MGT300 Chapter 6

Chapter 6 Valuing Organizational Information

Organizational Information

• Information is everywhere in an organization
• Employees must be able to obtain and analyze the many different levels, formats, and granularities of organizational information to make decisions
• Successfully collecting, compiling, sorting, and analyzing information can provide tremendous insight into how an organization is performing

Levels, formats, and granularities of organizational information

Transactional information verses analytical information

The Value of Timely Information

💙 Timeliness is an aspect of information that depends on the situation

• Real-time information – immediate, up-to-date information
• Real-time system – provides real-time information in response to query requests

The Value of Quality Information

• Business decisions are only as good as the quality of the information used to make the decisions
• You never want to find yourself using technology to help you make a bad decision faster\
• Characteristics of high-quality information include : 

          💛 Accurancy 

Are all the values correct ? For example, is the name spelled correctly ? Is the dollar amount recorded properly ?

         💛 Completeness

         💛 Consistency 

Is aggregate or summary information in agreement with detailed information ? For example, do all total fields equal the true total of the individual fields ?

         💛 Uniqueness

Is each transaction, entity, and event represent only once in the information ? For example, are there any duplicate customers ?

         💛 Timeliness

Is the information current with respect to te business requirements ? For example, is information updated weekly, daily, or hourly ?

Low quality information example

Understanding the Costs of Poor Information 

• Four primary sources / reasons of low quality information :

😞 

Online customers intentionally enter inaccurate information to protect their privacy

😞 Information from different systems have different entry standards and formats

😞

Call center operators enter abbreviated or erroneous information by accident or to save time

😞 Third party and external information contains inconsistencies, inaccuracies, and errors

• Potential business effects resulting from low quality information :

😟 Inability to accurately track customers

😟 Difficulty identifying valuable customers

😟 Inability to identify selling opportunities

😟 Marketing to nonexistent customers

😟 Difficulty tracking revenue due to inaccurate invoices

😟Inability to build strong customer relationships

Understanding the Benefits of Good Information

• High quality information can significantly improve the chances of making a good decision 
• Good decisions can directly impact an organization's bottom line

THE END OF CHAPTER 6 💛

MGT300 Chapter 5

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) ~ 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

Average CIO compensation by industry

What concerns CIOs the most

   ❤ Chief Technology Officer (CTO) ~ responsible for ensuring the throughput, speed, accurancy, 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

Skills pivotal for success in executive IT roles

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 

Ethics

😆 Principles and standards that guide our behaviour toward other people

😆 Privacy is a major ethical issue.

• Privacy - 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 - Intangible creative work that is embodied in physical form
• Copyright - The legal protection afforded an expression of an idea, such as a song, video game, and some types of proprietary documents
• Fair use doctrine - In certain situations, it is legal to use copyrighted material
• Pirated software - The unauthorized use, duplication, distribution, or sale of copyrighted software
• Counterfeit software - Software that is manufactured to look like the real thing and sold as such

😆 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

THE END OF CHAPTER 5 💚

MGT300 Chapter 4

CHAPTER 4   MEASURING THE SUCCESS OF STRATEGIC INITIATIVES

Measuring Information Technology’s Success

• Key performance indicator – measures that are tied to business drivers
• Metrics – detailed measures that feed KPIs

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.

Benchmarking – Base lining metrics

• Bencmarking – 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

Example : E-Government Benchmark

Efficiency IT Metrics 

• Efficiency IT metrics focus on technology and include :

1. Throughput ~ amount of infomation that can travel through a system at any point
2. Transaction speed ~ amount of time a system takes to perform a transaction
3. System availability ~ number of hours a system is available for users
4. Information accurancy ~ the extent to which a system generates the correct results when executing the same transaction numerous time
5. Web Traffic ~ includes host of benchmarks such as the no of page view, no of unique visitors, average time spent viewing Web page
6. Response Time ~ time it takes to respond to user interactions such as a mouse click

Effectiveness IT Metrics

• Effectiveness IT metrics focus on an organization's goals, strategies, and objectives, also include :

1. Usability ~ The ease with which people perform transactions and/or find information. A popular usability metric on the Internet is degrees of freedom, which measures the number of clicks required to find desired information.
2. Customer satisfaction ~ Measured by such benchmarks as satisfaction surveys, percentage of existing customers retained, and increases in revenue dollars per customer.
3. Conversion rates ~ The number of customers an organization “touches” for the first time and persuades to purchase its products or services. This is a popular metric for evaluating the effectiveness of banner, pop-up, and pop-under ads on the Internet.
4. Financial ~ Such as return on investment (the earning power of an organization’s assets), cost-benefit analysis (the comparison of projected revenues and costs including development, maintenance, fixed, and variable), and break-even analysis (the point at which constant revenues equal ongoing costs).

