Information Technology Systems

1
Information Technology Systems

• MIS EIS ERP
• Database developments
• Data Mining E-commerce

2
Management Information Systems

• REPORTS
• MIS reports provide management with current
  pictures of organization status. The system
  collects, organizes and retrieves data for the
  entire organization. Individuals may get
  specific reports with specific information,
  butTHE FOCUS IS ON MASS DISSEMINATION

3
MIS

• REPORTS serve as organizational ARCHIVES
• also serve as organizational database for QUERIES
• Because of large investment in equipment and
  personnel, centralized operation

4
EIS

• Custom designed system
• Easy to access
• Focused reports on critical success factors
• Ability to explore database (drill-down)

5
Enterprise Resource Planning

• Comprehensively provide computing throughout
  organization
• Implemented in modules (marketing)
• Intent total integration
• Entering data once more efficient
• Cleaner data

6
ERP Functions

• Support supply chain management
• Inventory control and planning
• Production control and planning
• Feed information to purchasing, shipping
• Track financial transactions

7
ERP Modules

• Inventory Production Planning
• Accounting
• Finance
• Human Resources Planning
• Payroll
• Benefits
• Evaluation

8
E-Commerce

• Computer to Computer (internet)
• Business to Consumer
• Business to Business
• Supply chains
• Vendors
• Customers
• market software like I2

9
Information Overload

• Retail food (groceries)
• average store - 20,000 items
• larger stores 40,000 to 60,000
• with weights, flavors, etc., hundreds of
  thousands
• every year 10,000 new items
• 550 corporate and regional buying offices
• 100,000 salespeople
• several hundred thousand price changes/year

10
Data Warehousing

• Price Waterhouse definition
• A data warehouse is an orderly and accessible
  repository of known facts and related data that
  is used as a basis for making better management
  decisions. The data warehouse provides a unified
  repository of consistent data for decision-making
  that is subject-oriented, integrated,
  time-variant, and non-volatile.

11
Data Warehousing

• ..includes tools for designing, populating, and
  maintaining.
• Encompasses multi-user database engines needed to
  store manage data
• Worldwide market in 1995 was 1.4 billion
• expect 30 growth/year, 5 billion by 2000

12
Data Warehousing

• Not just a technology
• an architecture and process designed to support
  decision making
• special-purpose database systems to improve query
  performance significantly
• index, partition, pre-aggregate data

13
Data Mart

• Dependent data mart source exclusively from
  data warehouse
• Independent typically a legacy (small version
  of data warehouse
• Usually used to collect data for a specific study

14
Data Warehouse (all trans)

15
Data Mart (aggregated)

16
OLAP (spreadsheet)

17
Customer Information Systems

• OPERATION
• artificial intelligence
• neural networks to wade through data
• identify shopping trends
• segment groups of customers
• (data mining)

18
Customer Information Systems

• AIRLINE INDUSTRY
• 1980s - deregulation
• number of possible fares rates skyrocketed
• SABRE - 45 million fares,
• 40 million changes/month
• industry now dominated by
• American (SABRE) United (Apollo)
• cost - hundreds of millions of dollars

19
Customer Information Systems

• Barriers to competition
• cost up to 100 million to develop
• years to gather data and build
• basic shift in source of competitive advantage

20
Customer Information Systems

• tens of thousands of characters of information
• tens of millions of customers
• enormous data storage
• hundreds of gigabytes
• parallel computing
• YOU HAVE TO BE BIG TO AFFORD

21
Own the Customer

• AP
• point-of-sale scanning
• frequent shopper programs
• used to build customer database
• sign up, get free bonus saver cards, check
  cashing
• hundreds of special discounts
• AP gathers list of purchases, feeds database
• centralized buying, better inventory, advertising

22
Versioning

• Assemble hundreds of versions of the same ad
• switch reassemble products prices
• Cigarette makers
• some of most advanced database marketing
• direct mail, discount coupons, freebies
• have build databases on smoker demographics
• anticipate market changes, target promotions

