GLOBAL MANAGEMENT OF E-BUSINESS & E-COMMERCE

1. GLOBAL MANAGEMENT OF E-BUSINESS & E-COMMERCE Chang-Yang Lin, Ph.D. Professor and Coordinator Computer Information Systems Program Eastern Kentucky University

2. Global Management ofE-Commerce and E-Business • E-Commerce and E-Business • Practices of IT Management • E-Business Planning and Information Resource Planning • Global E-Business Issues • The Challenge: Some Concluding Remarks EKU Business

3. E-Commerce: the buying & selling, marketing & servicing, and delivery & payment of products, services, and information over the Internet, intranets, and extranets between an enterprise and its prospects, customers, suppliers, and other business partners E-Business: the use of Internet technologies to internetwork and empower business processes, e-commerce, and communication and collaboration within a company and with its customers, suppliers, and other business stakeholders E-Commerce & E-Business EKU Business

4. E-Commerce & E-Business EKU Business

5. Source: Nat’l Academic Press, http://books.nap.edu/books/0309051797 EKU Business

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7. A 12% sales decline An inability to ship complete orders to some retail customers An increase in typical delivery times from 5 days to 12 A 29% increase in year-to-year inventory costs Strained customer relations and major market-share losses The Results of Hershey’s ERP Failure EKU Business

8. Enterprise Resource Planning (ERP) • ERP: Integrated cross-functional software that reengineers manufacturing, distribution, finance, human resources and other basic business processes of a company to improve its efficiency, agility, and profitability • Vendors • SAP R/3 • PeopleSoft Reasons for implementing an ERP system • To integrate applications and data to support decision-making needs • To force business process reengineering • To give the firm the competitive advantage to survive EKU Business

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10. Organization structure Networked Cisco maintains a strong web of strategic partnerships & systems integration with suppliers, contractors, and assemblers Leadership Everyone is a leader 40+ acquisitions become autonomous business units Knowledge Shared the suppliers’ production processes are pulled by Cisco’s demand a save of $500 million from supply chain management, online technical support, software distribution The E-Organization: EKU Business

11. The E-Organization: • Alliance • create new value and outsource uncompetitive services • Ally with competitors, customers, and suppliers • 50% of customer orders that come in over its website are routed electronically to a supplier who ships directly to the customer • Governance • Internal and external • Cisco’s rapid acquisitions process • Cisco’s ability to integrate its acquisitions quickly into the family • People and culture • Delegated authority; collaboration expected and rewarded • Turnover (Cisco: 6.7%; industry: 18%) EKU Business

12. Managing IT Organization: • Hire IS professionals who can flexibly integrate new IT and business competencies • Evolving workgroups organized around emerging IT-intensive business initiatives • IT funding typically based on value proposition around business opportunity related to building services for customers. IT project inseparable part of business initiative EKU Business

13. E-Business Planning Business Value Visioning Application Development and Deployment Information Resource Planning Business Strategies and Models IT Strategies and Architecture EKU Business

14. VISION FOR BUSINESS BUSINESS STRATEGIC PLAN ASSESS BUSINESS BUSINESS OPS PLAN & BUDGET IS OPS PLAN & BUDGET VISION: HOW BUSINESS SHOULD USE INFO INFORMATION ARCHITECTURE IS STRATEGIC PLAN ASSESS INFO USE & MANAGEMENT Information Resources Planning Process EKU Business

15. Information Resource Planning • Assessment of Current Information Resources • Information Vision & Information Technology Architecture • Strategic & Operational IS Plans Must Move Toward Desired Architecture EKU Business

16. Information Resources Assessment • Critical Evaluation of Inventory of Hardware, Software, People • Looks at Quality of Resources • Helps Meet Business Needs of Organization • Example EKU Business

17. Information Vision & Architecture • Information Vision: Written expression of desired future for information use & management • Technology Architecture: Description of how information resources should be deployed to achieve the information vision EKU Business

