Business Information Systems - Textbook

BUSINESS INFORMATION SYSTEM INFORMATION TECHNOLOGY VS INFORMATION SYSTEM Source: https://www.uagc.edu/  Information Systems Dimensions Information Systems are More Than Computers Using information systems effectively requires an understanding of the organization, management, and...

BUSINESS INFORMATION SYSTEM INFORMATION TECHNOLOGY VS INFORMATION SYSTEM Source: https://www.uagc.edu/  Information Systems Dimensions Information Systems are More Than Computers Using information systems effectively requires an understanding of the organization, management, and information technology shaping the systems. An information system creates value for the firm as an organizational and management solution to challenges posed by the environment. Contemporary Approaches to Information Systems A Sociotechnical Perspective on Information Systems In a sociotechnical perspective, the performance of a system is optimized when both the technology and the organization mutually adjust to one another until a satisfactory fit is obtained.  DECISION MAKING Structured Decisions Semi-Structured Decisions Unstructured Decisions The Role of Information Systems in Business Today The Interdependence Between Organizations and Information Technology In contemporary systems there is a growing interdependence between a firm’s information systems and its business capabilities. Changes in strategy, rules, and business processes increasingly require changes in hardware, software, databases, and telecommunications. Often, what the organization would like to do depends on what its systems will permit it to do.  Perspectives on Information Systems Functions of an Information System An information system contains information about an organization and its surrounding environment. Three basic activities—input, processing, and output—produce the information organizations need. Feedback is output returned to appropriate people or activities in the organization to evaluate and refine the input. Environmental actors, such as customers, suppliers, competitors, stockholders, and regulatory agencies, interact with the organization and its information systems.  Perspectives on Information Systems Levels in a Firm Business organizations are hierarchies consisting of three principal levels: senior management, middle management, and operational management. Information systems serve each of these levels. Scientists and knowledge workers often work with middle management. Strategic Business Objectives of Information Systems Using Information Systems to Achieve Competitive Advantage Generic strategies for dealing with competitive forces, enabled by using IT Low-cost leadership Product differentiation Focus on market niche Using Information Systems to Achieve Competitive Advantage Low-cost leadership Produce products and services at a lower price than competitors while enhancing quality and level of service Examples: WalMart Product differentiation Enable new products or services, greatly change customer convenience and experience Examples: Apple Using Information Systems to Achieve Competitive Advantage Focus on market niche Use information systems to enable a focused strategy on a single market niche; specialize Example: Hilton Hotels Using Information Systems to Achieve Competitive Advantage Why do some firms become leaders in their industry? Michael Porter’s competitive forces model Provides general view of firm, its competitors, and environment Five competitive forces shape fate of firm ▪ Traditional competitors ▪ New market entrants ▪ Substitute products and services ▪ Customers ▪ Suppliers Using Information Systems to Achieve Competitive Advantage Porter’s Competitive Forces Model In Porter’s competitive forces model, the strategic position of the firm and its strategies are determined not only by competition with its traditional direct competitors but also by four other forces in the industry’s environment: new market entrants, substitute products, customers, and suppliers.  