23
Versioning

• FINGERHUT
• 150 catalog mailings in 1992
• based on statistically predicted consumer
  response
• 13 million customers, 14 annual growth
• database captures 1400 pieces of information
  about a household
• demographics, purchasing histories

24
FINGERHUT

• identify your kids birthdays, send ideas
• FRONT-END programs
• get new customers (purchased from others)
• TRANSITION programs
• evaluate new purchasers, keep best
• BACK-END programs
• maximize profit

25
FINGERHUT

• FRONT-END
• newspaper, magazines, TV, postcards, catalogs
• predictive models
• lists from other companies
• if you respond
• TRANSITION
• sort out good credit risks, good purchasers

26
FINGERHUT

• BACK-END
• 80 of revenue from repeat customers
• customers segmented
• 75 specialty catalogs
• personalized messages

27
Marketing Budgets

• Saturated advertising channels
• expenditures more than doubled in 1980s
• too much advertising, too little relevant
• Shift to
• promotional discounts
• slotting - buy shelf space
• undermines brand loyalty

28
Narrowcasting

• Cable TV
• in-store coupons
• special monitors
• doctors offices, airport lounges
• interactive kiosks
• interactive home TV shopping

29
Data Mining

• DATA MINING - exploration and analysis
• by automatic means
• of large quantities of data
• to discover meaningful patterns rules
• GOAL - improve marketing, sales, customer support
  through better understanding of customers

30
Micromarketing

• Target small groups of highly responsive
  customers
• own niches like smaller competitors
• EXAMPLES
• Great Atlantic Pacific Tea Company (AP)
• target customers, centralize buying
• Fingerhut
• sell on credit to households lt25,000 income

31
Reasons why Data Mining is now effective

• Data is there
• Data is warehoused (computerized)
• Computing economically available
• Competitive pressure
• Commercial products available

32
How Data Mining is Being Used

• US Government -
• track down Oklahoma City bombers, Unabomber, many
  others
• Treasury department - international funds
  transfers, money laundering
• Internal Revenue Service

33
How Data Mining is Used

• Safeway
• offer Safeway Savings Club card
• users given discounts
• users must give personal information
• every use, collect data
• identify aggregate patterns (what sells well
  together what should be sold together)
• sell names for 5.5 cents per name to suppliers

34
How Data Mining is Used

• Firefly
• asks members to rate music and movies
• subscribers clustered
• clusters get custom-designed recommendations

35
Cross-selling

• USAA
• insurance
• doubled number of products held by average
  customer due to data mining
• detailed records on customers
• predict products they might need
• Fidelity Investments
• regression - what makes customer loyal

36
Warranty Claims Routing

• Diesel engine manufacturer
• stream of warranty claims
• examine each by expert
• are charges reasonable appropriate
• thinking of expert system to automate claims
  processing

37
Retaining Good Customers

• Customer loss
• Banks - Attrition
• Cellular Phone Companies - Churn
• study who might leave, why
• Southern California Gas -
• customer usage, credit information
• direct mail contact - most likely best billing
  plan
• who is price sensitive
• Who should get incentives, who to keep

38
Trends

• Every business is service
• hotel chains record your preferences
• car rental companies the same
• service versus price
• credit card companies
• long distance providers
• airlines
• computer retailers

39
Trends

• Mass Customization
• produce tailored products from standardized
  components
• Levi-Strauss - custom fit jeans
• The Custom Foot
• Andersen Windows
• Individual, Inc.
• electronic clipping
• customer profiles of interests
• send custom newsletter

40
Trends

• Information as Product
• Custom Clothing Technology Corporation
• fit jeans, other clothing
• Lands End
• J. Crew
• INFORMATION BROKERING
• IMS - collects prescription data from pharmacies,
  sells to drug firms
• AC Nielsen - TV

41
Information Technology

• Tremendous growth in what is possible to do
• Capacity of systems
• Speed of systems
• Cost reduction of systems
• Business has a hard time keeping up with ideas to
  implement
• Competition drives