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Learning Objectives
Describe six Web 2.0 tools and two major types of Web 2.0 sites.
Describe the benefits and risks of social commerce to companies.
Identify the methods used for shopping socially.
Discuss innovative ways to use social networking sites for advertising and market research.
Describe how social computing improves customer service.
Discuss different ways in which human resource managers make use of social computing.
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Chapter Outline
Web 2.0
Fundamentals of Social Computing in Business
Social Computing in Business: Shopping
Social Computing in Business: Marketing
Social Computing in Business: Customer Relationship Management
Social Computing in Business: Human Resource Management
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Opening Case
Dr. David Dao and United Airlines
Describe and evaluate United’s sequence of responses to the incident with Dr. Dao. Should United have responded differently? If so, then how?
Discuss the impacts of social media on United’s responses to the incident with Dr. Dao.
Discuss how this case illustrates the change in the balance of power between customers and organizations.
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Describe and evaluate United’s sequence of responses to the incident with Dr. Dao. Should United have responded differently? If so, then how?
Discuss the impacts of social media on United’s responses to the incident with Dr. Dao.
Discuss how this case illustrates the change in the balance of power between customers and organizations.
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IT’s About Business 9.1
Social Media and Disaster Relief
Earthquake in Mexico
Hurricane Harvey
Des Moines, Iowa Flood
Official Responses to the Use of Social media in Disaster Relief
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Discuss the reasons behind the increased use of social media in disaster relief efforts.
Discuss the disadvantages that could come from using social media in disaster relief efforts. Overall, should the use of social media in disaster relief efforts be encouraged? Why or why not?
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9.1 Web 2.0 (1 of 2)
Tagging
Folksonomies
Geotagging
Really Simple Syndication (RSS)
Blogs
Microblogging
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Tagging: a keyword or term that describes a piece of information—for example, a blog, a picture, an article, or a video clip. Tagging allows users to place information in multiple, overlapping associations rather than in rigid categories.
— Folksonomies: user generated classifications that use tags to categorize and retrieve Web pages, photos, videos, and other Web content.
— Geotagging: a specific form of tagging referring to tagging information on maps (example: Google Maps allows users to add pictures and information, such as restaurant or hotel ratings, to maps).
Really Simple Syndication (RSS): A Web 2.0 feature that allows you to receive the information you want (customized information), when you want it, without having to surf thousands of websites.
Blog: (short for weblog) a personal Web site, open to the public, in which the site creator expresses his or her feelings or opinions via a series of chronological events.
Microblogging: a form of blogging that allows users to write short messages (or capture an image or embedded video) and publish them (Example: Twitter).
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Figure 9.1 The Web site of National Public Radio (NPR) with RSS toolbar aggregator and search function.
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FIGURE 9.1 The Web site of National Public Radio (NPR) with RSS toolbar aggregator and search function (Courtesy of NPR. Used with permission.)
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9.1 Web 2.0 (2 of 2)
Wikis
Social Networking Web Sites
Social Graph
Social Capital
Enterprise Social Networks
Mashups
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Wiki: a Web site made up entirely of user generated content (Example: Wikipedia.com).
Social Network: a social structure composed of individuals, groups, or organizations linked by values, visions, ideas, financial exchange, friendship, kinship, conflict, or trade.
Social Networking: refers to activities performed using social software tools (e.g., blogging) or social networking features (e.g., media sharing).
— Social Graph: the map of a single member of a social network comprised of all relevant links or connections among the greater social network.
— Social Capital: refers to the number of connections an individual person has within and between social networks.
Social Networking Web Sites: web sites that allow participants to create their own profile page for free allowing them to post blog entries, pictures, video, music and/or share ideas.
Enterprise Social Networks: business-oriented social networks (public or private) designed to support networking and community building, social collaboration, social publishing, Social intelligence and social analytics.
Mashups: a Web site that takes different content from a number of other Web sites and mixes them together to create a new kind of content.
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Figure 9.2 Google Maps (www.googlemaps.com) is a classic example of a mashup.
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FIGURE 9.2 Google Maps (www.googlemaps.com) is a classic example of a mashup. In this case, Google Maps is pulling in information from public transportation Web sites to provide the customer with transit directions.