Using Information Systems to Achieve Competitive Advantage Business value chain model Views firm as series of activities that add value to products or services Highlights activities where competitive strategies can best be applied ▪ Primary activities vs. support activities At each stage, determine how information systems can improve operational efficiency and improve customer and supplier intimacy Utilize benchmarking, industry best practices Using Information Systems to Achieve Competitive Advantage The Value Chain Model This figure provides examples of systems for both primary and support activities of a firm and of its value partners that can add a margin of value to a firm’s products or services. Using Information Systems to Achieve Competitive Advantage The Value Web The value web is a networked system that can synchronize the value chains of business partners within an industry to respond rapidly to changes in supply and demand. Using Information Systems to Achieve Competitive Advantage An Ecosystem Strategic Model The digital firm era requires a more dynamic view of the boundaries among industries, firms, customers, and suppliers, with competition occurring among industry sets in a business ecosystem. In the ecosystem model, multiple industries work together to deliver value to the customer. IT plays an important role in enabling a dense network of interactions among the participating firms. Business Model A plan for the successful operation of a business, identifying sources of revenue, the target customer base, products, and financing details, essentially telling us how the key drivers of a business fit together. A concrete tool for business model innovation is The Business Model Canvas– a template that can be used to describe, design, challenge, and pivot your business model. Did You Know 2025 Business Model Canvas Business Model Canvas Customer Segments: Who are your customers? Value Proposition: Why do customers buy from you? What is the gain you provide or the need you satisfy? Channels: How are your products and services delivered to the market? Customer Relationships: How do you get, keep, and grow your customers? Revenue Streams: How does your business earn money? Key Resources: What unique strategic resources does your business have or need? Key Activities: What unique strategic activities does your business perform to deliver your value proposition? Key Partnerships: What non-key activities can you outsource to enable you to focus more on your key activities. Cost Structures: What are the major costs incurred by your business? Background: Dominos International Business Domestic Business Financials Supply Chain Business Canvas Model Business Canvas Model: Dominos Pizza Key Partners: Jubilant, Starship Technologies Key Activities: Orders Management, SCM, Marketing, Customer Service, Quality Management Key Resources: Franchises, Trained Staff, Transportation, Software/Analytics Value Proposition: 30 min guarantee, Affordable with quality Customer Segments: Students, Corporates Customer Relationships: Touchpoints, Pizza Tracker Channels: Branches, Apps, Website, SM Cost Structure: Working capital, Capital cost, Employees, Advertising Revenue Stream: Pizza sales Revenue of Domino's Pizza worldwide from 2006 to 2022 (in billion U.S. dollars) Revenue of Domino's Pizza worldwide 2006-2022 5.0 4.54 4.5 4.36 4.12 4.0 Revenue in billion U.S. dollars 3.62 3.43 3.5 3.0 2.79 2.47 2.5 2.22 1.99 2.0 1.8 1.65 1.68 1.57 1.44 1.46 1.43 1.4 1.5 1.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Note(s): Worldwide; 2006 to 2022; fiscal year ends on the Sunday closest to December 31.* Further information regarding this statistic can be found on page 8. 6 Source(s): Domino's Pizza; ID 207133 Number of Domino's Pizza stores in selected countries worldwide from 2010 to 2022 Number of Domino's Pizza stores in selected countries 2010-2022 United States India United Kingdom Japan Mexico Australia Turkey China Canada France South Korea Netherlands Taiwan Saudi Arabia Germany 16,000 14,000 12,000 Number of stores 10,000 8,000 6,000 4,000 2,000 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Note(s): Worldwide; 2010 to 2022; fiscal year ends on the Sunday closest to December 31.* Further information regarding this statistic can be found on page 8. 2 Source(s): Domino's Pizza; ID 207130 Revenue of Domino's Pizza worldwide from 2013 to 2022, by segment (in million U.S. dollars) Revenue by segment of Domino's Pizza 2013-2022, by segment Revenue in million U.S. dollars Supply chain Domestic franchise Domestic company-owned stores International franchise 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 2013 1,118.9 212.4 337.4 133.6 2014 1,262.5 230.2 348.5 152.6 2015 1,383.2 272.8 396.9 163.6 2016 1,544.3 312.3 439 177 2017 1,739 351.4 490.8 206.7 2018 1,943.3 750 514.8 224.7 2019 2,104.9 819.3 453.6 241 2020 2,416.65 965.43 485.57 249.76 2021 2,561 1,019.4 479 298 2022 2,754.7 1,041.6 445.8 295 Note(s): Worldwide; 2013 to 2022; fiscal year ends on the Sunday closest to December 31.