnel and IT personnel. Business personnel posses expertise in functional areas such as marketing, accounting, sales, and so forth. IT personnel have the technological expertise. Effective communication between business and IT personnel should be a two-way street with each side making the effort to better understand the other (including through written and oral communication).

Improving communications - Business personnel must seek to increase their understanding of IT. Although they do not need to know every technical detail, it will benefit their careers to understand what they can and cannot accomplish using IT. Business managers and leaders should read business-oriented IT magazines, such as Information-Week and CIO, to increase their IT knowledge.

Organizational Fundamentals-Ethics And Security

Ethics and security are two fundamental building blocks that
organizations must base their businesses on. Such events as the Enron and Bernie Madoff scandals along with 9/11 have shed new light on the meaning of ethics and security.

 Ethics

The ethical issues surrounding copyright infringement and intellectual property rights are consuming the ebusiness world. Advances in technology make it easier and easier for people to copy everything from music to pictures. Technology poses new challenges for our ethics- the principles and standards that guide our behavior toward other people.

In today's electronic, privacy has become a major ethical issue. Privacy is the right to be left alone when you want to be, to have control over your own personal possessions, and to not be observed without your consent.

https://www.youtube.com/watch?feature=player_embedded&v=vmVu66Fpd9U

 Security-How Much Will Downtime Cost Your Business?

The old business axiom "time is money" needs to be updated to more accurately reflect the crucial interdependence between IT and business processes. To reflect the times, the phrase should be "uptime is money". The leading cause of downtime is a software failure followed by human error, according to Infonetics research. Unplanned downtime can strike at any time from any number of causes, ranging from tornadoes to sink overflows to network failures to power outages.           

https://www.youtube.com/watch?feature=player_embedded&v=R-m8grawp1k

CHAPTER 4 : MEASURING THE SUCCESS OF STRATEGIC INITIATIVES

The first thing managers need to understand about IT success is that it is incredibly difficult to measure. Determining the return on investment (ROI) of new computer equipment is difficult. For example, what is the ROI of a fire extinguisher? 

If the fire extinguisher is never used, the return on the investment is low. If the 

extinguisher puts out a fire that could destroy the entire building, then its ROI is 

high. This is similar to IT systems. If a company implements a $5,000 firewall to 

virus attacks on the computer systems and it never stops a virus, the company lost 

$5,000. If the firewall stops viruses that could have cost the company millions of 

dollars, then the ROI of that firewall is significantly greater than $5,000

Efficiency and effectiveness

Efficiency and effectiveness metrics are two primary types of IT metrics. 
 Efficiency IT metrics measure the performance of the IT system itself including throughput, speed, and availability. Effectiveness IT metrics measure the 
impact IT has on business processes and activities including customer satisfaction, conversion rates, and sell-through increases. Peter Drucker offers a helpful distinction between efficiency and effectiveness. Drucker states that managers “Do things right” and/or “Do the right things.” Doing things right addresses efficiency—getting the most from each resource. Doing the right things addresses effectiveness—setting the right goals and objectives and ensuring they are accomplished.

Benchmarking-Baseline Metrics

A process of continuously measuring system results, comparing those results to optimal system performance (benchmark values), and identifying steps and procedures to improve system
performance.

The Interrelationships of Efficiency and Effectiveness IT Metrics 

Efficiency IT metrics focus on the technology itself. Figure 4.2 highlights the most 

common types of efficiency IT metrics.

Figure 4.2

While these efficiency metrics are important to monitor, they do not always guarantee effectivenes. Effectiveness IT metrics are determined according to an organization's goals, strategies, and objectives.

Be sure to consider the issue of security while determinig efficiency and effectivenes IT metrics. Purely from an efficiency IT metric point of view, security generates some inefficiency. From an organization's business strategy point of view, however, security should lead to increase in effectiveness metrics.

Metrics for Strategic Initiatives

What is a metric? A metric is nothing more than a standard measure to assess performance in a particular area.

More business professionals are familiar with finantial metrics. Different finantial ratios are used to evaluate a company performance.

Most commo financial ratios include:

- Internal rate of return (IRR)

- Return on investment (ROI)

- Payback method

- Breack - even analysis

Most managers are familiar with finantial metrics but unfamiliar with information system metrics. The following metrics will help managers to measure and manage their strategic initiatives:

  Website metrics

Most companies measure the traffic on a website as the primary determinat of the website's success. However, heavy website traffic does not mean it has large sales.