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IT’s About Business 9.2
Using Social Data to Make Lending Decisions
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The new credit-scoring businesses use nontraditional data the ways that traditional lending institutions assess creditworthiness? Provide specific examples to support your answer.
What are the potential disadvantages to customers if a financial institution uses social data to make a lending decision? Provide specific examples to support your answer.
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9.2 Fundamentals of Social Computing in Business
Social Commerce
Benefits to Customers
Benefits to Businesses
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Social Commerce: the delivery of electronic commerce activities and transactions through social computing. Social commerce also
supports social interactions and user contributions, allowing customers to participate actively in the marketing and selling of products and services in online marketplaces and communities.
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Social Commerce: Benefits to Customers (1 of 3)
Better and faster vendor responses to complaints (on Twitter, Facebook, and YouTube)
Customers can assist other customers (e.g., in online forums)
Customers’ expectations can be met more fully and quickly
Customers can easily search, link, chat, and buy while staying on a social network’s page
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Social Commerce: Benefits to Businesses (2 of 3)
Can test new products and ideas quickly and inexpensively
Learn a lot about their customers
Identify problems quickly and alleviate customer anger
Learn about customers’ experiences via rapid feedback
Increase sales when customers discuss products positively on social networking site
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Social Commerce: Benefits to Businesses (3 of 3)
Create more effective marketing campaigns and brand awareness
Use low-cost user-generated content, for example, in marketing campaigns
Obtain free advertising through viral marketing
Identify and reward influential brand advocates
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Collaborative Consumption
Collaborative Consumption
collaborative production, crowdfunding, peer-to-peer lending and others
Advantages: self-management, variety, flexibility, and positive environmental impact
Disadvantages: Law and regulatory adjustments, resources and pay issues, employee benefits and protection,
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Collaborative Consumption: An economic model based on sharing, swapping, trading, or renting products and services, enabling access over ownership
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9.3 Social Computing in Business: Shopping
Ratings, Reviews, and Recommendations
Group Shopping
Shopping Communities and Clubs
Social Marketplaces and Direct Sales
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Ratings, Reviews, and Recommendations: are usually available in social shopping and generally come from,
(a) Customer ratings and reviews integrated into the vendor’s Web page
(b) Expert ratings and reviews from an independent authority
(c) Sponsored reviews: paid-for reviews
(d) Conversational marketing: individuals converse via e-mail, blog, live chat, discussion groups, and tweets.
Group Shopping: Web sites such as Groupon and LivingSocial offer major discounts or special deals during a short time frame.
Shopping Communities and Clubs: host sales for their members that last just a few days and usually feature luxury brands and heavily discounted prices. These clubs tend to be exclusive and help sell luxury items without watering down the brands’ images.
Social Marketplaces and Direct Sales: act as online intermediaries that harness the power of social networks for introducing, buying, and selling products and services. A social marketplace helps members market their own creations.
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IT’s About Business 9.3
Health Care Providers Deal with Negative Reviews
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Questions
Refer to Chapter 3, and discuss the ethics of iHealthspot.
Does this case have implications for how we all should manage negative comments about ourselves on social media? Why or why not? Provide specific examples to support your answer.
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Figure 9.3 Yelp (www.yelp.com) users submit reviews of local business within a local metropolitan area. Some communities have pages that feature a Review of the Day (often referred to as the ROTD).
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FIGURE 9.3 Yelp (www.yelp.com) users submit reviews of local business within a local metropolitan area. Some communities have pages that feature a Review of the Day (often referred to as the ROTD).
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Figure 9.4 LivingSocial (www.livingsocial.com) is a popular example of a group shopping Web site.
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FIGURE 9.4 LivingSocial (www.livingsocial.com) is a popular example of a group shopping Web site.
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Figure 9.5 Etsy (www.etsy.com) is a social marketplace for all handmade or vintage items.
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FIGURE 9.5 Etsy (www.etsy.com) is a social marketplace for all handmade or vintage items.
