Chapter 2 Flashcards
What is the benefit of having a good info system
can give corporations a competitive advantage
Competitive advantage
any assets that provide an organization with an edge against its competitors
Business process
ongoing collection of tasks in a specific sequence that create a product or a service of value
has 3 components: inputs resources outputs
3 parts of a business process
inputs: materials, info, services that flow thorugh the process
resources: people or tools to make stuff
output: end result
how do companies measure their progress
effectivness
efficiency
effectivness
-measure of progress
-creating outputs of value to the business process customer—focusing on quality of work
Efficiency
- doing stuff without wasting resources;
- progressing from one process activity to another without delay or without wasting money.
-getting more things done with the same or fewer resources.
PROCUREMENT PROCESS
all of the tasks involved in getting needed materials from a vendor.
made up of five steps that in three different functional areas of the firm: warehouse, purchasing, and accounting.
procurment process steps
1) warehouse recognizes taht we need to procure materials; signs a purchase requisiton, send to purchasing dept
2)purhcasing dept finds vendor, orders
3) vendor ships the material, recieivd in warehouse
4) vendor sends an INVOICE, recived by the accoutning department
5) acct dept send payment to the vendor
invoice defintiion
An invoice is a document given to the buyer by the seller to collect payment
fulfilment process
the act of processing customer orders
steps of fulfilment process
- customer purchase order, recieved by sales
- sales validates the purcahse order, creates sales order
-sales tracks progress of order
-warehouse sends shipment to customer
-once acct notified of shipment, creates an invoice and sends it to the customer
-customer makes payment, recorded by acountig
SHAPES IN BUSINESS PROCESS FLOW DIAGRAM MEANINGS
DIAMOND= DECISION
AARROWS= CONNECTORS
RECTANGLES= STEPS
D DHAPED BOX= WAITING Period
OVALS= START/TERMINATION
3 roles of IS in Business processes
1) executing the process
2) capturing and storing process data
3) montioring process performance
1executing the process- procurement & fulfillment
IS- BP
letting employees know when to complete task.
providingg the data needed to complete the task
2 capturing and storing process data
IS- BP
processing data, (g=times, product numbers, prices etc)
transaction data providing real time feedback
3 Monitoring business performance
IS- BPR
evaluating info to determinne how well process was executed
identifies probelms for process improvement
Business Process Reengineering (BPR)
Radical redesign of a corporation, strategy to make an org more productive and profitable
How to do BPR
-VIEW THE PROCESSES FROM A “Clean sheet” perspective
-determine how you can re-make it to be better
BPR cons
too difficult, too radical, too lengthy
LOTS Of impact on orgs
What is Business Process Improvement
-alternative to BPR
-LESS radical and disruptive, more incremental approach
-goal is to reduce variotions in finsihed products by looking for what causes variation in production itself
Who is BPI performed by
Teams of employees, incuding a process “expert” - the process owner
Six Sigma
- popular method for BPI
-goal: <3.4 defects per million of a product created
BPI process 5 phases: DMAIC
Define: look at the exact “as is”, process (inputs outputs resources etc), describe the problem
Measure: measure the relevant metrics (time, cost) to generate ONE OUTPUT, look at the data
Analyze: using software to analyze the as is process map, and identify problems
-software can simulate real situations, and can create multiple scenarios
-Using a software to simulate processes is risk free and cheap
Improve: find possible solutions and address the root causes, create the “TO BE” process, eliminate processes that are useless
** company needs to take care of PROCESS CONTROLS: activities that safeguard company resources!
Control: process metrics and monitors improved process! basically controling the outcome
Why some Orgs use BPI and some BPR?
BPR: huge performance gains
BPI: cheaper, quantifiable results, bottom to top (bc employees can implement this in own life), less time takes, use less resources
Business Process Management (BPM)
Sustain BPI over time! BPM integrates BPI intiatives into the strategy execution!!!
