Chapter 2 MAJOR BUSINESS INITIATIVES Gaining Competitive Advantage with IT
Opening Case: Death of a Travel Agent Because consumers are now “empowered,” travel agents have declined from 171,600 (1999) to 95,000 (2009)
What are Supply Chain Management Systems? • Typical supply chain: lots of lag, inventory depreciates, inventory holding costs. • Just-in-time • Produce/deliver product or service just at the time the customer wants it • Need to be in touch with suppliers frequently and in some cases (like Dell) let customers order directly from suppliers • Inter-modal transportation • Multiple transportation channels (railway, truck, etc) to move products from origin destination • Creates supply chain complexities • Think about buying from Amazon…many different sellers but same order from you, the customer
SCM: Opportunities Can lead to cost leadership (Walmart). Can lead to reduced customer waiting time (Dell, Amazon). Can lead to availability of products when they are needed, without running out (Walmart). Can lead to predictability of order streams for everyone in the supply chain (Walmart).
SCM: Radio Frequency Identification (RFID) • RFID • Examples • On Products: http://www.youtube.com/watch?v=_xNhL39uD7I • WristBands: http://www.youtube.com/watch?v=l62jJ20CH10 • Healthcare:http://www.youtube.com/watch?v=DabzIhgyCo0
Customer Relationship Management Systems • Collects information on each customer and all their purchases • If customers have ongoing issues, it pulls up the customer profile and purchase history when they call • Allows communication via email, chat and telephone • Does data analysis to see what type of customer bought what, and makes recommendations • Can help in new product development by analyzing what kinds of products our customers are interested in. • Allows sales force to track leads and sales • Allows marketing promotions and tracking
The Focuses of Customer Relationship Management Analytics is now a huge part of CRM. Analytics use hard data to support decision making.
CRM: Opportunities Classic goals Treating customers better Understanding their needs and wants Tailoring offerings Providing “delightful” experiences Increasing revenue (sales) Identify the products that are selling well.
CRM: IT/IS Support Front-office systems Primary interface to customers and sales channels Back-office systems Fulfill and support customer orders Both interface to CRM database and analysis and reporting systems
CRM: IT/IS Support • Software-as-a-service (SaaS) – software model in which you pay for software on a pay-per-use basis instead of buying the software • This reduces fixed costs and is scaleable as the business grows. • Should we buy an off the shelf CRM or get a custom developed CRM?
What is an Enterprise Resource Planning System? MRP (Materials Requirement Planning) Systems Circa 1965-1975 MRP II systems: added inventory and productivity optimization to manufacturing, link accounting to manufacturing Circa 1975-1985 ERP (Enterprise resource planning): take database applications used by diverse business functions and put them together in one large database system Are modular and allow one to buys a few modules at a time. Is this an advantage or a disadvantage? Force data centralization, which is a good goal.. What do ERP systems do to our competitive advantage?
ENTERPRISE RESOURCE PLANNING • ERP is big business • Federal government spent $7.7 billion on ERP in 2009 • 60% of Fortune 1000 companies have ERP systems • ERP II systems are now being used to do business intelligence analysis on the data that has been accumulated. Data quality is important. Garbage in-Garbage out?
ENTERPRISE RESOURCE PLANNING The Big 4 ERP Vendors
ERP: Functionality Attempts to integrate everything CRM drives what SCM will produce Everyone works together The entire organization knows what it needs to know about the entire organization Think about TU Can you register for class with a bill outstanding? Can you register for a class for which you haven’t completed the prerequisite?
What is Social Media? Web 2.0 Social Media Social networking Social shopping Social playing Social “saving the world” Social locationing There are many more
Social Media: Social Networking • Social networking site • site on which you post information about yourself, create a network of friends, read about other people, share content, and communicate with people • The big ones • Facebook & LinkedIn • Google+ • StumbleUpon, Twitter, YouTube
Social Media: Social Shopping • See what other people are buying and wearing, trying to find the same, and informing others of where the best deals are. Pinterest. Instagram. • Pepsi – social vending machines • Bartab • Groupon/living social • Reviews of products/services on amazon, yelp
Social Media: Social Playing • MMORPGs (massively multiplayer online role-playing games) world of warcraft , second life • Xbox 360, Sony Ps4 • Ipad, Android games • Facebook games. Farmville.
Social Media:Social “Saving the World” • Social causes. Environmental. Protest movements. • Arab Spring • Recent riots in Kiev, Ukraine. • Kickstarter, Causes, CrowdRise. http://socialmediasun.com/group-funding-websites/
Social Media: Social Locationing • Social locationing (location-based services) • Use of a mobile device and its location to • Check into locations • Find friends and their locations • Receive rewards • Take advantage of specials based on location • Popular examples – • Geoloqi, Facebook Places, SCVNGR, Google Latitude, Foursquare,