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9.4 Social Computing in Business: Marketing
Social Advertising
Market Research
Conducting Market Research Using Social Networks
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Social Advertising: refers to the advertising formats that make use of the social context of the user viewing the ad. It is the first form of advertising to leverage forms of social influence such as peer pressure and friend recommendations and likes.
Market Research: today members of social media voluntarily provide demographics that help identify and target potential customers. Due to the open nature of social networking, merchants can easily find customers, see what they do online, and learn who their friends are.
Conversational Marketing: feedback from customers provided to companies through social computing tools (e.g., blogs, wikis, online forums, and social networking sites.
Conducting Market Research Using Social Networking: Customer sentiment expressed on Facebook, Twitter, LinkedIn and similar sites represent an incredibly valuable source of information for companies allowing them to analyze the data, conduct better advertising campaigns, improve their product design and their service offerings.
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IT’s About Business 9.4
Sprinklr
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Questions
Why is it so important for businesses to manage the entire customer experience by concentrating on social media? Provide examples to support your answer.
Describe Sprinklr’s Experience Cloud, and explain how it relates to social media.
Recall the chapter opening case about Dr. Dao and United Airlines. Explain how Sprinklr could have helped United with its response to the event. Provide specific examples to support your answer.
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Advertising
Social Advertising
Viral Marketing
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Social Advertising: refers to the advertising formats that make use of the social context of the user viewing the ad. It is the first form of advertising to leverage forms of social influence such as peer pressure and friend recommendations and likes.
Viral marketing: word-of-mouth advertising—lends itself especially well to social
networking.
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Figure 9.6 Customers share their ideas and feedback with Dell via IdeaStorm (www.ideastorm.com).
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FIGURE 9.6 Customers share their ideas and feedback with Dell via IdeaStorm (www.ideastorm.com).
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Conducting Market Research Using Social Networks
Using Facebook for Market Research
Using Twitter for Market Research
Using LinkedIn for Market Research
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Conducting Market Research Using Social Networking: Customer sentiment expressed on Facebook, Twitter, LinkedIn and similar sites represent an incredibly valuable source of information for companies allowing them to analyze the data, conduct better advertising campaigns, improve their product design and their service offerings.
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Using Facebook for Market Research
Obtain feedback from Facebook Fans
Test-market your messages
Use Facebook for survey invitations
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• Obtain feedback from your Facebook fans (and their friends if possible) on advertising campaigns, market research, etc. It is equivalent to holding a free focus group.
• Test-market your messages. Provide two or three options, and ask fans which one they prefer and why.
• Use Facebook for survey invitations (i.e., to recruit participants). Essentially, turn Facebook into a giant panel, and ask users to participate in a survey. Facebook offers a self-service model for displaying ads, which can function as invitations to take a survey. Facebook also allows you to target your audience very specifically based on traditional demographic criteria such as age and gender.
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Using Twitter for Market Research
Visit Twitter Search
Monitor industry-specific keywords
Review TweetStats
Solicit information from customers & interact with them
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Using Twitter for Market Research: Your customers, your prospects, and industry thought leaders all use Twitter, making it a rich source of instantly updated information. Consider
the following examples:
• Visit Twitter Search (www.twitter.com/search). Enter a company’s Twitter name. Not only can you follow what the company is saying, you can also follow what everyone is saying to them.
• Take advantage of the tools that enable you to find people in the industries in which they operate. Use search.twitter.com to monitor industry-specific keywords.
• Do you want to know what topic is on most people’s minds today? If so, then review the chart on TweetStats (www.tweetstats.com).
• An increasing number of companies are utilizing Twitter to solicit information from customers and to interact with them (e.g., Dell (connecting with customers), JetBlue
(learning about customers), Teusner Wines (gathering feedback, sharing information), and Pepsi (rapid response time in dealing with complaints).
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Using LinkedIn for Market Research
Post a question
Solicit advice from a LinkedIn group
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Post a question (e.g., solicit advice) regarding the topic or issue you are interested in.
You may obtain a better result if you go to a specific LinkedIn group to solicit advice.
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9.5 Social Computing in Business: Customer Relationship Management
How Social Computing Improves Customer Service
Qantas Airlines
Safeway
Best Buy
Groupon
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Social computing has vastly altered both the expectations of customers and the capabilities of corporations in the area of customer relationship management.