BPI, BPM, BPR
BPI is small improvements
BPM is mainting BPI in processes
BPR is the whole process overhaul
BPM components
1) processs modelling: graphical depiction of all steps in a process
Business Activity Monitoring
measuring and managing business processesh
BAM tracks operations to see if they are suceeding or failing
BPMS
Business process management suites
BPMS are integrated applications that are tools for process modelling, simulation, exectution, and coordination
Social BPM
tech that enables employees to collaborate to managemen BP
Why do we care about BPM
it can create a competitive advantage by improving org flexingbility
What are business pressures
market, technology, and societal pressures
business environment
slepp
social legal economic phsical poolitical
Type of business pressure:
1) Market Pressure
Generated by global economy, competition, changing workforce workforce, and powerful custmoers
-org is competing internationally with others (for customers, for labour)
-more diverse workforce (IT is helping this)
-Powerful customers (more knoledgable, easily compare prices, more CUSTOMER INTIMACY = focus on customer experience)
who supervises trade
the world trade org
regional trade agreements
cusma, eu
types of business pressures
2) Technology pressures
tech innovation, and info overload
-cycles of innovation and then bam u are obsolete
- employees and students use own devices (challenge for IT departments, and exposure to MALWARE, risk of losing private info)
INFO OVERLOAD:
- info is incrasing on the internet, now you have to sort through vast stores of data, info, and knowledge
types of business pressures
3) societal/legal/political pressures
what are the efforts to adress social issues known as
Social pressures impact business- efforts to address issues is called
“organizational social responsibility” or “Individual social responsibility”
How is green IT implemented
1) facility design and management: leed certifications to have eco friendly buildings
2) carbon management: IT execs monitoring carbon emissionons
3) canadian and intl environmental laws: consider laws in all products purchased and also on disposal process
How else does social world impact IT?
IT can create websites that are linked to scoial issues -> red cross, doctors without borders etc.
Digital Divide
separation b/w those who hace access to info communication tech and those who dont
how are countries bridging the digital divide
through free access to internet- libraries and one laptop per child program
Do governments exert pressure on business?
yes! government reulation and deregulation impacts IT heavily
Does TECH protect against terrorism
yes with cybersecurity programs
Ethical issues with IT
Information ethics - what is right or wrong in processing info; things like monitoring emails and invading data privacy
How do Orgs respond to pressures?
1) strategic systems
2) customer focus
3) make to order and mass customization
4) e business and e commerce
Strategic systems- response to pressures
creating good information systems that give a stategic advantage- like amazons storefront onlline does
Customer focus- response to pressures
enhancing the user experience is a way to placata powerful and knowledgable customers
Make to Order and Mass customization- respond to pressures
MAKE TO ORDER= making customized products and goods
Mass customziation is basically producing a lot of goods that are easily customizable (nike allows people to customize their shows_
e business and e commerce
conducting business electronically makes it easier to buy sell and learn about goods!
competitive strategy
statement identifying a business’s approach to compete- like what its goals are and how it is going to achieve those goals
has IT changed the core business of companies?
NO! it is still the same, but IT is enhancing operations
Strategic Info System (SIS)
-info system that gives a competitive advantage (helping org implement strategic goals)
- basically any system that increasing compeittive adv or decreases competitive disadv
Best method to analyze competitiveness
Porters Competiitve Forces MOdel
Porters Compeittive Forces Model
-5 major forces that affect company in an industry
THESE FORCES STAYED SAME FOR CENTURIES!!
1) In centre: Rivalry (Your Org vs Competing Orgs)
2) Threat of new Compeittiors (new ppl entering ur industry)
3) Buyer Power: the bargaining power of buyers
4) Thereat of substritutes: other products that can replace urs
5) Supplier Power: bargaining power of suppliers
Porter’s Compeittive forces:
-Threat of new entrants
- does web increase or decrease this force
When no barriers to entry, easy to have compeititors
Entry Barrier: product or service feature that a company NEEDS to have to attract customers
-Increases this force and threat as easier for ppl to start business by opening up a website
-Sometimes weakens the force as its not easy to re-create all things from competitiors on web (tracking packages)
Example of an industry that is facing incerase threat from competitiors cuz of web
Intermediation role companies (linking buyers and sellers) AND industries where the product/service is digital
-PPL LIKE TRAVEL AGENTS AND STOCK BROKERS have a lot of competition
-musicians have a lot of comp
Porter’s Compeittive forces:
-BARGAINING POWER OF SUPPLIERS
-impact of web?
-if not many suppliers avialble, they have a lot of power
-mixed impact (enables buyers to find alternate suppliers easy and also suppliers can lock in customers by using the internet in supply chain)
Porter’s Compeittive forces:
-BARGAINING POWER OF customers
-impact of web?
- buyers have a lot of choice= high power,
-Web has incerased buyer power mostly, but somethings decrease it like loyalty programs (incentivize you to source form one seller)
Porter’s Compeittive forces:
-threat of substituties
-impact of web?
