chapter 4:Measuring the Success of Strategic Initiatives

Measuring Information Technology’s Success:

What is the function of key performance indicator?
-it is to measures that are tied to business drivers

Metrics are detailed measures that feed KPIs

Performance metrics fall into the nebulous area of business intelligence that is neither technology, nor business centered, but requires input from both IT and business professionals

BPR AND ERP METRICS

The balanced scorecard enables organizations to measure and manage strategic initiatives



EFFICIENCY AND EFFECTIVENESS

Efficiency IT metric – measures the performance of the IT system itself including throughput, speed, and availability

Effectiveness IT metric – measures the impact IT has on business processes and activities including customer satisfaction, conversion rates, and sell-through increases

BENCMARKING- BASELINING METRICS

Regardless of what is measured, how it is measured, and whether it is for the sake of efficiency or effectiveness, there must be 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

-The Interrelationships of Efficiency and Effectiveness IT Metrics

Efficiency IT metrics focus on technology and include:
Throughput
Transaction speed
System availability
Information accuracy
Web traffic
Response time

Effectiveness IT metrics focus on an organization’s goals, strategies, and objectives and include:
Usability
Customer satisfaction
Conversion rates
Financial

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
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)

-Metrics for Strategic Initiatives

Metrics for measuring and managing strategic initiatives include:
Web site metrics
Supply chain management (SCM) metrics
Customer relationship management (CRM) metrics
Business process reengineering (BPR) metrics
Enterprise resource planning (ERP) metrics

WEB SITE METRICS

Web site metrics include:
Abandoned registrations
Abandoned shopping cards
Click-through
Conversion rate
Cost-per-thousand
Page exposures
Total hits
Unique visitors

SUPPLY CHAIN MANAGEMENT METRICS

Back order
Customer order promised cycle time
Customer order actual cycle time
Inventory replenishment cycle time
Inventory turns (inventory turnover)

CUSTOMER RELATIONSHIP MANAGEMENT METRICS

Customer relationship management metrics measure user satisfaction and interaction and include
Sales metrics
Service metrics
Marketing metrics

Chapter 3 :Strategic Initiatives for Implementing Competitive Advantages

Holla..! Today's chapter is talk about the strategic initatives.What is strategic initatives?

Strategic initatives is an organizations can undertake high-profile strategic initiatives including:

Supply chain management (SCM)
Customer relationship management (CRM)
Business process reengineering (BPR)
Enterprise resource planning (ERP)

The first one is supply chain management.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.

There have four basic components of supply chain management including:

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

Wal-Mart and Procter & Gamble (P&G) SCM


Effective and efficient SCM systems can enable an organization to:

1)Decrease the power of its buyers
2)Increase its own supplier power
3)Increase switching costs to reduce the threat of substitute products or services
4)entry barriers thereby reducing the threat of new entrants
5)Increase efficiencies while seeking a competitive advantage through cost leadership

Effective and efficient SCM systems effect on Porter’s Five Forces


CUSTOMER RELATIONSHIP MANAGEMENT

Customer relationship management (CRM) – 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 enterprisewide 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 behaviors

CRM Overview


BUSINESS PROCESS REEINGINEERING

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

Business process reengineering (BPR) – the analysis and redesign of workflow within and between enterprises
The purpose of BPR is to make all business processes best-in-class


Reengineering the Corporation – book written by Michael Hammer and James Champy that recommends seven principles for BPR


finding opportunity 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 an airplane which ignore the road completely


Progressive Insurance Mobile Claims Process


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



ENTERPRISE RESOURCE PLANNING

Enterprise resource planning (ERP) – integrates all departments and functions throughout an organization into a single IT system so that employees can make decisions by viewing enterprisewide information on all business operations

Keyword in ERP is “enterprise”

Sample data from a sales database


Sample data from an accounting database


ERP systems collect data from across an organization and correlates the data generating an enterprisewide view

Past Year Question March 2013 : Part C, Question 1 (a)

Five primary value activities are inbound logistics,operations,outbound logistics,marketing and sales and customer service.

Inbound logistics are include the receiving ,warehousing,and inventory control of input materials.Operations are the value-creating activities that transform the inputs into the final product.Outbound logistics are the activities required to get the finished product to the customer,including warehousing,order fulfillment,etc.Marketing and sales are those activities associated with getting buyers to purchase the product,including channel selection,advertising,pricing,etc.Service activities are those that maintain and enhance the product's value including customer support,repair services,etc.

Past Year Question October 2012: Part C,Question 2 (a)

Three porter Generic Strategies are cost leadership,differentiation and focused strategies.

Cost leadership is 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.

Differentiation is 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.As example,i-care by Proton.

Focused strategies is target to a niche market and concentrates on either cost leadership or differentiation.

Past Year Question October 2012: Part C Question 1, (a)

Four organizational information cultures are information functional culture,information sharing culture,information inquiring culture and information discovery culture.

Information Functional Culture is 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 manager’s input each time a new sales strategy is developed.

Information Sharing Culture is employees across departments trust each other to use information (especially about problems and failures) to improve performance.