Customers are now incredibly empowered as companies closely monitor negative comments and proactively involve customers to resolve problems/issues for improved customer service.
Empowered customers know how to use the wisdom and power of crowds and communities to their benefit.
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9.6 Social Computing in Business: Human Resource Management
Recruiting
Onboarding
Employee Development
Finding a Job
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Recruiting: Both recruiters and job seekers are moving to online social networks as recruiting platforms.
Onboarding: How new employees acquire the necessary knowledge, skills, and behaviors to become effective members of the organization.
Employee Development: HR professionals are using enterprise social tools such as Chatter, Yammer, and Tibbr to enable, encourage, and promote employee development through relationship building by providing a platform for employees to collaborate on sales opportunities, campaigns, projects as well as simplify workflows and capture new ideas. eLearning and eTraining are employee development tools that can be leveraged through social computing.
Finding a Job: The vast majority of entry-level positions in the United States are now listed only online. Job sites are the fastest, least expensive, and most efficient method to connect employers with potential employees. Today, job searchers use traditional job sites and social networks such as LinkedIn.
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Describe the benefits risks of social commerce to consumers and businesses.
Discuss 1) why social computing is so important in consumer relationship management; 2) how social computing improves customer service.
How can an organization best employ social computing technologies and applications to benefit its business processes?
In-Class Discussion
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Learning Objectives
Explain the purpose of transaction processing systems.
Explain the types of support information systems can provide for each functional area of the organization.
Identify advantages and drawbacks to businesses implementing an enterprise resource planning system.
Describe the three main business processes supported by ERP systems.
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Chapter Outline
Transaction Processing Systems
Functional Area Information Systems
Enterprise Resource Planning (ERP) Systems
ERP Support for Business Processes
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Opening Case
Backyard Adventures Shares Inventory to Control Inventory
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Questions
Why is maintaining effective control over inventory so important to any enterprise?
What factors drove Backyard Adventures’ decision to select Fishbowl as their inventory management system? Why do you think these factors are significant?
How did Backyard Adventures benefit from implementing the Fishbowl solution?
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10.1 Transaction Processing Systems (TPS)
Transaction
Transaction Processing System (TPS)
Online Transaction Processing (OLTP)
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Transaction: any business event that generates data worthy of being captured and stored in a database (e.g., product manufactured, a service sold, a person hired, and a payroll check generated)
Transaction Processing System (TPS): supports the monitoring, collection, storage, and processing of data from the organization’s basic business transactions, each of which generates and collects data continuously, in real time.
Source Data Automation: a process in which organizations try to automate the TPS data entry as much as possible because of the large volume involved.
Batch Processing: the firm collects data from transactions as they occur, placing them in groups or batches then prepares and processes the batches periodically.
Online Transaction Processing (OLTP): business transactions are processed online as soon as they occur and system performs these tasks in real time by means of online technologies.
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Transaction Processing Systems (TPS)
Transaction Processing System (TPS)
Continuous ‘real-time’ data collection
Efficiently handle high volumes of data and large variations in those volumes
Avoid errors and downtime
Record results accurately and securely
Maintain privacy and security
Source data automation
Batch processing
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Figure 10.1 How transaction processing systems manage data.
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FIGURE 10.1 How transaction processing systems manage data.
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10.2 Functional Area Information Systems
Information Systems for Accounting and Finance
Information Systems for Marketing
Information Systems for Production/Operations Management
Information Systems for Human Resource Management
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Information Systems for Accounting and Finance
Financial Planning and Budgeting
Managing Financial Transactions
Investment Management
Control and Auditing
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Financial Planning and Budgeting: Appropriate management of financial assets and is an important part of managerial planning for both acquiring and utilizing resources.
Managing Financial Transactions: accounting/finance software packages that are integrated with other functional areas (e.g., Peachtree offers a sales ledger, a purchase ledger, a cash book, sales order processing, invoicing, stock control, a fixed assets register, etc.). Organizations, business processes, and business activities operate with, and manage, financial transactions.