* Further information regarding this statistic can be found on page 8. 4 Source(s): Domino's Pizza; ID 816149 DOMINO'S How Pizza is made at Dominos SYSTEMS OVERVIEW Inventory Management System Order Management System ◦ Order Process ◦ I/P- Customer data (Who is ordering, location, contact no); Product data (Type of Pizza) ◦ O/P- Invoice /Bill/Receipt ◦ PULSE is the point of sale system capturing transactional data (for ordering system surely; maybe also its inventory system)-TPS ◦ PULSE can also generate reports consolidating sales across different franchisees for a particular product category (including graphical output like Pizza Tracker) –MIS ◦ However, PULSE has limitations in analytical capabilities, which need to be addressed using different tools, hence DSS capability absent as per the case DOMINO’S SUB-PROCESS Order Preparation Bake Quality Delivery  DOMINO’S-BOTTLENECKS Reducing Time taken for servicing order by examining bottlenecks in the process  DOMINO’S CUSTOMER Pizza Tracker: Develops Customer Intimacy CONTACT DOMINO’S DELIVERY Delivery at Dominos DOMINO’S SUMMARY PULSE ◦ Promotes operational efficiency ◦ Centralization of Process (more secured data) ◦ Standardized Reports ◦ Automated Tracking process from order to delivery ◦ Dashboards for customer outreach ◦ eConnect ◦ Inventory management APP ◦ Android ◦ IOS VoIP ◦ Virtual call centers Role of digitalisation and its applications  Agenda Digital transformation and data-driven innovation in different industries Organisational transformation for executing data-driven innovation  The big question is how can companies manage their data-driven transformation Key steps towards the organisational transformation for data driven innovation Choosethe right data – Focus on the problems thatcompanywantsto solve – GetnecessaryIT support Build Models that predict and optimize business outcomes – Focus on key business decisions to find out which model to use Transform company’s capabilities – Understand the current decision making process and its shortcomings – Ensure that decision-makers understand how the model Works and has confidence in using its output To improve performance with advanced analytics, companies need to develop strengths in three areas Source: Barton, D. and Court, D., 2012. Making advanced analytics work for you. Harvard business review, 90(10), pp.78-83.  Industry 4.0 Evolution “Industry 4.0” term is devoted to the fourth industrial revolution. Over time and by developing different technologies, this term has come with new paradigms and technologies, which help to connect the machines, products, and methods as an interconnected system. Industry 4.0 is Transformational Incorporates SMAC Physical Assets into Digital Assets Focus on Automation (KPIs change) Integration Challenge (ICF, Chennai) First Industrie 4.0 Hannover fair in 2011  Autonomous robots https://atimotors.com/hyundai-case-study/ https://www.dailyexcelsior.com/founders-of-av-startup-ati- motors-from-left-saad-nasser-v-vinay-and-saurabh-chandra/ IoT enabled Digital Twins and Smart Factories https://assets.new.siemens.com/siemens/assets/api/uuid:cda2b14 c-23bf-4685-8fdf-adb7fd25e3a7/Whitepaper-Digital-Twin-EN.pdf  Using VR for customer engagement Audi, in partnership with ZeroLight, is now offering a real- time 3D configurator via the web that allows customers to develop their dream car, then experience it in familiar surroundings. Once in the dealership, the same models can be experienced through virtual reality. Analytics inform every aspect of the journey, helping customers and dealers at every stage of the omnichannel experience. https://www.youtube.com/watch?v=BT0X9ZoyaDY  Using AR for service and maintenance https://www.youtube.com/watch?v=vgEY2W6dPqc Challenges in adopting a product-as-a- service model Risk and Uncertainty Business Model Transformation Investment and infrastructure Cultural and organisational shift Data Customer Security acceptance and and Privacy education VOLVO CE-Integrated connected solutions Brand agnostic, this