18. Assessing the Organization Ask these questions: Do key executives understand the impact of IT on the company’s competitive position? Do they understand what is possible with current and forthcoming technologies? Do they know how the capabilities and economics of IT will change the way the business is operated and managed? Does the company have the right balance between innovation and managing scarce technology resources? EKU Business

19. Assessing Current Information Resources • Measure Use and Attitudes • Review IS Organizational Mission • Information Vision: A mission can best be defined by delineating the reasons for having an IS function. Each reason is classified under one of the following categories: • Efficiency: Uses minimum resources to do its job • Effectiveness: Helps users spend time doing right things • Competitiveness: Helps ensure organization’s competitive position EKU Business

20. Examples of Information Resources Assessment • A single IS does not exist in our organization • Substantial potential exists for cleaning up the automation of existing work processes • Significant gaps exist in automation of the value-added process in our company • There is a perception that the IS organization is not a company-wide support organization • Except for the last year and a half, IS appears to have been a stepchild of senior management • There is a significant perception among the user population that IS is not particularly responsive to their needs EKU Business

21. Examples of Information Resources Assessment (continued) • IS personnel seem dedicated to IS and the company • The level of user training and support is substantially below needs and expectations • While the workload in IS is heavy at times, current staffing levels should be sufficient to meet current expectations • The Internet is not used extensively Additional issues: • Hardware; Network infrastructure • Databases; Software applications EKU Business

22. CREATING INFORMATION VISION • Speculate: How will competitive environment change? • Current System: Can it do future job? • Identify Changes: How must IS change to allow company to take advantage of future environment? EKU Business

23. IS Mission Statement – An Example Information Services is responsible for a wide variety of computing systems and services for the people of corporation. In this role, the department: Provides a secure location for housing and accessing the official electronic data records of the company Maintains shared computer processing capacity and support for file maintenance and information reporting Manages a corporate data network that delivers services to departmental servers and individual workstations linked to its data center Provides integrated IS development for departments in order to advance organizational strategies EKU Business

24. IS Mission Statement – Another Example In order to meet the challenges outlined within the company Vision Statement and support the strategic objectives and values of our company, the mission of Information Services is to provide reliable information, data, and computing services to all clients, both within and, where appropriate, outside of the company. To accomplish this role, it will be necessary to exercise leadership in identifying new management tools based on evolving IT that enables management to increase their effectiveness in operating and managing the business. The department’s ultimate objective is the development of an integrated information infrastructure and associated services required to facilitate the decision-making process. EKU Business

25. ELEMENTS OF IT ARCHIETCTURE • Technology Component • Hardware • Software • Network • Data • Human Component • Personnel • Values/Culture • Management System EKU Business

26. STRATEGIC IS PLAN • Set of Long Range Goals Which Document Movement Toward Information Vision & Architecture • Associated Major Initiatives to Achieve Goals • Development Steps: • Set Objectives • Conduct Internal & External Analysis • Establish Strategic Initiatives • Critical Success Factors • Analyze Competitive Forces • Value Chain Analysis EKU Business

27. VALUE CHAIN ANALYSIS • ACTIVITIES THAT ADD VALUE FOR THE CUSTOMER • PRIMARY ACTIVITIES (PRODUCT): • INBOUND LOGISTICS • OPERATIONS • OUTBOUND LOGISTICS • MARKETING & SALES • SERVICE EKU Business

28. OPERATIONAL IS PLAN • Precise set of short term projects to be executed by IS department & user-managers in support of strategic IS plan • LONG TERM: Two-to-three years, project definition, selection, prioritization. Based on anticipated changes in business • SHORT TERM: One year, linked to annual budget. Focuses on completing current projects, beginning new ones. Immediate hardware, software, staffing needs EKU Business

29. Benefits ofInformation Resources Planning • Better IS Resource Allocation • Communicates with Top Management • Helps Vendors • Creates Context for Decisions • Achieves Integration & Decentralization • Evaluates Options • Meets Management Expectations EKU Business