A web-centric metric is the measure of the success of the web and ebusiness initiatives.

  Supply Chain Management (SCM) Metrics

A supply chain managemnt can help an organization understand how it's operating over a given time period. Supply chain measurements can cover many areas including procurement, production, distribution, warehousing, inventory, transportation, and customer service. To succed using the supply chain is by measuring the following areas:

- Back Order

- Customer Order promised cycle time

- Customer order actual cycle time

- Inventory replenishment cycle time

- Inventory turns(inventory turnover)

Customer Relationship Management (CRM) Metrics

The metrics to track are no more than seven out of hundreds possible.

Business Process Reengineering (BPR) and Enterprise Resource Planning (ERP) Metrics

Business Process Reengineering (BPR) and Enterprise Resource Planning (ERP) Metrics are lage organization initiatives. Measuring these type of strategic initiatives is extremely difficult. One of the best methods is the balace sorecard.

 Balance Sorecard: is the management system, in addition to a measurement system, that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcome in order to continuously improve strategic performance and results.

CHAPTER 3 : STRATEGIC INITIATIVES FOR IMPLEMENTING COMPETITIVE ADVANTAGES

Supply chain management (SCM) is the management of an interconnected or interlinked between network, channel and node businesses involved in the provision of product and service packages required by the end customers in a supply chain. Supply chain management spans the movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption. It is also defined as the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally.

SCM draws heavily from the areas of operations management, logistics, procurement, and information technology, and strives for an integrated approach.

The four components of supply chain management are : 

• Four basic components of supply chain management include :
• Supply chain strategy - strategy for managing all resources to meet customer demand
• Supply chain partner - partner throughout the supply chain that deliver finished finished products, raw materials and services.
• Supply chain operation - schedule for production activities
• Supply chain logistics - product delivery process 

What is Customer Relationship Management (CRM)?

Originally used specifically for computer-based methods of tracking customer interactions, the term now refers to the practice of efficiently managing all aspects of customer interaction and the use of purchase history and other data to develop targeted marketing offers. CRM includes the storing of customer information in a database (or data warehouse) and using the information in a way that improves the customer's "experience".  Ideally this information is integrated into operational processes. Other than that, CRM can enable an organization to identify types of customers, design individual customer marketing campaigns, treat each customer as an individual, understand customer buying behaviors

What is Business Process Reengineering (BPR) ?

Business process re-engineering is a business management strategy, originally pioneered in the early 1990s, focusing on the analysis and design of workflows and processes within an organization. BPR aimed to help organizations fundamentally rethink how they do their work in order to dramatically improve customer service, cut operational costs, and become world-class competitors. In the mid-1990s, as many as 60% of the Fortune 500 companies claimed to either have initiated reengineering efforts, or to have plans to do so.

BPR seeks to help companies radically restructure their organizations by focusing on the ground-up design of their business processes. According to Davenport (1990) a business process is a set of logically related tasks performed to achieve a defined business outcome. Re-engineering emphasized a holistic focus on business objectives and how processes related to them, encouraging full-scale recreation of processes rather than iterative optimization of sub-processes.

Business process re-engineering is also known as business process redesign, business transformation, or business process change management

What is Enterprise Resource Planning (ERP) ?

Enterprise resource planning (ERP) is business management software that allows an organization to use a system of integrated applications to manage the business. ERP software integrates all facets of an operation, including product planning, development, manufacturing processes, sales and marketing.

Below are the example of ERP model :

CHAPTER 2 : IDENTIFYING COMPETITIVE ADVANTAGES

Competitive  advantage is a product or service that an organization’s customers place a greater value on that similar offerings from a competitor.

THE FIVE FORCES MODEL – Evaluating Business Segments

1)      Buyer Power

-          Buyer power is the ability of buyers to directly impact the price they are willing to pay for an item.

-           Buyer power is high when buyers have many choices from whom to buy.

-          Buyer power is low when their choices are few.

-          To reduce buyer power and create competitive advantage, an organization must make it more attractive to buy from the company not from the competitors or by using switching costs.

-          Switching costs are costs that can make customers reluctant to switch to another product or service.

-          Best practices of IT based : loyalty program in travel industry. For example, give rewards on free airline tickets or hotel stays.

2)      Supplier Power

-          A supply chain consists of all parties involved directly or indirectly in the procurement of a product or raw material.  Below are the diagram of the supply chain :

-          Supplier power is high when buyers have few choices of whom to buy from.