new digital service is available to a wide range of customers who are looking to make use of digital tools to improve work flow, boost profitability and reduce environmental impact. It also forms an important part of Volvo CE’s target to double revenue from services to 30% by 2030. The aim is to make it easier for customers to access and take full advantage of connectivity tools which maximize the fill rate of constructions trucks and therefore cut down on the amount of work cycles DESIGN FOR 3D PRINTING TO REDUCE WEIGHT AND IMPROVE DURABILITY OF AUTOMOTIVE PARTS A steering knuckle was redesigned for 3D Printing, where it was possible to achieve a weight saving of 40 % in the neck area compared to the conventional forged part. All the requirements demanded of the part were fulfilled, taking into account the given assembly space. Light weight brake pedal Source: SLM Solutions  Buttons made using 3D printing filaments from recycled fishing nets Digital technology implementation capabilities Optimising process for 3DP of buttons: It is difficult to 3D print nylon, as nylon naturally absorbs moisture. “To print with the Fishy Filaments nylon, it had to be baked at 55 degrees for 12 hours before printing. Whilst these trials were going ahead, I tested printing the different components’ sizes and forms using PLA plastic. This helped me understand how the printer will handle each file.” Value for customers-100% recycled and sustainable buttons: “Ours is the only marine nylon button in the world. Also, the fact that we can make 46 of these buttons which is equivalent to making 1 button –only based on production cost. If we also add transportation cost associated with importing the buttons, then we can produce many more buttons locally using our technology.” https://www.youtube.com/shorts/qW4xMgrALok What role does blockchain play in overall digitalisation agenda? BLOCKCHAIN IN FOOD SUPPLY CHAINS Source:Dimitra Data driven innovation in retail Coca Cola Freestyle DISASTER MANAGEMENT PLANNING AND MITIGATION Puri Sunderbans NPD Macro view of new product development Macro environment Competition, finance, economic conditions, legal framework New ideas, New products suggestions, and services concepts The organisation ? How does this process work  Key themes from the product development literature Process timing pre-development activities Organisational Management development activities structure authority marketing activities mechanism support launch activities style technical aspects communication People multifunctional Information co-ordination general product champion marketing Successful communication external new products communication Strategy orientation objectives synergy Source: Hart (1995) in Bruce & Biemans, Wiley; Trott (2005), Prentice Hall product characteristics A product is multi-dimensional Brand name Features Quality price specifications Level of Packaging service Technology Change a dimension and you have a new product Brand name Features Quality specifications Price Level of service Packaging Technology  Innovation management framework EXTERNAL INPUTS: macro factors; competition; profit; growth; diversification; etc. Organisation and business strategy Organisation’s knowledge base accumulates knowledge over EXTERNAL INPUTS: time scientific and technological EXTERNAL INPUTS: development; societal needs; competitors; competitors; suppliers; supplier partnerships; customers; distributors; university departments. customers; strategic alliances. Source: Trott, 1998  NPD as a network of interactions External inputs: External inputs: competitors; Marketing and sales Finance suppliers; societal needs; competitors; distributors; supplier partnerships; customers. distributors; customers; strategic alliances. Accumulation of knowledge External inputs: External inputs: over time competitors; scientific and suppliers; technological distributors; Engineering and Research and developments; customers; manufacturing development competitors; university departments. suppliers; customers; university departments.  PRODUCT: SMARTPHONE CUSTOMER REQUIREMENT SIZE EASE OF USE PICTURE QUALITY SOUND QUALITY OS TOUCH/TYPE/HYBRID COST RELIABILITY PROVIDE THE PRODUCT SPECS TO THE EXTENT POSSIBLE WORK OUT THE APPROX. PRICE, PROVIDING THE BREAKUP FOR MATERIAL COST, MANUFACTURING COST, MARKETING/PROMOTIONS ETC.  