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.
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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
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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

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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


Back-office systems


Primary interface to customers and sales channels
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 payper-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

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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?
ERP: FUNCTIONALITY
ENTERPRISE RESOURCE PLANNING
The Big 4 ERP Vendors
ERP: FUNCTIONALITY

Attempts to integrate everything

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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
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Social networking
Social shopping
Social playing
Social “saving the world”
Social locationing
There are many more
SOCIAL MEDIA: SOCIAL NETWORKING

Social networking site

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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 roleplaying 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-fundingwebsites/
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,