Information Inquiring Culture is employees across departments search for information to better understand the future and align themselves with current trends and new directions.

Information Discovery Culture is employees across departments are open to new insights about crisis and radical changes and seek ways to create competitive advantages.

Past Year Question March 2012 : Part C,Question 2

The five forces in Porter's Five Forces Model are buyer power,supplier power,threat of substitute products or services,threat of new entrants and rivalry among existing companies.

Buyer power is high when buyers have many choices of whom to buy and will 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)
Bargaining Power of Customers or Buyer power.Customers can grow large and powerful as a result of their market share.
Many choices of whom to buy from and low when comes to limited items as example is used loyalty programs (jusco card, tesco card,and being a members to get the discount)

Supplier power is 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 as example B2B marketplace which private exchange allow a single buyer to posts it needs and then open the bidding to any supplier who would care to bid. Reverse auction is an auction format in which increasingly lower bids.

Threat of substitute products and services is high when there are many alternatives to a product or service and 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 substitutes of their product or services.
Best practices of IT.As example,Electronic product which have same function but different brands.
Threat of Substitutes is to the extent that customers can use different products to fulfill the same need, the threat of substitutes exists.As example,electronic product which have same function but different brands.
Switching cost means costs can make customer reluctant to switch to another product or service.

Threat of new entrants is high when it is easy for new competitors to enter a market and is 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.
Best practices of IT.As example,new bank must offers online paying bills, acc monitoring to compete.
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.Example, new bank (online paying bills, acc monitoring).

Rivalry among existing companies is high when competition is fierce in a market and low when competition is more complacent.Best Practices of IT ,Wal-mart and its suppliers using IT-enabled system for communication and track product at aisles by effective tagging system.Reduce cost by using effective supply chain.Rivalry Among Existing Firms.
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).

Chapter 2 : The Competitive's Benefits

Hey! Whazzup..!! This week i'm going to share about the competitive advantages.

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

However it is only temporary because the other competitors will always try to duplicate the strategy.Then the company have to start with a new strategy.

There's Michael Porter’s Five Forces Model as an useful tool to aid organization in challenging decision whether to join a new industry or industry segment.

Michael Porter’s Five Forces Model including :

1)Buyer power
2)Supplier power
3)Threat of substitute products or services.
4)Threats of new entrants.
5)Rivalry among existing companies.

BUYER POWER :

The first one is buyer power.Buyer power will be high when buyers have many choices of whom to buy and will be 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 :

Will be high when buyer have fewer choices to buy from and it will be low when their choices are many.Best practices of IT to create competitive advantage.As example by using B2B marketplace as private exchange that allow a single buyer to posts it needs and then open the bidding to any supplier who would care to bid.

Reverse auction is an auction format in which increasingly lower bids.

THREAT OF SUBSTITUTE PRODUCTS OR SERVICES :

High – when there are many alternatives to a product or service.
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 substitutes of their product or services.
Best practices of IT
E.g. Electronic product -same function different brands

- Threat of substitutes,customers can use different products to fulfill the same need.E.g: electronic product -same function different brands.

Switching cost- costs can make customer reluctant to change to another product or service.

THREAT OF NEW ENTRANTS :

It high when easy a new competitor to enter a new market and it's low when there's barrier 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.
Best practices of IT
E.g. new bank must offers online paying bills, acc monitoring to compete.

Threat of New Entrants.
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.
E.g. new bank (online paying bills, acc monitoring)

RIVALRY AMONG EXISTING COMPANIES

High – when competition is fierce in a market
Low – when competition is more complacent
Best Practices of IT
Wal-mart and its suppliers using IT-enabled system for communication and track product at aisles by effective tagging system.
Reduce cost by using effective supply chain.

The Value Chains- Targeting Business Processes :
Supply Chain is a chain or series of processes that adds value to product & service for customer.
Add value to its products and services that support a profit margin for the firm.

Three Generic Strategies

Chapter 1: Business Driven Technology

Hey! Assalamualaikum to u'olls! Today i'm going to introduce about chapter 1 in business driven technology.We all already knew that technology has given many benefits to us.Such as,in communication,entertainment.But..what is the importance of technology in business?

Information technology is very important in playing role to develop the business.It give many benefits and advantages to all business operations.As example it give impacts for 70% to customer service and etc.There's goal and many impacts.As we know that business operation need to be related to each other as it must have full cooperation from the department that's why information technology can make it easier to sending any information and to communicate.It have two that are management information system (MIS) and also information technology (IT).

MIS is the general name for busness function whereas IT is the concerned with the use of technology in managing and processing the information. If we want to study about any information technology,we have to understand the data,information and business intelligence IT resources and IT cultures.For example,IT resources is consist of people,information technology to work with, and information.

Organizational information cultures include:

1)Information-Functional Culture - 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 manager’s input each time a new sales strategy is developed.

2) Information-Sharing Culture - Employees across departments trust each other to use information (especially about problems and failures) to improve performance.

3) 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 crisis and radical changes and seek ways to create competitive advantages.