Investment Management: Systems for managing organization investments in in stocks, bonds, real estate, and other assets that are subject to complex regulations and tax laws, which vary from one location to another.
Control and Auditing: effectively control their finances and financial statements. Let us examine some of the most common forms of financial control.
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Financial Planning and Budgeting
Financial Planning and Budgeting
Financial and economic forecasting
Budgeting
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Financial Planning and Budgeting: Appropriate management of financial assets and is an important part of managerial planning for both acquiring and utilizing resources.
Financial and Economic Forecasting: Knowledge about the availability and cost of money a key ingredient for successful financial planning including flow projections which inform organizations what funds they need, when they need them, and how they will acquire them.
Budgeting: allocates the organization’s financial resources among participants and activities allowing management to distribute resources in the way that best supports the organization’s mission and goals.
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Managing Financial Transactions
Managing Financial Transactions
Global stock exchanges
Managing multiple currencies
Virtual close
Expense management automation (EMA)
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Managing Financial Transactions: accounting/finance software packages that are integrated with other functional areas (e.g., Peachtree offers a sales ledger, a purchase ledger, a cash book, sales order processing, invoicing, stock control, a fixed assets register, etc.). Organizations, business processes, and business activities operate with, and manage, financial transactions.
Global stock exchanges: Financial markets operate in global, 24/7/365, distributed electronic stock exchanges that use the Internet both to buy and sell stocks and to broadcast real-time stock prices
Managing multiple currencies: Financial and accounting systems utilize financial data from different countries to convert currencies (with conversion ratios that constantly flux) in seconds.
Virtual close: the ability the books quickly at any time, on very short notice (rather than quarterly) which provides almost real-time information on the organization’s financial health.
Expense management automation (EMA): systems that automate the data entry and processing of travel and entertainment expenses through Web-based applications that enable companies to quickly and consistently collect expense information, enforce company policies and contracts, and reduce unplanned purchases as well as airline and hotel expenses.
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Control and Auditing
Control and Auditing
Budgetary control
Auditing
Two basic purposes of Audits
Monitor how the organization’s monies are being spent
Access the organization’s financial health
Financial ratio analysis
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Control and Auditing: effectively control their finances and financial statements. Let us examine some of the most common forms of financial control.
Budgetary control: managers at various levels monitor departmental expenditures and compare them against the budget and the operational progress of corporate plans.
Auditing: monitoring how the organization’s monies are being spent and assessing the organization’s financial health.
Financial ratio analysis: monitoring the company’s financial health by assessing a set of financial ratios including liquidity ratios (the availability of cash to pay debt), activity ratios (how quickly a firm converts noncash assets to cash assets), debt ratios (measure the firm’s ability to repay long-term debt), and profitability ratios (measure the firm’s use of its assets and control of its expenses to generate an acceptable rate of return).
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Information Systems for Production/ Operations Management
In-House Logistics and
Materials Management
Inventory Management
Quality Control
Planning Production and Operations
Computer-Integrated Manufacturing
Product Life Cycle Management
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Figure 10.2 Product life cycle.
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FIGURE 10.2 Product life cycle.
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Information Systems for Human Resource Management
Recruitment
Human Resources Development
Human Resources Planning and Management
Payroll and employees’ records
Benefits administration
Employee relationship management
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Recruitment: systems that assist human resource personnel in finding potential employees, evaluating them, and deciding which ones to hire.
Human Resources Development: IS that assist human resource personnel in helping new hires become part of the corporate human resources pool through evaluation and development.
Human Resources Planning and Management: Managing human resources in large organizations requires extensive planning and detailed strategy.
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IT’s About Business 10.1
Three Square Markets Puts IS insides Their Employees
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Questions
Do you think microchipping is an effective method of controlling access to information assets within an organization?
What ethical, privacy, and security concerns would you have about the use of this technology if it were mandated as opposed to being voluntary?
Who do you think should “own” the microchip information? A private company? A government entity? The individual employees? Why do you feel this way?
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Figure 10.3 Examples of information systems supporting the functional areas.
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FIGURE 10.3 Examples of information systems supporting the functional areas.
