Petros KAVASSALIS

Computer applications in the modern enterpriseΕπιχειρησιακές Εφαρμογές Η/ΥLecture 1 & 2 & 3: Introduction to Enterprise Information SystemsUniv. of the Aegean Financial and Management Engineering Dpt Petros KAVASSALIS

What you will learn in this course • A set of fundamentalconcepts and frameworks for understanding the potential impact of information technology (IT) on business strategy and structure • Computers and Information Systems (IS) • The business value chain • Business integration through Enterprise Application Integration • Information Systems in practice: How does the modern enterprise use “Business Intelligence” (BI) systems to improve decision-making • Methods and BI examples • “Hands-on” experience: create business reports by using Eclpise BIRT Reporting Tool (http://www.eclipse.org/birt/phoenix/)

Who am I? • PhDinEconomicsandManagement (Univ. ParisDauphine & Ecolepolytechnique) • Research experience • Ecolepolytechnique, Paris • MIT CenterofTechnologyPolicyandIndustrialDevelopment, MIT CTPID (MIT Internet TelecommunicationsConvergenceConsortium) • Current positions • Univ. of the Aegean (FME): Assoc. Professor • RACTI: Director of ATLANTIS Group

Communication tools • e-mail: pkavassalis@atlantis-group.gr • Course web site: see FME web site

Students evaluation • Class Participation (20%) + • Assignments (20%) + • Final Exam (60%)

My expectations from students [I copy a colleague I respect a lot…] • “Computer applications in the modern enterprise” is practical (with “hands-on” examples) but also intellectually challenging • I'm not a formal person and will be as accessible as I can to all of you (through e-mail) • Official office hours are proposed as Friday, from 12:00 to 15:00h • But my informality doesn't mean I'm casual about what goes on in my class… • I want from my students to avoid missing lectures and actively participate in the practical work (if yes: there is compensation)

Layers of a computer organization

Computers are everywhere: @home – @business • Computers are pervasive in today's firms • Investment in computers is for many firms the largest capital investment, often exceeding 50% of capital expenditure • Computers generate value via digitization Enterprise Applications digital information Databases

Computers in the context of an enterprise: Information Systems

Data transformation and dissemination IS Knowledge Data Information Person’s prior learning and experience Information Systems: more than computers • An Information System (IS) is a set of people, procedures and resources that collects data which it disseminates and transforms • It is a system of communication between peopleand machines (computers) Source: U. Fuller (2008) http://www.cs.kent.ac.uk/teaching/08/modules/CO/3/21/lectures.html

Information Systems (IS) • AnInformationSystem (IS) [source Wikipedia] • isthesystemofpersons, datarecordsandactivitiesthatprocessthedataandinformationin a givenorganization, includingmanualprocessesorautomatedprocesses. Usuallythetermisusederroneouslyas a synonymforcomputer-basedinformationsystems, whichisonlytheInformationtechnologiescomponentofanInformationSystem • ThestudyofInformationSystems • originatedas a sub-disciplineofcomputerscience, inanattempttounderstandandrationalizethemanagementoftechnologywithinorganizations. Ithasmaturedinto a majorfieldofmanagement, thatisincreasinglybeingemphasizedasanimportantareaofresearchinmanagementstudies, andistaughtatallmajoruniversitiesandbusinessschoolsintheworld.Today, InformationandInformationtechnologyhavebecomethefifthmajorresourceavailabletoexecutivesforshapinganorganization, alongsidepeople, money, materialandmachines. • Manycompanieshavecreated a positionofChiefInformationOfficer (CIO) thatsitsontheexecutiveboardwiththeChiefExecutiveOfficer (CEO), ChiefFinancialOfficer (CFO), ChiefOperatingOfficer (COO) andChiefTechnicalOfficer (CTO).The CTO mayalsoserveas CIO, andviceversa…

Information Systems in their context

Enterprise Information Systems • Information technology is the hardware and software a business uses to achieve its objectives • An information system consists of components that support decision making and control, and help with analysis, visualization, product design and creation and management of operations and processes

Data versus Information • Data is one or more symbols that are used to represent something (technically speaking, they are streams of raw facts representing events and occurrences). They may or may not mean something to the observer. • Give examples of data • 6,602,224,175 • Information is data that has been processed to have meaning and value to the recipient. It refers to data shaped into a meaningful and useful form.

