Hoorcollege 9 Flashcards
Productivity loss
Productivity loss due to lack of IT knowledge
-7.6% of work time solving computer problems
-641.026.560 lost hours
-19.3 billion euro’s
-In the Netherlands alone
It appears that people with a lack of IT knowledge have a lower productivity. These people used 7.6% of their work time solving computer issues. In total, 641.026.560 hours have been lost solving these computer problems. That is a loss of 19.3 billion euros in the Netherlands
alone!
Why do IT implementations keep failing?
It’s not only about IT, but also about the organization, the people, the processes. This is an Information System
Information System (IS)
An Information System (IS) is a group of interrelated components that work collectively to carry out input, processing, output,
storage, and control actions in order to convert data into information. An information system handles processes and
supports communication & information flows in an organization.
- Technology is not necessarily part of an IS.
- Technology makes information flows more efficiently, effective, and accurate.
Five-component framework of
Information Systems
According to the five-component framework of
Information Systems, Information Systems consist out of five components:
- Hardware
- Software
- Data
- Procedures
- People
Information Technology (IT)
Information Technology (IT) is the technology used in IS, e.g.:
- Hardware
- Software
- Telecommunications networks
- Database systems
Methods, standard, procedures for using this technology
Data stored in these technologies
Difference between IS and IT
There are some differences between IS and IT:
- IT = technology, IS > technology
- IS requires an understanding of business, e.g.:
o Public transport > vehicles and gas
o Communication > symbols
o University > lecture halls and syllabi
- IS assist people in an organization to attain business goals.
- You can buy IT but you can never buy an IS.
IS can perform several functions…
IS can perform several functions:
- Operational
o Processing routing transactions
o Payroll, order entry, administrative systems - Monitoring
o Performance checking, OSIRIS
o Forecasting - Decision support
o Value different alternatives, make decision - Communication
o E-mail, IM, groupware, workflow, SCM (supply chain management)
IS can be used to support… (scope of IS)
IS can be used to support:
- Workgroup processes
o Supported by functional IS
o E.g., inventory of a hospital pharmacy - Enterprise processes
o Supported by enterprise IS (e.g., ERP, CRM).
o E.g., hospital discharge process - Inter-organizational processes
o Supported by inter-enterprise IS
o E.g., supply-chain management
Most common IS
The most common used IS are:
- ERP: Enterprise Resource Planning system
- CRM: Customer Relationship Management System
- IOS: Inter-Organizational System, e.g. supply chain management (lecture 12)
- MIS & BI: Management Information Systems & Business Intelligence
- Office & Communication Systems
ERP: Enterprise Resource Planning
ERP is Enterprise Resource Planning.
Larger organizations may have many of different Information Systems:
- Many systems are needed
- But different departments/systems may use different system for the same function.
What happens if they are not connected?
- Duplicate and inconsistent data
- Disjointed processes
- Limited information and lack of integrated information
- Isolated decisions (inefficiency) → impedes innovation
- In general: increased expense, lower efficiency, lower effectiveness.
What does ERP do
ERP systems coordinate processes, knowledge and
activities among different business functions, levels, and business units to improve efficiency. An ERP consists of a central database to which several applications connect.
There is an integrated IS (usually from a single vendor, usually SAP) that coordinates internal processes. It provides company-wide data to support decision making
(customer, strategic, etc.).
What does ERP provide
ERP provides many different modules, such as financial and accounting processes, human resources processes
and sales and marketing processes.
Advantages of ERP
ERP has a lot of advantages:
- Integration & Standardization
o Uniform organization
o Integrate regional differences and cultures
o Leverage scale - Outside connections
o CRM systems
o Supply chain integration - Information availability & synchronicity across departments
- Decision information
o Control by reliable indicators (MIS)
o Provide data for DSS and analytical tools - Best practices
o Best way of doing business
o Organizing baked into the system
Disadvantages of ERP
ERP also has some disadvantages:
- ERPs low success rate
o 70% of companies have not obtained the promised benefits on schedule or
spend more than intended. - High total costs of ownership
o License fees, consultancy costs, maintenance staff, change over costs. - Organizational change requirements
o Integration: loss of cultural values?
o Best practices: competitive advantage?
o Standards: innovation?
IS, ERP & Business
Information Systems need to fit in with the structure (and culture) of an
organization:
-Departmental fit
-Formalization
-Span of control
-Control vs. coordination
Generally, ERP systems are focused on ‘control’
-Centralizing information (span of control)
-Control instead of coordination (centralization)
-Standardization of processes (formalization)
Sometimes explicit: “our new system’s going to make everybody fall into line”…
Two types of CRM
There are two types of CRM:
- Operational CRM
o Sales, marketing & service automation
o Sales force automation (from lead identification to after-sales)
o Call-center & customer support - Analytical CRM
o Gathering & connecting customer data from different sources
o Strategic purpose (R&D, forecasting)
o Part of Business Intelligence
o eCommerce
CRM
CRM (Customer Relationship Management) is about:
-Customer aquisition
-Customer retention
-Customer extension
-Customer selection
Customer acquisition
Forming relationships to gain new customers
ailored marketing communications such
as direct mail, e-mail and visits by sales representatives are used to explain the features and benefits of services
Customer retention
Keeping existing customers buying existing products (repeat purchases)
Personalised communications are used to keep the customer informed about the
products offered
Customer extension
Part of customer retention that is specifically focused
on selling additional similar products (cross- selling) or widening the range of products used to more expensive products (up-selling)
Personalised communications are used to encourage repeat cross-selling and up-selling
Customer selection
Marketing communications for acquisition, retention
and extension are targeted to customers likely to give the best response
Database analysis and modelling is used to
identify the groups of customers such as
those that will be most responsive
Interplay between innovations, IT, & organizations
Innovations are often technological innovations that affect how organizations organize
themselves, for example…
- New information systems change procedures and make an organizational more or less formal
- Social media has changed customer interactions
- Social media allows more flexibility in working together across time, space, and structures
- RFID and augmented reality change supply chain
- Technology to support organizations may change
what an organization entails / definition of an organization
Culture and technology
Culture affects the technologies / systems that work best in the organization, for example…
- Internal process -> large integrated systems, ERP, data warehouses
- Rational goal -> CRM systems
- Human relations -> Groupware, social media
- Open systems -> (external) social media, extranet, decision support software
Technologies / systems in an organization may affect culture, for example…
- Social media may make communication more informal (we know email has)
- ERP can lead to standardization, formalization, central power
- Internet, SCM can lead to more external orientation