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10.3 Enterprise Resource Planning (ERP) Systems
ERP II Systems
Benefits and Limitation of ERP Systems
Implementing ERP Systems
Enterprise Application Integration
Enterprise Application Integration (EAI)
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Enterprise Resource Planning (ERP) Systems: systems designed to correct a lack of communication among the functional area IS and they adopt a business process view of the overall organization to integrate the planning, management, and use of all of an organization’s resources, employing a common software platform and database.
ERP II Systems: interorganizational ERP systems that provide Web-enabled links among a company’s key business systems—such as inventory and production—and its customers, suppliers, distributors, and other relevant parties.
Enterprise Application Integration (EAI) System: integrates existing systems by providing software, called middleware, that connects multiple applications allowing existing applications to communicate and share data.
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IT’s About Business 10.2
Under Armour Finds a Chip in Their Armor
The Business Problem
The IT Solution
The Results
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Questions
What strategic moves has Under Armour made to become more of a digital company?
What problems has the company faced as a result of implementing an integrated ERP solution (SAP HANA)?
Based on the information in the case, how do you think technology will drive fashion in the future? Explain your answer.
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ERP II Systems
ERP II systems are interorganizational ERP systems that provide Web-enabled links among a company’s key business system and its customers, suppliers, distributors, and other relevant parties
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Core ERP Modules
Financial Management
Operations Management
Human Resource Management
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Core ERP Modules
Financial Management: These modules support accounting, financial reporting, performance management, and corporate governance. They manage accounting data and financial processes such as general ledger, accounts payable, accounts receivable, fixed assets, cash management and forecasting, product-cost accounting, cost-center accounting, asset accounting, tax accounting, credit management, budgeting, and asset management.
Operations Management: These modules manage the various aspects of production planning and execution such as demand forecasting, procurement, inventory management, materials purchasing, shipping, production planning, production scheduling, materials requirements planning, quality control, distribution, transportation, and plant and equipment maintenance.
Human Resource Management: These modules support personnel administration (including workforce planning, employee recruitment, assignment tracking, personnel planning and development, and performance management and reviews), time accounting, payroll, compensation, benefits accounting, and regulatory requirements.
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Extended ERP Modules
Customer Relationship Management (CRM)
Supply Chain Management (SCM)
Business Intelligence (BI)
E-Business
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Extended ERP Modules
Customer Relationship Management: (Discussed in detail in Chapter 11.) These modules support all aspects of a customer’s relationship with the organization. They help the organization to increase customer loyalty and retention, and thus improve its profitability. They also provide an integrated view of customer data and interactions, helping organizations to be more responsive to customer needs.
Supply Chain Management: (Discussed in detail in Chapter 11.) These modules manage the information flows between and among stages in a supply chain to maximize supply chain efficiency and effectiveness. They help organizations plan, schedule, control, and optimize the supply chain from the acquisition of raw materials to the receipt of finished goods by customers.
Business Intelligence: (Discussed in detail in Chapter 12.) These modules collect information used throughout the organization, organize it, and apply analytical tools to assist managers with decision making.
E-Business: (Discussed in detail in Chapter 7.) Customers and suppliers demand access to ERP information including order status, inventory levels, and invoice reconciliation. Furthermore, they want this information in a simplified format that can be accessed via the Web. As a result, these modules provide two channels of access into ERP system information—one channel for customers (B2C) and one for suppliers and partners (B2B).
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Figure 10.4 ERP II system.
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FIGURE 10.4 ERP II system.
Core ERP Modules
Financial Management: These modules support accounting, financial reporting, performance management, and corporate governance. They manage accounting data and financial processes such as general ledger, accounts payable, accounts receivable, fixed assets, cash management and forecasting, product-cost accounting, cost-center accounting, asset accounting, tax accounting, credit management, budgeting, and asset management.
Operations Management: These modules manage the various aspects of production planning and execution such as demand forecasting, procurement, inventory management, materials purchasing, shipping, production planning, production scheduling, materials requirements planning, quality control, distribution, transportation, and plant and equipment maintenance.
Human Resource Management: These modules support personnel administration (including workforce planning, employee recruitment, assignment tracking, personnel planning and development, and performance management and reviews), time accounting, payroll, compensation, benefits accounting, and regulatory requirements.
