CHAPTER 6: VALUING ORGANIZATIONAL INFORMATION

CHAPTER 6: VALUING ORGANIZATIONAL INFORMATION

Organizational information comes at different levels and in different formats and granularities. Information granularities refers to the extent of details within the information. The organizational must know what kind of information that they want for. Make sure the information gives the best quality or high quality for that organizational itself.

Employees must be able to differentiate the levels of the information, formats, and granularities of information when making a decision. If the employees can knows how to use the information with different levels of information or format then, the information can be a values to the sender or receiver of the information.

Successfully collecting, compiling, sorting, and finally analyzing information from multiple levels, in varied formats, exhibiting different granularity can provide tremendous insight how an organization is performing.

TRANSACTIONAL INFORMATION

• Encompasses all of the information contained within a single business processes or unit of work and its primary purpose is to support the performing of daily operational tasks.

• Any documentation about the information. Example: The receipt purchase by the customer.

• All the information will enter in the database and will correlate.

• The organizational need that information in database to make a decision.

ANALYTICAL INFORMATION

• Encompasses all organizational information, and its primary purpose is to support the performing of managerial analysis tasks.

• From the transactional information, the organizational can get the analytical information. For example, when comes to Ramadhan, the organizational looks the previous database Ramadhan to give more promotional to customer.

• Any kind of information must have timing information because we want to look whether the information still can use in the effective time or not.

All the information have a timing information. For example, Real-time information means immediate up-to-date information. And this kind of information are not always constant because it's always keep up-to-date.

Poor Information

Poor information happened when some of the information are not completed or missing and this make the information are not accurate, inability to track customers. With the poor information, its difficult for the organizational to make a right decision because of poor information happened.

High Information

High quality of information can significantly improve the chances of making a good decision and directly increase an organization's bottom line. But if the organizational have high quality information, that's not guarantee that can make a good decision because obviously people ultimately make decisions. So, if the organizational have a high quality of information but the people in the organizational do not use the information accurately, it will be nothing.

Chapter 5:Organizational Structures That Support Strategic Initiatives

Chapter 5:Organizational Structures That Support Strategic Initiatives

Organizational Structures

Organizational employees must work closely together to develop strategic initiatives that create competitive advantages.

Ethics and security are two fundamental building blocks that organizations must base their businesses upon.

IT Roles and Responsibilities

Information technology is a relatively new functional area, having only been around formally for around 40 years.

Recent IT-related strategic positions:

Chief Information Officer (CIO)

Chief Technology Officer (CTO)

Chief Security Officer (CSO)

Chief Privacy Officer (CPO)

Chief Knowledge Office (CKO)

Chief Information Officer (CIO) – oversees all uses of IT and ensures the strategic alignment of IT with business goals and objectives

Broad CIO functions include:

Manager – ensuring the delivery of all IT projects, on time and within budget

Leader – ensuring the strategic vision of IT is in line with the strategic vision of the organization

Communicator – building and maintaining strong executive relationships

Chief Technology Officer (CTO) – responsible for ensuring the throughput, speed, accuracy, availability, and reliability of IT

Chief Security Officer (CSO) – responsible for ensuring the security of IT systems

Chief Privacy Officer (CPO) – responsible for ensuring the ethical and legal use of information

Chief Knowledge Office (CKO) - responsible for collecting, maintaining, and distributing the organization’s knowledge.

The Gap Between Business Personnel and IT Personnel

-Business personnel possess expertise in functional areas such as marketing, accounting, and sales

-IT personnel have the technological expertise

-This typically causes a communications gap between the business personnel and IT personnel

Improving Communications

-Business personnel must seek to increase their understanding of IT

-IT personnel must seek to increase their understanding of the business

-It is the responsibility of the CIO to ensure effective communication between business personnel and IT personnel

Organizational Fundamentals –

Ethics and Security

Ethics and security are two fundamental building blocks that organizations must base their businesses on to be successful.

In recent years, such events as the Enron and Martha Stewart, along with 9/11 have shed new light on the meaning of ethics and security.

Ethics

Ethics – the principles and standards that guide our behavior toward other people

Privacy is a major ethical issue

Privacy – the right to be left alone when you want to be, to have control over your own personal possessions, and not to be observed without your consent.

Issues affected by technology advances:

-Intellectual property

-Copyright

-Fair use doctrine

-Pirated software

-Counterfeit software

-One of the main ingredients in trust is privacy

-Primary reasons privacy issues lost trust for e-business

Security

Organizational information is intellectual capital - it must be protected

Information security – the protection of information from accidental or intentional misuse by persons inside or outside an organization

E-business automatically creates tremendous information security risks for organizations

Apple – Merging Technology, Business, and Entertainment

1.Predict what might have happened to Apple if its top executives had not supported investments in IT

2.Explain why it would be unethical for Apple to allow its customers to download free music from iTunes

3.Evaluate the effects on Apple’s business if it failed to secure its customer’s information and it was accidentally posted to an anonymous Web site

4.Explain why Apple should have a CIO, CTO, CPO, CSO, and CKO

Executive Dilemmas in the Information Age

The vast array of business initiatives from SCM to ERP make it clear the IT is a business strategy and is quickly becoming a survival issue.

