IT Systems

1. IT Systems 1 ITS are the tools organizations use to meet the MIS challenge to provide perfect service at customer moment of value (Lundberg) 2.aVF’smarket response strategy (@Walmart) provided competitive advantage (Levi) by integrating IOS, TPS, DSS (O’Connell)  development of integrated IT systems involves SDLC including C:B considerations of all business processes ---opportunity costs: carrying costs of unsold inventory,stock-outw.r.t. perfect service at customer moment of value 2.b Organizations that do not use ITSto be more efficient in performing business processes (e.g. market response/ inventoryreplenishment) so that provide perfect service at the customer moment of value lose competitive advantage in the Innovation Economy (Business Week: 1Aug05, 31Jul06; K-mart : Wal-Mart; Levi’svs Vanity Fair; LLBeanvs Penny’s; CIO 1Aug02) 2.cLevi’s response with its own ITS for turn-around with Wal-Mart (CIO 15Jul03) illustrates WhyITDoesMatter (PerryEllis)  Cases are like parables to teach difficult concepts (JC used everyday stories to explain faith, hope, love to primitive people)  many did not comprehend because they closed their eyes (Pharisees) or turned away (richyoungman) YOU must look to see, listen to hear, and think to understand (Global Business Credential: listen & learn) 3Real world organizationalstructures are complex because of their super-ordinate goals (4a) and complex missions (5a).  Key is not to discuss information flows nor ITS until 6a 4adifferent organizational levels and functional areas are assigned to make different kinds of decisions that require different kinds of information and coordination of activities (4b -battle:war; dean:chair) 5avariety of product lines within mission increases complexity of organizational structures (5b - CSSentities) 6aConsequently, informationflows are complex. DifferentITS are designed to provide differentinformation between / to differentorganizational levels / product divisions / functions so organizational activities can be integrated(CIO CASES) 7aITS are designed to perform the information processing tasks (5Cs) that support these complex information flows (Vanity Fair) 7c Therefore, understanding & using IT systems begins with “gettingthearchitectureright” –identifying the information flows needed to support essential business processes (FLYZIK, CIO of DHS, CIO 1Dec02)  Essential to begin CIO cases with understanding the business processes (problems) then use ITS to support the information flows 8aBasic typesof ITSsupporting information flows in complex organizations  studied to provide guidance for benchmarkingw.r.t. bestpractices (KPMGprovided to CSS)  Your task in CIO CASES is to identify or suggest the application of best practices including ITS

2. 9aTPSare the primary ITS because : 9b primary real world interface bycapture & cradle data about fundamental events (objects)used throughout the organization related to journalizing of transactions in accounting – capture real world in symbols that can be cradled to do all 5Cs  CIO cases: Building: orders / use materials; Dock: location / movement containers; Homeland: entry /exit country, hazmat (NASA); Indian: orders & parts like Dell; Jackpot: patron play;Rx: prescribe & administer meds 9c primary customer interface  when customers perceive an inadequate interface they perceive the entire organization as inadequate (Rx:DANA-FARBERCANCER CENTER; Dock: drivers LaSalle: bursar/billing & financial aid)  databases (DBMS) & networks are components of shared information • RFIDare newtechnology (ideas vs things with potential to perform basic transaction processing tasks (capture / cradle / communicate) more reliably, timely & efficiently(TESCO, VNUNet.com 16Jan03; WAL-MART14Jul03) 10aCIS 10b the new customer interface that extends TPS by placing technology in customers’ hands (external orinternal) so provides opportunity for:  M-commercebecause customer canprocess their own transactions anywhere/ anytime (LASALLE online registration, databases, grades; SECElectronic Data Gathering, Analysis and Retrieval System) I-commerce involving 2-way communication (WSJ29Oct01: P&G; DockofBayRFIDsystem provides information to & from truck driver ; Rx FILESwarningbefore administer; UPS online tracking;)  Go to Proctor & Gamble website: pg.com (folders in IT Systems)  enhances capability to provide perfect service at customer moment of value ( 10d – 10f ) 11.aMISafterTPS & CIS capture &cradle data 11b creates/ conveysinformation in periodic / predeterminedreports to alert management to opportunities / threats similar to sentry or point man (GRADES report to students; library material use : acquisitions; CSS occupancy rates : intake, QC reports : material use & scrap) 11cAR aging schedule 11d characteristics: periodic / summarized / comparative / exception  Dashboard (NETSUITE, LEVI’S) 14.aEIS 14a highly interactiveMIScombined with DSS / AI for creating new information & conveying in flexible formats ACCESS team projects, Excel Capabilities include: data warehouse (cradling), drill down (whatis.com) / query (creating),flexible data presentation (reports - conveying)