Interrelationships of Efficiency and Effectiveness IT Metrics

• 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 

✌ Web site metrics 

• Abandoned registrations ~ Number of visitors who start the process of completing a registration page and then abandon the activity.
• Abandoned shopping carts ~ Number of visitors who create a shopping cart and start shopping and then abandon the activity before paying for the merchandise.
• Click-through ~ Count of the number of people who visit a site, click on an ad, and are taken to the site of the advertiser
• Conversion rate ~ Percentage of potential customers who visit a site and actually buy something.
• Cost-per-thousand (CPM) ~ Sales dollars generated per dollar of advertising. This is commonly used to make the case for spending money to appear on a search engine
• Page exposures ~ Average number of page exposures to an individual visitor
• Total hits ~ Number of visits to a Web site, many of which may be by the same visitor
• Unique visitors ~ Number of unique visitors to a site in a given time. This is commonly used by Nielsen/Net ratings to rank the most popular Web sites

✌ Supply Chain Management Metrics (SCM)

• Back order ~ An unfilled customer order. A back order is demand (immediate or past due) against an item whose current stock level is insufficient to satisfy demand.
• Customer order promised cycle time ~ The anticipated or agreed upon cycle time of a purchase order. It is a gap between the purchase order creation date and the requested delivery date
• Customer order actual cycle time ~ The average time it takes to actually fill a customer’s purchase order. This measure can be viewed on an order or an order line level.
• Inventory replenishment cycle time ~ Measure of the manufacturing cycle time plus the time included to deploy the product to the appropriate distribution center.
• Inventory turns (inventory turnover) ~ The number of times that a company’s inventory cycles or turns over per year. It is one of the most commonly used supply chain metrics

✌ Customer Relationship Management (CRM) Metrics 

• Measure user satisfaction and interaction, also include :

                ❤ sales metrics

                ❤ service metrics

                ❤ marketing metrics

Sales Metrics	Service Metrics	Marketing Metrics
~Number of prospective customers ~Number of new customers ~Number of retained customers ~Number of open leads ~Number of sales calls ~Number of sales call per lead ~Amount of new revenue ~Amount of recurring revenue ~Number of proposals given	~Cases closed same day ~Number of cases handled by agent ~Number of service calls ~Average number of service requests by type ~Average time to resolution ~Average number of service calls per day ~Percentage compliance with service-level agreement ~Percentage of service renewals ~Customer satisfaction level	~Number of marketing campaigns ~New customer retention rates ~Number of responses by marketing campaign ~Number of purchases by marketing campaign ~Revenue generated by marketing campaign ~Cost per interaction by marketing campaign ~Number of new customers acquired by marketing campaign ~Customer retention rate ~Number of new leads by product

✌ Business Process Reengineering (BPR) metrics

✌ Enterprise Resource Planning (ERP) metrics 

• BPR and ERP metrics is the balanced scorecard which enables organizations to measure and manage strategic initiatives.

THE END OF CHAPTER 4 👍👍

MGT 300 Chapter 3

Chapter 3 Strategic Initiatives for Implementing Competitive Advantages

Strategic Initiatives

• Organization 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.

• 4 basic components :

1. Supply chain strategy - strategy for managing all resources to meet customer demand
2. Supply chain partner - partners throughout the supply chain that deliver finished products, raw materials, and services
3. Supply chain operation - schedule for production activities 
4. Supply chain logistics - product delivery process

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

Effective and efficient SCM system 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

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

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 Reengineering (BPR)

• 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

Example of BPR

Enterprise Resource Planning (ERP)

• ERP intergrates all departments and departments and functions throughout an organization into a single IT system.
• Keyword in ERP is "enterprise"

Sample data from a sales database

Sample data from an accounting database

• ERP system collect data from across an organization and correlates the data generating an enterprisewide view.

THE END OF CHAPTER 3 ❤❤