This case explores several examples of executive IT issues resulting from IT.

chapter4: Measuring the Success of Strategic Initiatives

chapter4: Measuring the Success of Strategic Initiatives

1. Chapter 4 Measuring the Success of Strategic Initiatives

3. 3 Overview Efficiency and effectiveness IT metrics are two ways to measure the success of IT strategic initiatives Efficiency IT metrics – measure the performance of the IT system itself including throughput, speed, availability, etc. Effectiveness IT metrics – measure the impact IT has on business processes and activities including customer satisfaction, conversion rates, sell-through increases, etc.

4. 4 Benchmarking - Baselining Metrics Benchmarks – baseline values the system seeks to attain Benchmarking – 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

6. 6 Efficiency IT metrics focus on technology and include: Throughput – amount of information that can travel through a system at any point in time Speed – amount of time to perform a transaction Availability – number of hours a system is available Accuracy – extent to which a system generates correct results Web traffic – includes number of pageviews, number of unique visitors, and time spent on a Web page Response time – time to respond to user interactions

7. 7 Effectiveness IT metrics focus on an organization’s goals, strategies, & objectives Usability – the ease with which people perform transactions and/or find information Customer satisfaction – such as the percentage of existing customers retained Conversion rates – number of customers an organization “touches” for the first time and convinces to purchase products or services Financial – such as return on investment, cost-benefit analysis, etc.

8. The interrelationships between efficiency and effectiveness

9. 9 The interrelationships between efficiency and effectiveness Security is an issue for any organization offering products or services over the Internet It is inefficient for an organization to implement Internet security, since it slows down processing time. However, to be effective it must implement Internet security Secure Internet connections must offer encryption and Secure Sockets Layers (SSL denoted by the lock symbol in the lower right corner of a browser)

10. 10 Determining IT Efficiency and Effectiveness Customer metrics – assess the management of customer relationships by the organization and include: Market share Customer acquisition Customer satisfaction Customer profitability

12. 12 Web Traffic Analysis Cookie – a small file deposited on a hard drive by a Web site containing information about customers and their Web activities Click-through – a count of the number of people who visit one site and click on an advertisement that takes them to the site of the advertiser Banner ad – a small ad on one Web site that advertises the products and services of another business, usually another dot-com business Interactivity – visitor interactions with the target ad

13. 13 Behavioral Metrics Click-stream data tracks the exact pattern of a consumer’s navigation through a Web site Click-stream data can reveal: Number of pageviews Pattern of Web sites visited Length of stay on a Web site Date and time visited Number of customers with shopping carts Number of abandoned shopping carts

16. 16 How Levi’s Got Its Jeans into Wal-Mart Formulate a strategy for how Levi’s can use efficiency metrics to improve its business Formulate a strategy for how Levi’s can use effectiveness metrics to improve its business

17. 17 How Do You Value Friendster? Friendster specializes in social networking Friendster received over $13 million in VC capital Google recently offered to buy Friendster for $30 million A venture capital company recently valued Friendster at $53 million Friendster has yet to generate any revenue

18. 18 Case Questions How could you use efficiency metrics to help place a value on Friendster? How could you use effectiveness metrics to help place a value on Friendster? Explain how a venture capital company can value Friendster at $53 million when the company has yet to generate any revenue Explain why Google would be interested in buying Friendster for $30 million when the company has yet to generate any revenue

CHAPTER 3- STRATEGIC INITIATIVE FOR IMPLEMENT THE COMPETITIVE ADVANTAGES.

CHAPTER 3- STRATEGIC INITIATIVE FOR IMPLEMENT THE COMPETITIVE ADVANTAGES.

STRATEGIC INITIATIVES

·         Organizations can undertake high-profile strategic initiatives including:

-          Supply chain management (scm)

-          Customer relationship management (crm)

-          Business process reengineering (bpr)

-          Enterprise resource planning (erp)

SUPPLY CHAIN MANAGEMENT (SCM)

·         Involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability.

·         Four basic components of supply chain management include:

-          Supply chain strategy: strategy for managing all resources to meet customer demand.

-          Supply chain partner: partners throughout the supply chain that deliver finished products, raw materials, and services.

-          Supply chain operation: schedule for production activities

-          Supply chain logistics: product delivery process .

SUPPLY CHAIN MANAGEMENT

·         Effective and efficient SCM systems can enable an organization to:

-          Decrease the power of its buyers

-          Increase its own supplier power

-          Increase switching costs to reduce the threat of substitute products or services.

-          Create entry barriers thereby reducing the threat of new entrants.

-          Increase efficiencies while seeking a competitive advantage through cost leadership.

·         Customer relationship management- involves managing all aspects of a customer's relationship with an organization to increase customer loyalty and retention and an organization’s profitability.