3.  “Therealvaluewill come from getting theright information(good, clean, timely, reliable data) to theright people, at theright time, and giving those people thetools to find the meaningin it.” Declaration of Integration AbbieLundberg Editor-in-Chief CIO Vanity FairillustratesITSaretoolsto meetMIS challengein the information age IT Systems in Organizations: tools to meet the MIS challenge

4.  The strategy“ …was built on the backbone of a fullyintegratedsystemwithallthe elements (5Cs) needed to provide the rightkind of informationat right time tomake the rightkind of decisions.” O’Connell, CEO Indian Motorcycle  CIO 15Jul03 assignment 

5. Vanity Fair Uses ITsystems as tools to Beats the Pants off Levi Strauss Sys-2.a Introduction O’Connell CEO, Indian • VF’s market response strategyreplenishes inventory in 3 days (speed) with only best-sellingstyles (force) which increasesROI • “We get more sales from the same amount of inventory…”1.3 • Levi’s takes month • LL Bean & Sears similar supply chain problems email • Actually 3 integrated IT systems performingall5Cs: • transactions processing systemcaptures & cradles basic data, thencreates information about transactions • interorganizational systemcommunicates retailer (Wal-Mart) sales information to VF by linking computers • decision support system creates, communicates, conveys the styles, sizes and related groups of goods to ship

6. Vanity Fair Uses ITsystems as tools to Beats the Pants off Levi Strauss Sys-2.b Introduction • ITS are tools that provide competitive advantage • Organizations not using ITS to manage information more efficiently so provide perfect service at (VF.5) customer moment of value lose competitive advantage in the innovation economy Bus.Week 1Aug05 • K-martvs.WalmartDrayer, CIO 1Aug02 • JC Penny (shirts all buttoned up) WSJ 11Sep03 • CIOcases are parables to teach difficult concepts (JC).

7. Levi’s responded to VF with its own IT Transformation Sys-2.c Introduction “what customers wanted…when they are needed, notbefore and certainly not after.” 42.10 • Levi’s plan to market through Wal-Mart (100mshoppers / week required an IT transformation of its supply chain so: 41.A,3 • Replenish on time – speed • with what the customer wants - force43.1 • Lack of information translated to poor performance 43.7 • Couldn’t track product • 65% on time product delivery • Illustrates: Why IT does matter! HBS 10Sep03 • Same systems asVF (TPS, IOS, DSS) withdashboard (MIS) 44.0-1 • “right style in the right place at the right time” -- (95%) 45.6 • “Today, there are encouraging signs Levi’s is turning around.”45.6 • Sales grew for the first time in 6 years and Levi’s in 45.6 Fashionworld’slist of top ten brands preferred by young women ProquestAsssignmentLevi’s got its Jeans into Wal-Mart CIO 15Jul03

8. Why IT Does MatterHarvard Business School McFarlan & Nolan 10 Sep 2003 Sys-2.d Introduction • Technology’s transformingpotential1.7 Levi’s 1.1: BroadVision • The most important thing to understand is that IT has enabled every industry’s transactioncosts (TPS, CIS) to decrease continually as with Perry Ellis 18, 21.7 • creating the feasibility of products and services not possible in the past(Rx: EMR telemetry; Jackpot; Stonyfield)

9. Why IT Does MatterHarvard Business School McFarlan & Nolan 10 Sep 2003 Sys-2.d Introduction • Technology’s transformingpotential • Organizationboundaries have become permeable, organic (grow as needed), and global through IT networks and the Internet (2.1) • Providing opportunities for improvement of organizational structures(2.6) such as information partnerships and virtual organizations • Observed:VF:Wal-Mart; Levi’s:Wal-Mart; Penny’s+TAL all CIO cases