Extended ERP Modules
Customer Relationship Management: (Discussed in detail in Chapter 11.) These modules support all aspects of a customer’s relationship with the organization. They help the organization to increase customer loyalty and retention, and thus improve its profitability. They also provide an integrated view of customer data and interactions, helping organizations to be more responsive to customer needs.
Supply Chain Management: (Discussed in detail in Chapter 11.) These modules manage the information flows between and among stages in a supply chain to maximize supply chain efficiency and effectiveness. They help organizations plan, schedule, control, and optimize the supply chain from the acquisition of raw materials to the receipt of finished goods by customers.
Business Intelligence: (Discussed in detail in Chapter 12.) These modules collect information used throughout the organization, organize it, and apply analytical tools to assist managers with decision making.
E-Business: (Discussed in detail in Chapter 7.) Customers and suppliers demand access to ERP information including order status, inventory levels, and invoice reconciliation. Furthermore, they want this information in a simplified format that can be accessed via the Web. As a result, these modules provide two channels of access into ERP system information—one channel for customers (B2C) and one for suppliers and partners (B2B).
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Benefits and Limitations of ERP Systems
Major Benefits of ERP Systems
Major limitations of ERP implementations
Major causes of ERP implementation failure
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Major Benefits of ERP Systems
Organizational flexibility and agility
Decision support
Quality and efficiency
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Organizational Flexibility and Agility: ERP systems break down many former departmental and functional silos of business processes, information systems, and information resources making organizations more flexible, agile, and adaptive.
Decision Support: provide essential information on business performance across functional areas which significantly improves managers’ ability to make better, more timely decisions.
Quality and Efficiency: ERP systems integrate and improve an organization’s business processes, generating significant improvements in the quality of production, distribution, and customer service.
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Major Limitations of ERP Implementations
Since ERP’s are based on best practices companies may need to change their methods of achieving business objectives
ERP systems can be complex, expensive, and time-consuming to implement.
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Business Processes Predefined by Best Practices: may require companies need to change their existing business processes to fit the predefined business processes incorporated into the ERP software.
Difficult to Implement: ERP systems can be extremely complex, expensive, and time consuming to implement.
Potential for Failure
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Major Causes of ERP Implementation Failure
Failure to involve affected employees in the planning and development phases and in change management processes
Trying to do too much too fast in the conversion process
Insufficient training in the new work tasks required by the ERP system
The failure to perform proper data conversion and testing for the new system
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Implementing ERP Systems
On-Premise ERP Implementation
Vanilla approach
Custom approach
Best of breed approach
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Vanilla Approach: a company implements a standard ERP package, using the package’s built-in configuration options.
Custom Approach: a company implements a more customized ERP system by developing new ERP functions designed specifically for that firm.
Best of Breed Approach: combines the benefits of the vanilla and customized systems while avoiding the extensive costs and risks associated with complete customization.
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Software-as-a-Service ERP Implementation
Three major advantages of using a cloud-based ERP system
Three major disadvantages of using a cloud-based ERP system
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Three major advantages of using a cloud-based ERP system are:
The system can be used from any location that provides Internet access
Companies using cloud-based ERP avoid the initial hardware and software expenses that are typical of on-premise implementations
Cloud-based ERP solutions are scalable, meaning it is possible to extend ERP support to new business processes and new business partners (e.g., suppliers) by purchasing new ERP modules.
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Three major disadvantages of using cloud-based ERP systems are:
It is not clear whether cloud-based ERP systems are more secure than on-premise systems
Companies that adopt cloud-based ERP systems sacrifice their control over a strategic IT resource
Lack of control over IT resources when the ERP system experiences problems
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10.4 ERP Support for Business Processes
The Procurement, Fulfillment, and Production Processes
The Procurement Process
The Fulfillment Process
The Production Process
Interorganizational Processes: ERP with SCM and CRM
SCM and CRM
ERP SCM
ERP CRM
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Procurement Process: originates when a company needs to acquire goods or services from external sources, and it concludes when the company receives and pays for them.
Order Fulfillment Process: (order-to-cash process) process in which the company sells goods to a customer originating when the company receives a customer order, and concluding when the company receives a payment from the customer.