·         Many organizations, such as Charles Schwab and Kaiser Permanente, have obtained great success through the implementation of CRM systems.

·         CRM  is not just technology, but a strategy, process, and business goal that an organization must embrace on an enterprise wide level.

·         CRM can enable an organization to:

-          Identify types of customers

-          Design individual customer marketing campaigns

-          Treat each customer as an individual

-          Understand customer buying behavior.

BUSINESS PROCESS ENGINEERING

·           Business process-  a standardized set of activities that accomplish a specific task, such as processing a customer’s order

·         Business process reengineering ( bpr)- analysis and redesign of workflow within and between enterprises

-          The purposes of bpr is to make all business processes best-in class

·         Reengineering the corporation- book witten by Michael Hammer and James Champy that recommends seven principles for BPR.

1)      Organize around outcomes, not tasks.

2)      Identify the organizations processes and priotize them in order of redesign urgency.

3)      Intergrate information processing work into the real work that produces th information.

4)      Treat geographically dispersed resources as though they were centralized.

5)      Link parallel activities in the workflow instead of just intergrating their results.

6)      Put the decision point where the work is performed, and build control into the process.

7)      Capture information once at the source.

FINDING OPPURTINITY USING BPR

·         A company can improve the way it travels the road by moving from foot to horse and then horse to car

·         BPR looks at taking a different path, such as arplanes which ignore the road completely.

·         Types of change an organization can achieve, along with the magnitudes of change and the potential business benefit.

ENTERPRISE RESOURCE PLANNING

·         Enterprise resources planning (erp)- intergrates all departments and functions throughout an organization into a single IT system so that employees can make decisions by viewing enterprise wide information an all business operations.

·         Keyword in ERP is “enterprise”

·         ERP systems collect data from across an organization and correlates the data generating an enterprise wide view. 

CHAPTER 2 (IDENTIFYING COMPETITIVE ADVANTAGE)

CHAPTER 2 (IDENTIFYING COMPETITIVE ADVANTAGE)

WHAT IS COMPETITIVE ADVANTAGE?

·         A product or services that an organization’s customers place a greater value on than similar offerings from a competitor.

·         Unfortunately, CA is temporary because competitors keep duplicates the strategy.

·         Then, the company should start the new competitive advantage.

INTRODUCTION

·         Michael porter’s Five Forces Model is useful tool to aid organization in challenging decision whether to join a new industry or industry segment.

BUYER POWER

·         High- when buyers have many choices of whom to buy.

·         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.

·         Best practices of IT-based- loyalty program in travel industry (e.g. rewards on free airline tickets or hotel stays)

SUPPLIER POWER

·         High- when buyers have few choices of whom to buy from.

·         Low- when their choices are many. (Best practices of IT to create competitive advantage.)

·         Supplier power is the converse of buyer power.

Suppliers > organization > customers

THREAT OF SUBSTITUTE PRODUCTS & SERVICES

·         High- when there are many alternatives to a product or services.

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

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

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.

RIVALRY AMONG EXISTENCE COMPEITORS

·         High- when competition is fierce in a market.

·         Low- when competition is more complacent.

THE THREE GENERICS STRATEGIES

·         Cost leadership

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

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

·         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/or stimulate demand.

CHAPTER 1: BUSINESS DRIVEN TECHNOLOGY

CHAPTER 1: BUSINESS DRIVEN TECHNOLOGY

INFORMATION TECHNOLOGY’S ROLE IN BUSINES

·         Information technology is everywhere in business.

INFORMATION TECHNOLOGY’S IMPACT ON BUSINESS OPERATIONS

·  Business function receiving the greatest benefits from information technology.

·     Organizations typically operate by functional area or functional silos.

·      Functional areas are independent.

INFORMATION TECHNOLOGY BASICS

·  Information technology (IT) – a field concerned with the use of technology in managing and processing information.

·      Information technology is an important enabler of business success and innovation.

·   Management information systems (MIS) -  a general name for the business function and academic discipline covering the application of people, technologies, and procedures to solve business problems.

·   MIS is a business function, similar to Accounting, Finance, Operations, and Human Resources.

·         When beginning to learn about information technology it is important to understand:

-       Data, information, and business intelligence IT resources

-       IT cultures

INFORMATION

·         Data – raw facts that describes the characteristics of an event.

·         Information – data converted into a meaningful and useful context.

  ·        Business intelligence – applications and technologies that are used  to support decision-making efforts.

IT RESOURCES

·         People use

·         Information technology to work with

·         Information

IT CULTURES

·         Organizational information cultures include:

-       Information-functional cultures: employees use information as a means of exercising influence or power over others. For example, a manager in sales refuses to share information with marketing. This causes marketing to need the sales managers input each time a new sales strategy is developed.

-       Information- sharing culture: employees across department trust each other to use information (especially about problems and failures) 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 insights about crisis and radical changes and seek ways to create competitive advantages.