-many alternatives= threat is storng
-web increases this competitive force bc any digitized good must compete with the rest of the internet
how does a company mitigate the threat the web poses on enabling more substititures?
switching costs, these are the costs of money and time that a customer has to spend to buy elsehwere
companies incorporate penatly into contract like phone coompanies making u stay for 2 years or pay high fee; spotify creating and curatnig ur playlists that are hard to recreate
Porter’s Compeittive forces:
-rivalrly among firms
-impact of web?
intensel ycompetiitve= high threat
DO PROPREITORY info systems give any more comp adv?
not anymore! if i see my competitior have smthg then i will copy it
do digital products have a high variable cost?
no ! it is very los actually!! oonce you develop the product, creating additional units cost is approaching zero
What is porters value chain model used for
to identify specific activities in which they can use competitive strategies for greatest impact, they use value chain model
what is a value chain
sequence of activities which the org inputs are transofrmed into more valuable outputs
what does porters value chain model DO??
shows points where an org can use IT to make competitive advatnage
2 types of actitivies in value chain model:
1)primary: creating value directly (production/distribution)
2)support: aid primary activities and help comp adv
word
look at porters value chain model
IMAE
strategies to combat the forces on porters model
Cost leadership strategy: Produce products and services at the lowest cost in the industry.
Differentiation strategy: Offer different products, services, or product features than your competitors.
Innovation strategy: Introduce new products and services, add new features to existing products and services, or develop new ways to produce them.
Operational effectiveness strategy: Improve the manner in which a firm executes its internal business processes so that it performs these activities more effectively than its rivals.
Customer orientation strategy: Concentrate on making customers happy.
- Discuss the ways in which information systems enable cross-functional business processes and business processes for a single functional area.
A business process is an ongoing collection of related activities that produce a product or a service of value to the organization, its business partners, and its customers. Examples of business processes in the functional areas are managing accounts payable, managing accounts receivable, managing after-sale customer follow-up, managing bills of materials, managing manufacturing change orders, applying disability policies, hiring employees, training computer users and staff, and applying Internet use policy. The procurement and fulfilment processes are examples of cross-functional business processes.
- Discuss the ways in which information systems enable cross-functional business processes and business processes for a single functional area.
A business process is an ongoing collection of related activities that produce a product or a service of value to the organization, its business partners, and its customers. Examples of business processes in the functional areas are managing accounts payable, managing accounts receivable, managing after-sale customer follow-up, managing bills of materials, managing manufacturing change orders, applying disability policies, hiring employees, training computer users and staff, and applying Internet use policy. The procurement and fulfilment processes are examples of cross-functional business processes.
- Differentiate between business process reengineering, business process improvement, and business process management.
Business process reengineering (BPR) is a radical redesign of business processes that is intended to improve the efficiency and effectiveness of an organization’s business processes. The key to BPR is for enterprises to examine their business processes from a “clean sheet” perspective and then determine how they can best reconstruct those processes to improve their business functions. Because BPR proved difficult to implement, organizations have turned to business process management. Business process management (BPM) is a management technique that includes methods and tools to support the design, analysis, implementation, management, and optimization of business processes.
- Differentiate between business process reengineering, business process improvement, and business process management.
Business process reengineering (BPR) is a radical redesign of business processes that is intended to improve the efficiency and effectiveness of an organization’s business processes. The key to BPR is for enterprises to examine their business processes from a “clean sheet” perspective and then determine how they can best reconstruct those processes to improve their business functions. Because BPR proved difficult to implement, organizations have turned to business process management. Business process management (BPM) is a management technique that includes methods and tools to support the design, analysis, implementation, management, and optimization of business processes.
- Identify effective IT responses to different kinds of business pressures.
Market pressures: An example of a market pressure is powerful customers. Customer relationship management is an effective IT response that helps companies achieve customer intimacy.
Technology pressures: An example of a technology pressure is information overload. Search engines and business intelligence applications enable managers to access, navigate, and use vast amounts of information.
Societal/political/legal pressures: An example of a societal/political/legal pressure is social responsibility, such as the state of the physical environment. Green IT is one response that is intended to improve the environment.
- Identify effective IT responses to different kinds of business pressures.
Market pressures: An example of a market pressure is powerful customers. Customer relationship management is an effective IT response that helps companies achieve customer intimacy.
Technology pressures: An example of a technology pressure is information overload. Search engines and business intelligence applications enable managers to access, navigate, and use vast amounts of information.
Societal/political/legal pressures: An example of a societal/political/legal pressure is social responsibility, such as the state of the physical environment. Green IT is one response that is intended to improve the environment.
competitive forces.