30. Outline of an Operational IS Plan • Mission • Environment of IS: information needs of the various user groups and of the corporation as a whole • Objectives of IS Department • Constraints on IS Department: the limitations imposed by technology in general and the constraints imposed by the resources within the company (financial, technological, personnel) • Long-Term Systems Needs • Short-Range Plan: a detailed inventory of present projects and systems, and a detailed plan of projects to be developed or advanced during the current year • Contingencies: events that may affect the plan EKU Business

31. E-Business Planning Process Strategy development • Developing strategies that support a company’s vision, and use IT to create innovative E-Business systems that focus on business value Resource management • Developing strategic plans for managing or outsourcing a company’s IT resources Technology architecture • Making strategic IT choices that reflect an IT architecture designed to support a company’s E-Business initiatives EKU Business

32. IT Architecture: a conceptual blueprint including the following components Technology platform • The Internet, intranets, extranets, computer systems, system software, enterprise application software Data resources • operational databases, information databases, data warehouses, hypermedia databases Applications architecture • including support for developing and maintaining supply chain applications, ERP, and customer relationship management applications IT organization EKU Business

33. Managing the IS Function Organizing IT • More centralized control over the management of the IS resources while serving the strategic needs of its business units • Separate .com business units • Outsourcing • ASP Technology management Managing Application development Managing IS operations • Performance monitors supply information needed by chargeback systems that allocate costs to users based on the information services rendered Managing user services Human resource management of IT EKU Business

34. Premiere Technologies, Inc.: ing yl yi Using ASPs • Goal • Rescue a failing PeopleSoft ERP project without compromising core business efforts • ASP:TransChannel LLC, Atlanta • Solution • Premiere turned the whole project over to the ASP to manage • Result: • Saving about $3 million over five years by giving the work to TransChannel EKU Business

35. Mission Statement • Mission: We will become the world's most valued company to patients, customers, colleagues, investors, business partners, and the communities where we work and live. • Values: To achieve our mission, we affirm our values of Integrity, Leadership, Innovation, Performance, Teamwork, Customer Focus, Respect for People, and Community. • Integrity: We demand of ourselves and others the highest ethical standards, and our products and processes will be of the highest quality. • Customer Focus: We are deeply committed to meeting the needs of our customers, and we constantly focus on customer satisfaction EKU Business

36. Mission Statement • Respect: We recognize that people are the cornerstone of Pfizer's success, we value our diversity as a source of strength, and we are proud of Pfizer's history of treating people with respect and dignity. • Performance: We strive for continuous improvement in our performance, measuring results carefully, and ensuring that integrity and respect for people are never compromised. • Teamwork: We know that to be a successful company we must work together, frequently transcending organizational and geographical boundaries to meet the changing needs of our customers. • Innovation is the key to improving health and sustaining Pfizer's growth and profitability. EKU Business

37. Mission Statement • Leadership: We believe that leaders empower those around them by sharing knowledge and rewarding outstanding individual effort. Leaders are those who step forward to achieve difficult goals, envisioning what needs to happen and motivating others. • Community: We play an active role in making every country and community in which we operate a better place to live and work, knowing that the ongoing vitality of our host nations and local communities has a direct impact on the long-term health of our business. EKU Business

38. Our Values • Respect for people that includes our concern for the interests of all people worldwide who touch — or are touched by — our company: customers, employees, shareholders, partners and communities • Integrity that embraces the very highest standards of honesty, ethical behavior and exemplary moral character • Excellence that is reflected in our continuous search for new ways to improve the performance of our business to become the best at what we do EKU Business

39. Mission Statement • Mission • to provide society with superior products and services -- innovations and solutions that improve the quality of life and satisfy customer needs -- to provide employees with meaningful work and advancement opportunities and investors with a superior rate of return. • Our Values • Our business is preserving and improving human life. All of our actions must be measured by our success in achieving this goal. We value above all our ability to serve everyone who can benefit from the appropriate use of our products and services, thereby providing lasting consumer satisfaction. . EKU Business