10. Why IT Does MatterHarvard Business SchoolMcFarlan & Nolan 10 Sep 2003 Sys-2.e Introduction • Technology’s transformingpotential • IT can change the rules and assumptions about competition, providing opportunities to expand customer value (MIS Challenge) and create strategic advantage (Dell, Toyota)2.2, 2.6 • Unless nurtured and evolved, IT-enabled competitive advantage doesn’t endure(Vanity Fair vs. Levi’s)2.5

11. Why IT Does MatterHarvard Business SchoolMcFarlan & Nolan 10 Sep 2003 Sys-2.e Introduction • Evaluating these opportunities (threats) is vitally important, non-boring work. 3.2 • New technologies (e.g. RFID) will allow things to be transformed in nonlinear ways and give companies the opportunity to differentiate themselves (all CIO cases) 2.53.2 • These jobs will be of unparalleled importance in the decades ahead and prototypes of leadership skills needed for survival 3.6 • Only limit is management team’simagination2.4 Global Business Credential: Thinking Change Brain

12. Information Age (MIS challenge data, info., knowledge, 5C) difficult problems CIO cases concepts:tools solve difficult problems complex, ambiguous challenges Systems Strategies integrate knowledge.4 synthesize solutions & new paths.6 probe relentlessly.4 Develop Global Credential Competencies (AICPA) in TeamPresentation TEAM TIME listen & learn.5 from experiences of others: ideal & nadir

13.  Summary & Review Vanity Fair & Levi’s • VFused 3 integrated IT systems that performed all5Cs to achieve competitive advantage • By providing perfect service (right jeans) at customer moment of value (right time and right place) • Levis’s responded with its own IT systems • Same IT systems as VF with Dashboard to provide right information to right people at right time • Changed on time from 65% to 95% & in FashionWorld top 10 • Why IT still matters, just as with Preferred Sands “by streamlining the gathering, use and communication of data… to eliminate charges incurred from idle rail cars containing sand.”

14. UsingIT systems to meet the MIS challenge requiresunderstanding: Sys-3 Introduction • Organizational Structures are complex because of complex, superordinate goals • Information flows in organization are similarlycomplex • IT systems(ITS)are designed to perform information processing tasks (5Cs) to support these complex information flows in complex organizations

15. Sys-6.a Complex Information Flows in Organizations Competitive intelligence from customers, suppliers, other partners & constituencies INWARD FLOW OF INFORMATION OUTWARD FLOW OF INFORMATION Communication to customers, suppliers & other partners. STRATEGIC mission UPWARD FLOW OF INFORMATION TACTICAL plans How the organization is operating & transactions that have occurred Strategies, goals & directives OPERATIONAL implementation NONMANAGEMENT operations DOWNWARD FLOW OF INFORMATION HORIZONTAL FLOW OF INFORMATION Communication among functional units & workteams

16.  Seven fundamental IT Systems (ITS)Support Information Flows in Organizationsby Performing Information Processing Tasks (5Cs) • Transaction Processing Systems TPS • Customer Integrated SystemsCIS • Management Information SystemsMIS • Executive Information SystemsEIS • Decision Support SystemsDSS • Workgroup Support SystemsWSS • Interorganizational SystemsIOS • ITS arebestpractices forbenchmarkinginCIO cases • Whitehead, Bloom

17. ITS in Organizations Sys-9.a Transaction Processing Systems (TPS) ideas vs. things primary interface with real world – captures in symbols (journalize) so perform 5Cs Tesco RFID Networks VanityFair, Levi’s, Penny’s Database (DBMS:DSS) applications across many industries (TechRepublic 18Aug03 p.2.1) Build: materials; Dock: containers; Homeland: hazmat; Indian orders/ parts like Dell; Jackpot: patron play; Rx: scripts /admin. meds  fundamental events: Askteams? Most important ITS because everythingbeginshere!