About data… you know something • New concepts in this course • Information and Knowledge

See New York City website: CPR Agency Performance Reporting http://www.nyc.gov/html/ops/cpr/html/about/about.shtml (Business) Information is…

Digital Information is a key business resource • (Business Digital) Information is data that are processed to be useful • Provides answers to "who", "what", "where", and "when" questions • Fuels firms’ operational life and can be the critical factor in determining the success or failure of a business • Information has enabled radically lower cost structures, new levels of customer service, new products, new markets etc • Needs to be managed correctly • Managing computer-generated information differs from handling manually produced data. Information is: • Stored in relational databases • Used to understand relations: information becomes evident when we organize the clean raw data into charts, summaries, averages and ranked lists that help us understand the problem and make decisions

IS: Categorization • Transaction Processing Systems (TPS) • Office Automation Systems (OAS) • Knowledge Work Systems (KWS) • Management Information Systems (MIS) • Decision Support Systems (DSS) • Expert Systems (ES) • Executive Support Systems (ESS) • Group Decision Support Systems (GDSS) • Computer-Supported Collaborative Work Systems (CSCWS)

A list with no end… • New technologies, such as ecommerce, Enterprise or Enterprise Resource Planning (ERP), Customer Relationships Management (CRM), Business Process Management Systems (BPMS), Document Management Systems (DMS) etc. are being integrated into traditional systems and so on… • E-commerce uses the Web to perform business activities • Enterprise Resource Planning (ERP) has the goal of integrating many different information systems within the corporation, using a “single” software • Customer Relationships Management (CRM) supports customer information handling • Business Process Management Systems (BPMS) is software that is Is driven by explicit “process representations” to coordinate the enactment of business processes • Document Management Systems (DMS) provide an information for document storage, versioning and collaborative authoring

The role of ISs in the modern enterprise • Information systems provide value in organizations by supporting organizational (or business) objectives • Achieving operational excellence • Managing business processes • Developing new products and services • Attaining customer intimacy and service • Improving decision making • Promoting competitive advantage • Ensuring survival through change management

Firms, Functions and Information Systems • Organizations are complex systems composed of interrelated and interdependent subsystems (Functional Areas) • Information Systems support the operation of these “interrelated and independent” enterprise functions • Information Systems are described as either open, with free flowing information, or closed with restricted access to information. • Information Systems usually extend beyond enterprise frontiers to support e-business activities

Source: MIT, Sloan School, CISR DELTA Operating Model

IS relate to firm’s value chain • Value chain • The enterprise’s activity breaks down to different business functions with the objective to analyze their contribution to market success • Enterprises’ value chains interconnect each other

Source: MIT, Sloan School, CISR Case: UPS

UPS: a brief overview • Headquarters: Atlanta, GA • Company Profile: The company is the world's largest package delivery company and a leading global provider of specialized transportation and logistics services • 2000: UPS had grown to become the world’s largest integrated package delivery company, delivering an average of 13.6 million packages a day sent by 1.8 million shippers to 7 million consignees • UPS employs approximately 359,000 people in 200 countries around the world • Core functional units include U.S. operations, International Operation (both of which had regional offices as well), Sales and Marketing, Finance, Legal, Human Resources, and UPS Airlines • UPS always emphasized efficiency in its delivery services. But it had not always emphasized IT in the delivery of its services. • This came in late 80s and 90s, through a massive investment program of digitization Case: http://dspace.mit.edu/bitstream/handle/1721.1/1572/United+Parcel+Service+4356-01.pdf?sequence=1 Visit: http://www.ups.com/ (country: Greece)

IT@UPS (1) • Introductory case: package tracking • We thought, “Why do they care about tracking? We know we deliver them all. It’s really only a creature comfort, because we deliver every package every day. We’re so effective that there’s no reason to track these packages.” Mike Eskew, Vice Chairman and Executive Vice President

IS@UPS (2) • In 1985 • The company was generating revenues of about $8 billion, the corporate IT unit numbered approximately 100 people and had a budget of approximately $50 million (total IT spending was about $75 million) • Between 1986 and 1996 UPS • Invested more than$11 billion in information technology • Growing the IT unit to more than 4,000 people by 1997 • Package tracking has been the locomotive for IT development (due to the competitive pressure) • “Look, we don't have anything in place to do tracking. We have no network. We have no databases. We have no repository for packaging. We are several years away from a sophisticated tracking system”, Frank Erbrick, CIO • By 1990 • UPS had a global network called UPS Net, three centralized databases (people, customers, packages), and a centralized data processing facility • It began to build applications around this infrastructure, starting with package tracking and billing

IS@UPS: Phase 1 (80s and 90s) • The centralized IT infrastructure supports deployment of enterprise-wide applications • In 1993 UPS introduced the DIAD 4 (Delivery Information Acquisition Device) • Captured a customer signature with every delivery and uploaded data in real time to the package information database. The device was estimated to save each driver thirty minutes per day by automatically summarizing the day’s results • By capturing delivery data on every package, UPS enhanced its package database with information that it could use to better understand the profitability of individual customers and packages • This information could be used to make routing and pricing decisions, and, ultimately, to provide its customers with information on their individual shipping habits

IS@UPS: Phase 2 (90s up to today)_1 • In the mid-1990s • The company assigned a small team to study Web technologies, and UPS became one of the first companies to create its own web page • e-commerce • 80% of UPS’ revenues were generated by businesses shipping goods to other businesses and individual customers. If businesses increasingly used the Internet to sell directly to end customers rather than to wholesalers and distributors, the Internet would prove to be a business opportunity • UPS’ goals in e-commerce were to enable more business and to establish a branded presence in global commerce solutions. From the beginning, management believed that electronic linkages with customers would allow UPS to get more deeply into their customers’ businesses.