-          When supplier power is high, the supplier can influence the industry by charging higher price, limiting quality or services and shifting costs to industry participants.

-          Supplier power is low when their choices are many where best apply of IT practices to create competitive advantage will conquer the supplier power.

3)      Threat of substitute products or services

-          High : when there are many alternativesto a product or service.

-          Low : when there are few alternatives from which to choose.

-          Ideally, an organization would like to be on market in which there are few substitutes of their product or
       services.

         ·         Best practices of IT.For example, electronic product that have the same function but different
               brands.

4)      Threat of new entrants
-          High : when it is easy for new competitors to enter a market
-          Low : when there are significant entry barriers to entering a market.
-          Entry barriers is a product or service feature that customers have come to expect from organizations and
       must be offered by entering organization to compete and survive.
-          Many threats come from companies that do not yet exist or have a presence in a given industry or 
       market.
-          The threat of new entrants forces top management to monitor the trends, especially in technology, that 
       might give rise to new competitors.
-          Best practices of IT : example, new bank must offers online paying bills, account monitoring to compete 

5)      Rivalry Among Existing Firms 
-          High : when competition is fierce in a market
-          Low : when competition is more complacent
-          Best Practices of IT : reduce cost by using effective supply chain.
-          Existing competitors are not much of the threat : typically each firm has found its “niche”.
-          However, changes in management, ownership, or “ the rules of the game “ can give rise to serious 
       threats to long term survival from existing firms.
-          Example, the airline industry faces serious threats from airlines operating in bankruptcy, who do not pay
       on the debts while slashing fares against those healthy airlines who do pay on debt (MAS & AIR ASIA)

      THE THREE GENERICS STRATEGIES

        1)      Broad costs leadership

-          Becoming a low cost producer in the industry allows the company to lower prices to customers.

-          Competitors with higher costs cannot afford to compete with the low-cost leader on price.

2)      Broad differentiation

-          Create competitive advantage by distinguishing their products on one or more features important to their customers.

-          Unique features or benefits may justify price differences and stimulate demand.

-          For example, i-care by Proton.

    3)      Focused strategy

-          Target to a niche market

-          Concentrates on either cost leadership or differentiation.

CHAPTER 1 : BUSINESS DRIVEN TECHNOLOGY

Information Technology (IT) is a field concerned with the use of technology in managing and processing information. In this current globalisation days, technology is one of the current factor that contribute in boosting business activities for those who just venture into the business market or even for those organization that had been establish for years to spread their business all across the world.

 IT’s IMPACT ON BUSINESS OPERATIONS
 1) Reducing costs
 2) Improving productivity
 3) Generating growth

 INFORMATION TECHNOLOGY BASICS
 Information Technology (IT)
1) Is a field concerned with the use of technology in managing and processing information
 2) Covering many field that deal with the use of electronic computers and computer software to convert, store, protect, process, transmit and retrieve information securely
 3) Can be an important enabler of business success and innovation.
4) Not useful unless the right people know how to use and manage it effectively

  Management Information Systems (MIS)
1) Is a business function just as marketing, finance, operations and human resources
 2) Is a general name for the business function and academic discipline covering the application of people, technologies, and procedures ( collectively called information systems use to solve business problems )

  Important elements of MIS
1) Data, Information and Business Intelligence
 - Data : raw facts that describe the characteristics of an event : example for characteristic for a sale are date. Item number, item description,quantity ordered, customer name, and shipping details.
 - Information : data converted into a meaningful and useful context : information from sales events could include best selling item, worst selling item, best customer and worst customer.
- Business Intelligence : applications and technologies that are used to gather, provide access to, and analyze data and information to support decision making efforts.


 IT RESOURCES
 1) People
 2) Information
 3) Information Technology 


 IT CULTURES
 1) Culture will influence the way people use information (their information behaviour) and will reflect the importance that company leaders attribute to the use of information in achieving success or avoiding failure.
2) Organizational Information Cultures
 - Information-Functional Culture : employees use information as ameans of exercising influences or power over others.
- Information-Sharing Culture : employees across departments trust each other to use information (especially about problems) to improve performance.
- Information-Inquiring Culture : employees across departments search for information to better understand the future and align themselves with current trends and new directions
. - Information-Discovery Culture : employees across departments are open to new insights about crises and radical changes and seek ways to create competitive advantages