THE BALANCED SCORECARD THE BALANCED SCORECARD IS A STRATEGIC PLANNING AND MANAGEMENT METHOD USED TO: ALIGN BUSINESS ACTIVITIES TO A VISION AND STRATEGY OF AN ORGANIZATION IMPROVE INTERNAL AND EXTERNAL COMMUNICATIONS MONITOR ORGANIZATIONAL PERFORMANCE AGAINST STRATEGIC GOALS. THE DESIGN OF BALANCED SCORECARD CONCERNS ITSELF WITH: THE IDENTIFICATION OF A SMALL NUMBER OF FINANCIAL AND NON-FINANCIAL MEASURES REFERRED TO AS PERSPECTIVES SETTING TARGETS FOR THE MEASURES AND THEN MEASURING THEM ON A REGULAR BASIS TO DETERMINE SUCCESS OR FAILURE.  BALANCED SCORECARD Indicator 1 Indicator 1 Indicator 2 Indicator 2 Indicator 3 Indicator 3 Financial Customer Vision Internal Innovation Processes Learning Indicator 1 Indicator 1 Indicator 2 Indicator 2 Indicator 3 Indicator 3  BALANCED SCORECARD Financial Objectives Measures Initiatives Customer Internal Processes Objectives Objectives Vision Measures Measures Initiatives Initiatives Innovation & Learning Objectives Measures Initiatives ENTERPRISE SYSTEMS ERP SCM CRM KMS  Enterprise Systems HOW ENTERPRISE SYSTEMS WORK Enterprise systems feature a set of integrated software modules and a central database that enables data to be shared by many different business processes and functional areas throughout the enterprise.  An Example: Before ERP Orders Parts Sends report Customer Demographic Sales Dept. Files Customers Checks for Parts Calls back “Not in stock” Accounting “We ordered the parts” Files Accounting Sends report Invoices Sends report accounting Ships parts Vendor Warehouse Order is placed “We Need parts #XX” with Vendor Inventory Purchasing Files 3 Files “We ordered the parts” Purchasing  An Example: After ERP Orders Parts Inventory Data If no parts, order is placed Customers Sales Dept. through DB Accounting Financial Data exchange; Books invoice against PO Order is submitted to Purchasing. Database Purchasing record Books inventory order in DB against PO Order is placed with Vendor Warehouse Vendor Purchasing 4 Ships parts And invoices accounting ERP Benefits 5  ERP Implementation Stages Need for ERP (based on the current business practices, changed or changing environment conditions, and the proposed business strategy) Evaluation of organization’s preparedness (issues related to data availability and consistency, process orientation, technical ability of executives, management culture, IT strategy, ability to work in teams, and learning attitude) Implementation (process mapping, gap analysis, process redesign, data creation, pilot implementation, and propagation) Stability, maintenance, and enhancement Acknowledgement: Vikalpa, Vol 28, No 1, Jan-Mar 2003 METHODOLOGY FOR RANKING ERP SYSTEMS Reputation in industry Customer adoption rate Ease of implementation, including average time and total cost of ownership Breadth and depth of functionality Maturity of cloud solutions Flexibility of solutions Scalability of solutions Ease of integration to third-party systems Vendor’s product roadmap and overall viability Ease of organizational change management and training Strength of vendor ecosystem, such as system integrators and partners Return on investment  ERP Implementation: Success Factors Top management support (motivation, budget support, resource creation and deployment, generating backup options, etc.) Efficient project execution team (reporting formats, time-and cost management- related issues, resource allocation, use of external consultants and internal implementation team, etc. Conflict resolution procedures (committee structure, role clarity, and process team structure) Training and education (technical, behavior on change management process and managerial process orientation)  Total Cost of Ownership of ERP Total cost of ownership (TCO) is a model developed by Gartner Group to analyze the direct and indirect costs of owning and using hardware and software. TCO essentially helps a company determine whether it wins or loses from specific technology implementations. 