Production Process: occurring only in companies that produce physical goods, this process follows one of two strategies: make-to-stock and make-to-order.
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ERP Support for Business Processes
The Procurement, Fulfillment, and Production Processes
Interorganizational Processes: ERP with SCM and CRM
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Procurement Process: originates when a company needs to acquire goods or services from external sources, and it concludes when the company receives and pays for them.
Order Fulfillment Process: (order-to-cash process) process in which the company sells goods to a customer originating when the company receives a customer order, and concluding when the company receives a payment from the customer.
Production Process: occurring only in companies that produce physical goods, this process follows one of two strategies: make-to-stock and make-to-order.
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Figure 10.5 Departments and documents flow in the procurement process.
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FIGURE 10.5 Departments and documents flow in the procurement process.
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Figure 10.6 Departments and documents flow in the fulfillment process.
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FIGURE 10.6 Departments and documents flow in the fulfillment process.
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Figure 10.7 Departments and documents flow in the production process.
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FIGURE 10.7 Departments and documents flow in the production process.
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Figure 10.8 Integrated processes with ERP systems.
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FIGURE 10.8 Integrated processes with ERP systems.
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Interorganizational Processes: ERP with SCM and CRM
SCM and CRM
ERP SCM
ERP CRM
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Closing Case Olive Garden
The Business Problem
The IT Solution
The Results
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Questions
In what ways did Olive Garden hope their new tabletop ordering system would improve the customer experience?
What do you see as the positive and negative impacts on the waitstaff of the new tabletop kiosk system?
What are the positive and negative impacts on collecting payment?
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How do information systems benefit the finance and accounting functional area?
Define ERP and describe its functionalities. List some drawbacks of ERP software.
What are the three inter-organizational processes that are typically supported by ERP systems?
Highlight the differences between ERP configuration, customization, and best of breed implementation strategies.
In-Class Discussion
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The Power Point of other Members:
· It uses data analysis about customers’ history with a company to improve business relationships with customers, specifically focusing on customer retention and ultimately driving sales growth.
· CRM helps companies acquire new customers and retain and expand their relationships with profitable existing customers. Retaining customers is particularly important because repeat customers are the largest generator of revenue for an enterprise. Also, organizations have long understood that winning back a customer who has switched to a competitor is vastly more expensive than keeping that customer satisfied in the first place.
· The goal is simple: Improve business relationships. A CRM system helps companies stay connected to customers, streamline processes, and improve profitability.
· A CRM system gives everyone — from sales, customer service, business development, recruiting, marketing, or any other line of business — a better way to manage the external interactions and relationships that drive success. A CRM tool lets you store customer and prospect contact information, identify sales opportunities, record service issues, and manage marketing campaigns, all in one central location — and make information about every customer interaction available to anyone at your company who might need it.
· Some of the biggest gains in productivity can come from moving beyond CRM as a sales and marketing tool, and embedding it in your business – from HR to customer services and supply-chain management
The outline of the Term project:
Introduction of the specific topic
Customer Relationship Management
As a group, we will be explaining how customer relationship management is a customer-focused and customer-driven organizational strategy. Elaborate on how modern CRM systems can build sustainable long-term customer relationships that can create value for both companies and their customers. In addition, to helping many companies acquire new customers while also retaining and expanding their relationships with advantageous existing customers. Overall, this topic is an approach to manage a company’s interaction with current and potential customers. It uses data analysis about customers history with a company to improve business relationships with customers. It specifically focuses on customer retention and driving sales growth. The reason this is important and relevant to our class is because businesses data is used to see what customers like and don’t like. Businesses use this because sales tend to improve overall when they use CRM.
Tentative milestone/schedule of the project.
Selected helpful Web Resources:
· INFORMS: http://www.informs.org/
· Management Information Systems Research: http://www.brint.com/ISResearch.htm
· MIS Web Resource: http://www.bus.iastate.edu/mennecke/server/courses/MIS.htm
· CNET Tech News: http://news.cnet.com ; ZD Net News: http://www.zdnet.com
· CNN Technology News: http://www.cnn.com/TECH