Porter’s five competitive forces:
The threat of entry of new competitors: For most firms, the Web increases the threat that new competitors will enter the market by reducing traditional barriers to entry. Frequently, competitors need only to set up a website to enter a market. The Web can also increase barriers to entry, as when customers come to expect a nontrivial capability from their suppliers.
The bargaining power of suppliers: The Web enables buyers to find alternative suppliers and to compare prices more easily, thereby reducing suppliers’ bargaining power. From a different perspective, as companies use the Web to integrate their supply chains, participating suppliers can lock in customers, thereby increasing suppliers’ bargaining power.
The bargaining power of customers (buyers): The Web provides customers with incredible amounts of choices for products, as well as information about those choices. As a result, the Web increases buyer power. However, companies can implement loyalty programs in which they use the Web to monitor the activities of millions of customers. Such programs reduce buyer power.
The threat of substitute products or services: New technologies create substitute products very rapidly, and the Web makes information about these products available almost instantly. As a result, industries (particularly information-based industries) are in great danger from substitutes (e.g., music, books, newspapers, magazines, software). However, the Web also can enable a company to build in switching costs, so that it will cost customers time or money to switch from your company to that of a competitor.
The rivalry among existing firms in the industry: In the past, proprietary information systems provided strategic advantage for firms in highly competitive industries. The visibility of Internet applications on the Web makes proprietary systems more difficult to keep secret. Therefore, the Web makes strategic advantage more short-lived.
competitive forces.
Porter’s five competitive forces:
The threat of entry of new competitors: For most firms, the Web increases the threat that new competitors will enter the market by reducing traditional barriers to entry. Frequently, competitors need only to set up a website to enter a market. The Web can also increase barriers to entry, as when customers come to expect a nontrivial capability from their suppliers.
The bargaining power of suppliers: The Web enables buyers to find alternative suppliers and to compare prices more easily, thereby reducing suppliers’ bargaining power. From a different perspective, as companies use the Web to integrate their supply chains, participating suppliers can lock in customers, thereby increasing suppliers’ bargaining power.
The bargaining power of customers (buyers): The Web provides customers with incredible amounts of choices for products, as well as information about those choices. As a result, the Web increases buyer power. However, companies can implement loyalty programs in which they use the Web to monitor the activities of millions of customers. Such programs reduce buyer power.
The threat of substitute products or services: New technologies create substitute products very rapidly, and the Web makes information about these products available almost instantly. As a result, industries (particularly information-based industries) are in great danger from substitutes (e.g., music, books, newspapers, magazines, software). However, the Web also can enable a company to build in switching costs, so that it will cost customers time or money to switch from your company to that of a competitor.
The rivalry among existing firms in the industry: In the past, proprietary information systems provided strategic advantage for firms in highly competitive industries. The visibility of Internet applications on the Web makes proprietary systems more difficult to keep secret. Therefore, the Web makes strategic advantage more short-lived.
The five strategies are as follows:
Cost leadership strategy—Produce products and services at the lowest cost in the industry.
Differentiation strategy—Offer different products, services, or product features.
Innovation strategy—Introduce new products and services, put new features in existing products and services, or develop new ways to produce them.
Operational effectiveness strategy—Improve the manner in which internal business processes are executed so that a firm performs similar activities better than its rivals.
Customer orientation strategy—Concentrate on making customers happy.
The five strategies are as follows:
Cost leadership strategy—Produce products and services at the lowest cost in the industry.
Differentiation strategy—Offer different products, services, or product features.
Innovation strategy—Introduce new products and services, put new features in existing products and services, or develop new ways to produce them.
Operational effectiveness strategy—Improve the manner in which internal business processes are executed so that a firm performs similar activities better than its rivals.
Customer orientation strategy—Concentrate on making customers happy.
6 characteristics for excellent IT alignment
1) view IT as engine of innovation
2) view customer service as importatn
3) rotate IT and business professionals
4) have overarching goals
5) train employees
6) vibrant and inclusive culture
six steps to business process mapping
1) what is the problem or process to be mapped
2) what activities are involved
3) what are the sequence of steps
4) draw a flowchart using process mapping symbols
5) confirm
6) what can be improved
what are the two business processes called (old & new)
as is
to be
business process model and notation SHAPES AND THEIR MEANINGS
START/TERMINATE= oval
Connector= circle
GATEWAY/DECISION= diamond
Document= weird cutoff
Task= rectangle w rounded corners
Cylinder= data store
Trapezoid=Data