18. The Future of RFID The Future of RFID NASA monitors hazardous materials NASA monitors hazardous materials Tesco Tesco RFID in shipping labels (PDR timer)

19. Sys-8 Seven fundamental IT Systems (ITS)Support Information Flows in Complex Organizationsby Performing Information Processing Tasks (5Cs) • Transaction Processing Systems TPS • Customer Integrated SystemsCIS • Management Information SystemsMIS • Executive Information SystemsEIS • Decision Support SystemsDSS • Workgroup Support SystemsWSS • Interorganizational SystemsIOS • ITS arebestpractices forbenchmarkinginCIO cases

20. ITS in Organizations Sys-10.a Customer Integrated Systems (CIS) 6. creates 5. conveys 4. communicates 7. communicate 8. convey 9. create 10. convey 11. communicate Database (DBMS:DSS) 3.cradles Networks 2.communicates  LaSalle RxFiles Dock(Driver) Buzzsaw Jackpot (Winet) 1.captures Technology in customers’ hands & On-linebanking familiar, great potential

21. Sys-10.b Customer Integrated System (CIS) ITS in Organizations • Thenew customer interface that extends TPS by placing technology in the hands of customers (external or internal) process their own transactions, anywhere / anytime (m-commerce). • SEC’s Electronic Data Gathering, Analysis, and Retrieval system (EDGAR) provides on-line: software, tutorial, filing, retrieval • LaSalle: on-line registration, library databases, reporting grades • provide opportunity for two-way communication (I-commerce) • WSJ 29Oct01  P&G, Road Runner Sports, Victoria’s Secret • Rx Files  warning before medication administered • Dock  information makes driver efficient and willing to return

22. Sys-10.c to to from from to to P&G’s CIS supports I-commerce by two-way communication with customers / clients “P&G’s innovative capability is based on the application of technology to making connections with customers and developing a deep understanding of their habits, needs and wants.” P&G.com (Jackpot; DHS) Customer-Driven Innovation Optimizemag.com Feb07

23. “Collaboration with customers is transforming product-development strategies ….tapping into an almost endless source of ideas for new product offerings that will differentiate you from your competition.” Feb07 p27 Nabisco 100 calorie sensible snack packs For both Tesco & Kroger, the approach begins with individual purchase data from loyaltycards, giving a look into everybag of groceries and providing data on neighborhood (ZIP & telephone) as well as seasonalbuyingpatterns. Jackpot: Winet layout, inventory, promotions Victoria’s Secret Dell, Indian

24. Sys-10.d

25. Sys-10.e Rise of I-Commerce ITS in Organizations • “We tend to take a verynarrowlens when we think about e-commerce. It’s notjust about buying and selling things on the Net.” (1.5)Sawhney, Professor e-connerce, Northwestern Unversity • “The information they provideto customers on their Web sites, along with the intelligence merchants are able to gatherabout consumers can be at least asvaluable as the stuff the actually sell on line.” (1.3)Michael Totty News Editor, WSJ • On the internet, “Informationgathering is muchmoreimportant than actually selling actual products to consumers” (2.10)Waits, research manager, P&G WSJ Report 29 Oct 01

26. Sys-10.e Rise if I-Commerce ITS in Organizations BUS 205 CIO team • “In today’s electronic age, the role of IT is becoming increasinglysignificant across all areas of our (P&G’s) business.” • “Fromdayone, you’ll work on a core businessteam…. Here we improve business results by exploitingITcapability for P&G’s customerteams….” • “We develop a thorough understanding of our customers system, data and information …. We then transform this understanding into knowledge and insight about the customer, the market and the consumer.” PG.com/information technology 7Feb05

27.  Seven fundamental IT Systems (ITS)Support Information Flows in Organizationsby Performing Information Processing Tasks (5Cs) • Transaction Processing Systems TPS • Customer Integrated Systems CIS • Management Information SystemsMIS • Executive Information SystemsEIS • Decision Support SystemsDSS • Workgroup Support SystemsWSS • Interorganizational SystemsIOS • ITS arebestpractices forbenchmarkinginCIO cases • Whitehead, Bloom

28. Sys-11.a ITS in Organizations Management Information Systems After TPS (CIS) capture & cradle data, MIS create & convey upward flow of information about transactions operations TPS CIS 1.Capture data 4. Creates information DBMS:DSS ACCESS 6.convey K.W. Networks 3.communicates Networks 5.communicate Database 2.cradles Inventory reports Accounts Receivable QC reports Periodic Predetermined Summarized Comparative Like sentry, alerts management to threats or opportunities Levi’s & Netsuite Dashboards (cio.com)

