Major Business Initiatives: Gaining Competitive Advantage With IT

Chapter 2
Major Business
Initiatives: Gaining
Competitive
Advantage with IT
McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
STUDENT LEARNING
OUTCOMES
1. Define supply chain management

(SCM) systems and describe their
strategic and competitive
opportunities.
2. Define customer relationship
management (CRM) systems and
describe their strategic and
competitive opportunities.
2-2
STUDENT LEARNING
OUTCOMES
3. Explain the significance of enterprise

resource planning (ERP) software as
the integration of functional
software systems.
4. Define social media and describe a
few of its many dimensions that
make it important in the business
world.
2-3
DEATH OF A TRAVEL AGENT
2-4
DEATH OF A TRAVEL AGENT
 The previous slide shows the

dramatic impact of technology on
the number of travel agents in the
U.S.
 Because consumers are now
“empowered,” travel agents have
declined from 171,600 (1999) to
95,000 (2009)
2-5
Questions
1. When you last flew, did you use a

travel agent or directly to the Web
for tickets?
2. What is your preferred travel site?
What features do you like?
3. Why do airlines support moving
reservation systems to the Web?
2-6
CHAPTER ORGANIZATION
1. Supply Chain Management

 Learning Outcome #1
2. Customer Relationship Management
3. Enterprise Resource Planning
4. Social Media
2-7
SUPPLY CHAIN MANAGEMENT
 Supply chain management (SCM) –

tracks inventory and information among
business processes and across companies
 Supply chain management (SCM)
system – IT system that supports supply
chain management
 Just-in-time (JIT) – method for
producing or delivering a product or
service just at the time the customer
wants it 2-8
Dell’s Effective SCM Through
JIT
2-9
Supply Chain Management
 Most supply chains use inter-

modal transportation, multiple
transportation channels (railway,
truck, etc) to move products from
origin destination
 This creates supply chain
complexities
2-10
Opportunities of SCM
 Business strategy
 Overall cost leadership
 Running the organization (RGT)
framework
 Goal is to squeeze out every penny
of cost possible in the supply chain
 This will optimize fulfillment,
logistics, production, revenue and
profit, and cost and price
2-11
IT Support for SCM
 SCM systems pioneered by specialist

companies
 SCM is now part of ERP software
(discussed later)
 Learn more
 Supply Chain Knowledge Base
 Supply Chain Management Review
 i2 Technologies
 CIO Magazine
2-12
CUSTOMER RELATIONSHIP
MANAGEMENT
 Customer relationship
management (CRM) system –
uses information about customers
to gain insight into their needs,
wants, and behaviors in order to
serve them better
 Includes multi-channel service
delivery, multiple ways in which
customers can interact with a
business
2-13
The Focuses of Customer
Relationship Management
Analytics is now a
huge part of CRM.
Analytics use hard
data to support
decision making.
2-14
Customer Relationship
Management
 Sales force automation (SFA)

systems – automatically track all
the steps in the sales process
 Sales lead tracking
 Listing potential customers
 Market and customer analysis
 Product configuration
 Getting repeat customers
2-15
GM’s Sales Force Automation
(Purchase Funnel)
2-16
Opportunities of CRM
 Business strategy
 Differentiation and focus
 Growing the organization
 Classic goals
 Treating customers better
 Understanding their needs and wants
 Tailoring offerings
 Providing “delightful” experiences
2-17
IT Support for CRM
 Front-office systems – primary

interface to customers and sales
channels
 Back-office systems – fulfill and
support customer orders
 Both interface to CRM database and
analysis and reporting systems
2-18
IT Support for CRM
2-19
IT Support for CRM
 Software-as-a-service (SaaS) –
software model in which you pay for
software on a pay-per-use basis
instead of buying the software
 Learn more
 Salesforce.com
 CIO Magazine
 CRM Today
 destinationCRM.com
2-20
ENTERPRISE RESOURCE
PLANNING
 How do you bring together SCM, CRM,
and other systems? With an ERP
system.
 Enterprise resource planning
(ERP) system – collection of
integrated software for business
management, accounting, finance,
supply chain management, inventory
management, customer relationship
management, e-collaboration, etc. 2-21
ENTERPRISE RESOURCE
PLANNING
 ERP is big business