IS@UPS: Phase 2 (90s up to today)_2 • To establish tighter linkages with customers, UPS developed tools that could be embedded into customers’ applications • Tracking • The IT unit built a web front-end onto the existing tracking system as well as an API (what is an API?) that individual companies or vendors could integrate into their applications • Putting the tracking tool on the UPS web site generated immediate benefits by reducing call center traffic… Only that? • “We’ve gotten into customers’ systems and shown that we can save them money, because if your customer calls and asks a question about your order, nine times out of ten, customer service can’t answer it. They have to call shipping and shipping often calls somebody else. So now that one call is generating a minimum of two other calls. If we assume the $2.00 rule, now you’ve got $6.00 in cost, where if I can give you a tracking number when you order—which we can do in our system—and send you to our page, you can self -service. So the customer gets better service.”, Joe Pyne, Senior VP, Marketing and Corporate Development

IS@UPS: Phase 2 (90s up to today)_3 • Although many customers were able and willing to integrate UPS’ tracking API into their home-grown software, many others purchased software, including ERP systems (what is it?) • To meet the needs of these customers, UPS established alliances with key vendors (Oracle, Peoplesoft, Harbinger, IBM, SAP built the UPS tracking API into their software) • UPS followed three principles in developing alliances with software vendors: • The APIs would be developed by UPS • They would be embedded into the software of the alliance partner • The service would be branded—when individual customers accessed UPS systems, the UPS logo would be on their screens • “A lot of vendors wanted us to pay them to get the tools into their software, and we said no, we’re giving you the value of our brand. We’re increasing the functionality. Your customers will see greater value in what you’re offering”, Joe Pyne • Open standards (please comment it) • [More on Open Standards: T. McGrath, 2009, Open Standards make for better business]

IS@UPS: Phase 2 (90s up to today)_4 • New Services • Following the launch of the Tracking API, UPS introduced a Rates and Services tool that allowed UPS customers to link their own customers to a menu of UPS shipping options and costs • By late 2000, UPS had six OnLine Tools available to customers for downloading, and had compiled a list of 30 services, some functional, others informational, that the company intended to make available through UPS Online Tools • In addition to its OnLine Tools, UPS developed a wide range of web-supported products and services • UPS Document Exchange allowed firms to transfer large electronic files in a secure, encrypted environment, with full visibility real-time tracking and confirmation of delivery. • UPS Returns Services supported the return process for shippers who wanted to make their customers’ return process hassle-free • UPS shippers could enter package information on-line and receive the same services as firms that had downloaded the OnLine Tools

Successful outcome • These products and services were intended to bring UPS deeper into its customers’ businesses (!) and increasingly provide global commerce solutions • By mid-2000 • More than 50,000 firms had downloaded UPS’ OnLine Tools and integrated them into their shipping or accounting applications • On December 19, 2000, UPS received 6.5 million tracking requests, approximately double the number of tracking requests on the busiest day in 1999 • In 1995, UPS had received only 100,000 tracking requests during the entire month of December • “The surge in online tracking requests is a clear indication of the rapidly growing use of Internet technology, by UPS and its customers, to manage the “supply chains” of everyone from Fortune 500 companies to individual consumers.”, UPS Press Release

New business opportunities • UPS e-Venture • UPS believed that the Internet offered new opportunities to provide global commerce solutions for its customers. To identify these “out of the box” opportunities, UPS e-Ventures, a wholly owned subsidiary of UPS • UPS e-Logistics • Provided a complete menu of “behind the scene” services that would manage the entire back-end logistics process from the time an order was placed on a customer’s web site to the time the order was delivered. Services included warehousing, inventory management, order fulfillment (pick, pack and ship), shipping and delivery, management reporting, returns management, customer care, and telephone support

IT development: prioritize • Modularity and re-usability • With the Internet, tracking was the first application, and that was just reusing mainframe-based technology? (what is it?). We wrote an interface module that was used originally to interface customer service to our tracking environment. Then we extended it to the Internet, and then extended it for IVR (what is it?). It's just a query entrance, so basically here’s the API, do a query, submit this data. It will go out, peruse all the databases in two different data centers, pull the data together, present it back in this file format, and your application just uses it.”, Jim Medeiros, UPS IS • IT focus on supporting cross-functional processes within the firm • Customer Relationship Management • Customer Information Management • Package Management • Product Management

Petros KAVASSALIS