29.  Sys-11.c ITS in Organizations periodic predetermined structure comparative exceptions summary

30. To see a different role, click on one of the three role buttons directly below, Roll over the highlighted numbers on the screen to see descriptions of NetSuiteDashboard (Levi’s)

31. Roll over the highlighted numbers on the screen to see descriptions of NetSuite Dashboard features.

32. The Dashboard offers instant real-time snapshots of key performance indicators.

33. EIS Sys-12.a Executive Information Systems 1.cradles database MIS + DSS (DBMS) interactive 3.conveys 4. opportunity for KW to create 2.communicates   networks Access team projects Tesco & Kroger “Optimize”, Information Week

34. Artificial Intelligence (Decision Support System - DSS) Sys-13.a DSS / AI projects DSS + Groupware Sys-14c  Excel Access Expert Choice (N-Gage) flexible / interactive complex & ill-structured infrequent or subjective Pipeline Anti-Terrorism GPS (zilllow.com) knowledge blood analysis cancer cell detection regression IBM software to prevent server failures

35.  IA-20.a Information processing tasks provide shared information and decentralized computing That supports decision making & innovation shared information (networks& databases) capture, communicate, cradle decentralized computing (DSS) communicate, convey, create (DSS) communicate, cradle Microsoft Explorer Access Excel PowerPoint / Word  DSS decision making & innovation • How DSS used to meet the MIS challenge in CIO Cases? Rx check script; Dock & Build locate/unload ship or warehouse; Jackpot CRM with DBMS

36. IOS Initially, B2B (TPS), Evolved B2C professional sites weather channel RRS Sys-15.a Interorganizational Systems Wal-Mart Penny’s TPS & Database  • Direct deposit pay / SS • SEC & IRS filings • CSS & government agencies • Indian (Dell), Jackpot (CRM), DHS (intelligence), Building (designs), Dock (container, • ship locations), Rx (emr)   • reduce • Costs & Errors • increase • Speed & Force Networks  directly communicate computer to computer Vanity Fair, Levi’s TAL Database & DSS

37. Sys-14.a WSS WSS Support Information Flows Within / BetweenTeams Communication between teams formed with suppliers, customers, other partners & constituencies (Buzzsaw, APL, Indian extranet) OUTWARD FLOW OF INFORMATION INWARD FLOW OF INFORMATION CSS & Dept. Homeland Security get data from the operational level in the field; then after analysis, disseminate strategic and tactical responses Communication among functional units & work teams (Jackpot, Rx)

38. Sys-14.c WSS Groupware Supports 3 Group Processes Communicating Cradling  Netscape  Explorer  Lotus Notes  Outlook  MS Live- Meeting MSOffice:  PowerPoint  Word  Excel  Access Capturing Creating Conveying CSS adopted MS standard in 2003

39. Sys-16.a Some Final Thoughts ITS in Organizations • ITS arebestpractices(general principles)for benchmarking in CIO cases (concrete details). Whitehead • Functional ITSareintegratedcombinationsof IT systems intended to performall5Csso that they support decision making and innovation in complex organizations with complex information flows.Vanity Fair & Levi’s Connell, CEO Indian • “Getting the right information to the right people all the time …startsby identifying ❶ the business processes … ➋ the information that is most consumed by those processes and produced by those processes.Onlyafterthat …will they begin to ➌ look at IT enablement of the business processes.”Flyzik, DHS

40. Sys-16.b Some Final Thoughts ITS in Organizations Your team: Team of dreamers (ChemSecure @ NASA) • New technologies (RFID) will continue to give companies the opportunities to differentiate themselves. Innovation Economy BW 1Aug05 • Only, the senior management team’s imagination limits new IT-based opportunities. • Evaluating these opportunities as well as thinking through their implications and timing is vitally important, non-boring work . • These jobs will be ofunparalled importance in the decades ahead. Why IT does matter!McFarlan & Nolan HBS 10Sep03

41. Sys-16.b Some Final Thoughts ITS in Organizations • CIO CASES are examples (parables) to teach difficult concepts. Jesus Christ used everyday stories to explaining faith, hope, love to primitive people. • Many did not comprehend because they closed their eyes like the Pharisees or turned away like the richyoungman. • You must look to see, listen to hear, and think to comprehend.

42. Quiz If Participation Indicates Lack of Preparation