9 Source: http://www.cio.com/summaries/enterprise/erp/index.html Business Process Integration 10 Information Technology in a Supply Chain: Legacy Systems Strategic Planning Operational Supplier Manufacturer Distributor Retailer Customer Information Technology in a Supply Chain: ERP Systems Strategic Planning Potential ERP Potential Operational ERP ERP Supplier Manufacturer Distributor Retailer Customer  Information Technology in a Supply Chain: Analytical Applications Strategic SCM Planning APS Transport & Inventory Dem Plan Planning Supplier Apps Transport execution & CRM/SFA MES WMS Operational Supplier Manufacturer Distributor Retailer Customer  Knowledge Management System (KMS) A Knowledge Management System (KMS) is any kind of IT system that stores and retrieves knowledge to improve understanding, collaboration, and process alignment. Knowledge management systems can exist within organizations or teams, but they can also be used to center your knowledge base for your users or customers. Supply Chain Management - A supply chain consists of Supplier Manufacturer Distributor Retailer Customer Upstream Downstream - aims to Match Supply and Demand, profitably for products and services SUPPLY SIDE DEMAND SIDE - achieves The right Product + + + + + The right Price The right Store The right Quantity The right Customer The right Time = Higher Profits 15 A Generic Supply Chain Sources: Regional Field Customers, plants Warehouses: Warehouses: demand vendors stocking stocking centers ports points points sinks Supply Inventory Purchase Inventory Transportation 16 Importance of Supply Chain Management ▪ Supply chain related activities (movement, storage, and control of products across supply chains). Source: State of Logistics Report Frequent Supply shortages Low order fill Inefficient rates logistics High Tier 1 Manufacturer Distributor Retailer Customer stockouts Supplier Glitch-Wrong Material, Ineffective Machine is Down – High inventories High landed costs to through the chain promotions the shelf effect snowballs ▪ Eliminating inefficiencies in supply chains can save millions of $. 17 Cycle View of Supply Chains Customer Customer Order Cycle Retailer Replenishment Cycle Distributor Manufacturing Cycle Manufacturer Procurement Cycle Supplier 18 Push vs Pull System What instigates the movement of the work in the system? In Push systems, work release is based on downstream demand forecasts – Keeps inventory to meet actual demand – Acts proactively » e.g. Making generic job application resumes today In Pull systems, work release is based on actual demand or the actual status of the downstream customers – May cause long delivery lead times – Acts reactively » e.g. Making a specific resume for a company after talking to the recruiter 19 Linking SC and Business Strategy Competitive (Business) Strategy Product Development Strategy Marketing Strategy -Portfolio of products -Frequent discounts Supply Chain Strategy -Timing of product introductions -Coupons New Marketing Product and Operations Distribution Service Development Sales Finance, Accounting, Information Technology, Human Resources 20 Strategic Scope Suppliers Manufacturer Distributor Retailer Customer Competitive Strategy Product Dev. Strategy Supply Chain Strategy Marketing Strategy 21 Achieving Strategic Fit: Consistent SCM and Competitive strategies Fit SC to the customer Understanding the Customer – Range of demand, pizza hut stable – Production lot size, seasonal products Implied (Demand) – Response time, organ transplantation Uncertainty for SC – Service level, product availability Implied trouble – Product variety for SC – Innovation – Accommodating poor quality 22 Contributors to Implied Demand Uncertainty Commodities Customized products Detergent High Fashion Clothing Long lead time steel Emergency steel, for maintenance/replacement Price Customer Need Responsiveness Low Implied Demand Uncertainty High Short lead times, product variety, distribution channel variety, high rate of innovation and high customer service levels all increase the Implied Demand Uncertainty 23 Drivers of Supply Chain Performance How to achieve Efficiency Responsiveness Supply chain structure Logistical Inventory Transportation Facilities Drivers Cross- Information Sourcing Pricing Functional Drivers 24 Considerations for Supply Chain Drivers Driver Efficiency Responsiveness Inventory Cost of holding Availability Transportation Consolidation Speed Facilities Consolidation / Proximity / Dedicated Flexibility Information Low cost/slow/no High cost/ duplication streamlined/reliable Sourcing Low cost sources Responsive sources Pricing Constant price Low-high price 25  Information Security Office of Budget and Finance Education – Partnership – Solutions 26 Future of Supply Chain Future 27