40. Our Values (continued) • We are committed to the highest standards of ethics and integrity. We are responsible to our customers, to Merck employees and their families, to the environments we inhabit, and to the societies we serve worldwide. In discharging our responsibilities, we do not take professional or ethical shortcuts. Our interactions with all segments of society must reflect the high standards we profess. • We are dedicated to the highest level of scientific excellence and commit our research to improving human and animal health and the quality of life. We devote our resources to meeting the needs of consumers EKU Business

41. Our Values (continued) • We expect profits, but only from work that satisfies customer needs and benefits humanity. Our ability to meet our responsibilities depends on maintaining a financial position that invites investment in leading-edge research and that makes possible effective delivery of research results. • We recognize that the ability to excel -- to meet society's and customers' needs -- depends on the integrity, knowledge, imagination, skill, diversity and teamwork of employees, and we value these qualities most highly. To this end, we strive to create an environment of mutual respect, encouragement and teamwork -- a working environment that rewards commitment and performance and is responsive to the needs of employees and their families EKU Business

42. Global Market Challenges • Political challenges • Rules regulating transfer of data • Restrict/tax/prohibit imports • Local content laws that specify the portion of the value of a product that must be added in that country • Geoeconomic challenges • Too long to fly • Difficult to communicate in real time • Cultural challenges • languages, cultural interests, religions, customs, social attitudes, and political philosophies: managers must be trained and sensitized to such cultural differences • Differences in work styles and business relationships: teams vs individuals; one leadership vs shared leadership EKU Business

43. Global E-Business StrategiesThe Transnational Approach • A business must depend on its information systems and Internet technologies to help it integrate its global business activities • A business must develop an integrated and cooperative worldwide hardware, software, and Internet-based architecture for its IT platform. • Examples EKU Business

44. Transnational Strategies byAmerican Express • Tactic: Global customer service • IT Environment • Global network linked from local branches and local merchants to the customer database and medical or legal referrals database • Results • Worldwide access to funds • “Global Assist” hotline • Emergency credit card replacement • 24-hour customer service EKU Business

45. Transnational Strategies by Benetton • Tactic: Global sourcing and logistics • IT Environment • Global network, EPOS terminals in 4000 stores, CAD/CAM in central manufacturing, robots and laser scanner in their automated warehouse • Results • Produce 2000 sweaters per hour using CAD/CAM • Quick response (in stores in 10 days) • Reduced inventories (JIT) EKU Business

46. Business Drivers for Global E-Business Global customers • People who may travel anywhere or companies with global operations • Global IT can help provide fast, convenient service Global products • Products are the same or are assembled by subsidiaries throughout the world • Global IT can help manage worldwide marketing and quality control Global operations • Parts of a production or assembly process are assigned to subsidiaries based on changing or economic conditions • Global IT can support such geographic flexibility EKU Business

47. Business Drivers for Global E-Business Global resources • The use and cost of facilities and people are shared by subsidiaries of a global company • Global IT can keep track of such shared resources Global collaboration • The knowledge and expertise of colleagues can be quickly accessed, shared, and organized to support individual or group efforts • Global IT can support such enterprise collaboration EKU Business

48. NYPRO Global ERP Issues Gillette • ERP applications using SAP and PeopleSoft because they automatically create reports in different languages • Development work is done in Boston, deployment and screen labeling is handled locally to overcome language barriers Nypro • Runs an ERP system from eBPCS • Provides China plants with networked ERP systems • Put control over ERP data extraction and manipulation in local hands EKU Business

49. Key Questions for Global Websites What content will you translate, and what content will you create from scratch to address regional competitors or products that differ from those in your country? Should your multilingual effort be an adjunct to your main site, or will you make it a separate site, perhaps with a country-specific domain name? What kinds of traditional and new media advertising will you have to do in each country to draw traffic to your site? What are the legal ramifications of having your website targeted at a particular country, such as laws on competitive behavior, treatment of children, or privacy? EKU Business

50. Business Managers inInformation Resource Planning Process • Assessing the current environment and proposing ideas for the future computing environment • Being creative in thinking about IT applications and be knowledgeable about her department’s information needs • Involving during resource and funding justification process • Involving in the process of systems implementation and training • Creating an atmosphere that is conducive to acceptance of the new applications EKU Business