 Federal government will spend $7.7
billion on ERP in 2009
 60% of Fortune 1000 companies
have ERP systems
2-22
ENTERPRISE RESOURCE
PLANNING
The Big 4 ERP Vendors

2-23
ERP Evolution
 MRP – 1970s; focus on production

planning, calculating time requirements,
procurement; basic automated
manufacturing focus
 MRP II – 1980s; closed the loop to include
financial and accounting systems and serve
as a decision support tool for managers
2-24
ERP Evolution
 ERP – late 1980s/early 1990s; focus on

critical “time to market”; shorter lead
times; customers want it now
 ERP II – today; focus on complete ERP
integration with CRM, business
intelligence, and a host of other
applications across the organization
2-25
ERP Functionality
2-26
ERP
 Attempts to integrate everything

 CRM drives what SCM will produce
 Everyone works together in e-collaboration
 The entire organization knows the entire
organization
 Think about your school
 Can you register for class with a bill
outstanding?
 Can you register for a class for which you
haven’t completed the prerequisite?
2-27
ERP Integrates Everything
2-28
ERP and Market Size
 Many ERP vendors based on

organization size
 Small business – less than 100 seats
 Medium-size business – 100-500
seats
 Large business – more than 500
seats
2-29
SOCIAL MEDIA
 Social media – Web-based and

mobile technologies that create
interactivity among users, mostly
allowing users to be both creators
and consumers of content
2-30
SOCIAL MEDIA
 Fueled by Web 2.0

 Web 2.0 – second generation of the
Web focusing on online collaboration,
users as both creators and modifiers
of content, dynamic and customized
information feeds, and many more
engaging technologies
2-31
The Evolution of the Web
2-32
Some Aspects of Social Media
 Social networking
 Social shopping
 Social playing
 Social “saving the world”
 Social locationing
 There are many more
2-33
Social Networking
 Social networking site – 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
2-34
Social Networking Players
2-35
Social Shopping
 See what other people are buying

and wearing, trying to find the same,
and informing others of where the
best deals are
 Pepsi – social vending machines
 Bartab
 Groupon
2-36
Social Playing
 MMORPGs (massively
multiplayer online role-playing
games) – thousands or millions of
people play and interact in a robust
virtual world
2-37
Social Playing
2-38
Social Playing
 World of Warcraft
 Largest, 11 million players
 Complete quests in a world of monsters,
uber-warriors, and mythical creatures
 Second Life
 Virtual world
 Avatar
 Linden dollars
2-39
Social Playing
 Zynga
 Over 270 million play Zynga games on
Facebook
 Cityville
 Farmville
 Mafia Wars
 Zynga Pokerr
 Words with Friends
2-40
Social “Saving the World”
 Games that support sustainability and

triple-bottom-line efforts
2-41
Social “Saving the World”
 Pepsi Refresh Project – education,

arts and music, communities
 Toyota Ideas for Good – use Toyota
technology for non-auto uses
 Volkswagen Fun Theory – change
behavior of people for the good
 TOMS One-for-One – buy shoes and
have a free pair donated to someone
2-42
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
2-43
Popular Social Locationing
Systems
 Geoloqi
 Facebook Places
 SCVNGR
 Google Latitude
 Foursquare
 Gowalla
2-44

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Chapter 2

1. Define supply chain management

3. Explain the significance of enterprise

 The previous slide shows the

1. When you last flew, did you use a

1. Supply Chain Management

 Supply chain management (SCM) –

 Most supply chains use inter-

 SCM systems pioneered by specialist

 Sales force automation (SFA)

 Front-office systems – primary

 ERP is big business

The Big 4 ERP Vendors

 MRP – 1970s; focus on production

 ERP – late 1980s/early 1990s; focus on

 Attempts to integrate everything

 Many ERP vendors based on

 Social media – Web-based and

 Fueled by Web 2.0

 See what other people are buying

 Games that support sustainability and

 Pepsi Refresh Project – education,

 Social locationing (location-

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