Information Technology

1
Information Technology Control

• Chapter 8
• Information Technology, E-commerce and Learning
  Organizations

2
Uses of info-tech systems

• Vastly increased faster storage, retrieval and
  analysis capability
• Expert systems to replicate experience to go
  beyond expert capability
• see www.paloaltosoftware.com
• Simulations, modeling, scenarios for planning,
  training, testing
• Production systems for mass/custom

3
Uses of Information Tech

• Operational changes
• Data storage, retrieval, analysis
• Transactions processing, client service
• Access/sharing of wider/higher level info
• Participation in decisions
• Managerial changes
• Decision support systems/Group DSS
• Intranets electronic data interchange (EDI)
  between internal value-chain of operations -
  networks

4
Strategic Uses of Info Tech

• Enterprise Resource Planning (ERP)
  re-engineering of value-chain plus common info
  tech system (BWB)
• Extranets links to key suppliers/clients
• B2B business to business system
• B2C business to clients system
• EDI suppliers to business system
• CRM better quality service
• Virtual organization with B2B info links

5
Electronic data interchange

• IT linkages in the supply chain ? auto matic
  processing of orders/supplies

supplier
manufacture
retailer
AUTOMATIC IT LINKS
customer
Just in time supplies to the system
6
Feedback control systems
TARGETS
ACTUAL PERFORMANCE
OPERATIONS
CONTROLS
BUDGETS
MONITOR
QUALITY
TECH SYSTEMS
STATS
REWARDS
7
IT impact on org design

• Smaller internal orgs but larger volume
• Greater decentralization of operations
• More virtual, network organizations
• Greater employee empowerment
• Greater intra/extra net systems
• More professional IT staff/depts
• New CIO executive jobs

8
Balanced Scorecard system

• Four major elements in control systems to ensure
  balanced performance
• Financial performance
• Customer service performance
• Internal processes efficiencies
• Innovations/growth/learning
• Result is balanced performance

9
Knowledge management

• Improve quality of intellectual capital
• Explicit K formal, documented info
• Tacit K informal, verbal, non-document
• Learning organization local experiences ?
  analysis ? adoption ? wide sharing
• From tacit to explicit knowledge of best
  practices and mistakes to avoid

10
Knowledge Management

• Share data, information, knowledge widely to
  create a learning-organization
• Share experiences, insights, networks
• Debrief analysis of problems/near misses
• Share best-practices internal/external
• Data-mining, knowledge-mapping
• Share tacit knowledge as culture
• Avoid not-invented-here syndrome
• Formal follow-through for implementation
• Reward adopters of best practices

11
E-commerce

• Use Internet for marketing, sales, service
• Use virtual organization operations as much as
  possible for supplies and services
• Types of E-commerce revenues
• Indirect from banner ads/referrals
• Listing fees for preferred suppliers
• Subscribers/membership fees
• Transaction fees/service charges
• Direct sales of products
• (look at CanadaOne.com)

12
Example EBay.com

• Old market for sellers and buyers
• Slow/imperfect sharing of information
• Limited range of market/product options
• Slow purchasing/high transaction costs
• New E-market for sellers and buyers
• Internet system allows huge scope of
  market/product options
• Allows zero information sharing costs
• Allows instant transactions/low service cost
• Slow delivery of products or services

13
E-commerce life-cycle eToys

• Concept on-line toy shopping/delivery
• Young, rich adults, pampered kids
• Avoid time/hassle of mall shopping
• Competitive prices to big-box stores
• Results from launch in 1999
• IPO at 20 share -gt 80 in first day!
• Market value of 8 bil in 2000!
• Rapidly growing sales volume in 2000

14
eToys results from operations

• Market response to e-shopping concept was OK -gt
  growing sales volume
• Operations needed to build infrastructure
• Set up warehouses for inventory to respond
• Set up costly distribution/delivery systems
• Keep retail prices low to be competitive
• Sales are good but investment expenses are
  greater than profits from sales
• Results cash-outflow (burn-rate) exceeds
  cash-inflow bankruptcy in March 2001.

15
Lessons from E-commerce

• Later players often do better than early
• E-clients can be very expensive to reach and are
  not loyal
• Virtual inventory/delivery is an illusion
• Sales revenues are not the same as profits
• Product returns are a nightmare
• Techies are not marketers/retailers
• Share values not the same as earnings

16
Example K-M at Quadgraphics

• How does the president encourage employees to
  share knowledge and take responsibility for
  improvements?
• How do employees respond to the company culture?
• How does the company perform compared to others?

17
Summary

• Info technology greatly increases bus capability
  and new type of business
• Info tech fails when not well managed
• Learning organizations outperform non or slow
  learning organizations
• Being a learning organization is a matter of
  strategy and management