Enhancing Business Efficiency with E-Business Innovations

1. Chapter 11 Managing E-Business Applications

2. Introduction • Organizations are establishing intranets and rebuilding internal systems for e-business • The successful use of Web-based internal systems positions the firm to adopt e-commerce applications and transact business electronically with suppliers and customers • Many barriers exist within organizations that limit or impede e-business initiatives; successful managers must anticipate and remove these barricades

3. Re-engineering for E-Business • Business Process Re-engineering (BPR) • A process where current business processes are modeled from inbound processes through operational activities to outbound processes • Model work and information flows • Application of e-business technologies allows a firm to improve operations by restructuring • De-optimized business processes create the opportunity, IT helps capture the benefits • This is truly business process innovation

4. Analysis • First goal is to identify those activities the firm should not be doing • Eliminate redundant, wasteful activities • Second, is to find essential processes that can be accomplished more effectively outside the firm • Outsource non-core business processes • Payroll processing, desktop support

5. Synthesis • For the activities that remain, innovative new processes need to be devised • These new processes must look to leverage IT and communication technologies • Many times great efficiencies can be created when sequential processes are redesigned to work in parallel • Parallelism may be created within a firm and between firms using IT and Internet linked systems

6. Distributed Systems • Distributed systems consist of powerful workstations attached to LANs connecting workers to databases, servers, and storage • Yields operational flexibility and increased responsiveness to business pressures • Replaces rigid top-down systems with local expertise • More employees can have access to more and higher quality data

7. Client/Server Operations • Client/server operations divide the complete application (presentation, function, data management) into two parts connected via a high speed network • This networked architecture changes and rearranges workflow • Affects people, processes, and organizations • Requires restructuring of hardware, software, telecommunications, and applications

8. Client/Server Operations • PC-based Web browsers have provided businesses with the universal/generic client • Many applications have begun to incorporate Web portals – Web functions allowing application usage via browsers • Use of Web browsers leverages user interface familiarity to enable new workers to quickly learn applications

10. Client/Server Operations • Depending on the application, the client, and the network, configuration of the client/server architecture can place greater or lesser performance demands on the various components • Thin clients with no local storage and modest computing power put greater demands on the network and server, but can be placed easily as point of sale terminals • Full workstations with fast processors can do most work locally with little server support

11. Building Client/Server Applications • Successful implementation of client/server systems results from planning • No one planning methodology is adequate; managers must seek a blend based on the situation • Client/server application development requires programmers with strong skills in new tools and techniques • The management plan needs to be developed concurrently with the application

12. Issues of Distributed Computing • Software and application issues • Hardware compatibility and maintenance issues • Telecommunications issues • Data and database issues • Asset protection and security issues • Business controls issues • Financial concerns • Political, cultural, and policy issues • Staffing and personnel issues

13. Compatibility • Compatibility between commonly used applications significantly enhances the effectiveness of distributed computing • Incompatibilities between basic programs increase costs, reduce ease of data sharing, and cause increased complexity with other applications • Standardized hardware platforms make installation and support of networking and software cost effective

14. Communication • The firm’s physical network architecture, communication software, and protocols should be standardized • Policies are needed for linking to and using outside databases, the Internet, and EDI

15. Databases • Firms must clarify issues of ownership, control, and responsibility • Integrity issues must be addressed formally with controls covering uploading and downloading of data • IT must create a balance for the firm between accessibility and security

16. Security Issues • As technology dispersion brings powerful systems and applications to the level of the department, critical IT management responsibilities migrate with them • Disaster recovery planning and management • Asset security • Physical access controls

17. Political Issues • Migration from centralized computing to a client/server model shifts the firm’s power structure, giving more people the power to evaluate data and make decisions • Widespread implementation of IT tends to flatten a firm’s structure; this change causes displacement of managers and changes in power relationships

18. Staffing and Personnel Issues • The most critical factor • Considerable training is required to support this transformation • Not all employees can adapt and take full advantage of the new tools • Leadership changes are required to effectively lead re-engineered departments • Understanding and addressing these stresses in a formal manner is critical

19. Human Support Infrastructure • Staffing, training, and support issues are an ongoing challenge to IT • For firms undergoing extensive or prolonged IT changes, establishing a formal department to support this new need is commonly done • Called by many names: Help Desk, Customer Support, • It receives assistance from IT, but includes non-IT members as well

20. Info Center • Supports the firm’s IT migration by centralizing support, purchasing, and application licensing • Helps to maintain compatibility across the firm for hardware and software • Acts as a central maintenance depot • Data gathered by the info center during support activities can be used to glean customer preferences and trends

21. Help Desk Functions • Conduct or provide user training • Provide development assistance • Evaluate new applications • Distribute customer information • Answer routine customer questions • Assist in problem determination • Gather planning information

22. E-Business, The New Paradigm • E-business represents an integrated approach to obtaining differentiated value by combining information systems and business processes with Internet technologies • E-business is broader than e-commerce or e-marketing because when businesses are connected to the Internet, they are forced to restructure operations and capitalize on the natural strengths of the Web

23. Intranets and Extranets • Intranet – an internal Web site containing company-specific information with access restricted to the employees of the firm • Used to communicate information like product documentation, corporate policies, or procedures • They have become much more efficient systems for communication • Span of control is replaced by span of communication (Drucker)

24. Intranets and Extranets • Extranet – private networks based on Web protocols and standards linking corporations together • Data is secured and private, off the public Internet • Web standards make it easy to create and remove shared content • Use of extranets to link suppliers and their customers helps decrease inventory, increase returns, and reduce carrying cost

25. Developing and Using Intranets and Extranets • Deployment of a corporate intranet is the first step in preparing to deploy an e-business • Introduce employees to digitized business processes • Encourage business process redesign • Require deployment of middleware • Security • Access control • Communications systems (e-mail, IM, etc.)

26. Developing and Using Intranets and Extranets • The second step is to connect the intranet to the Internet • Allows employees to: • obtain external information • correspond with external customers • Helps grow the culture of electronic interaction, digitized processes, and streamlined processes • The third step is to link employees to ERP systems over the intranet

27. Developing and Using Intranets and Extranets • Finally, an extranet is created linking suppliers, select customers, and internal staff; an embryonic B2B implementation is created • Place orders • Receive invoices • Funds transfers • Check stocking levels

28. B2C • Permits millions of customers to select and order products, make payments, or return merchandise • These are sophisticated systems requiring all the preceding technologies and business practices to be implemented and mastered • B2C operations open new possibilities with data mining, marketing, and product branding

29. Management Issues • E-business places greater demands on the firm’s managers and technical personnel • New tools are used: XML, HTML, JAVA • New processes are needed • Uptime, reliability, and disaster recovery must be impeccable • IT managers must focus on the firm’s e-business goals, and other dept. managers must understand IT operations

30. Managing Web-Hosting • Companies lacking internal resources or needing rapid time to market may choose to outsource their Web operations • Businesses are trusting their online presence to another firm, and must carefully screen their new business partner • Level of experience and commitment • Depth of financial resources • Physical assets • Availability and uptime • Stability

31. Application Hosting • Application programs are supplied to a business on a lease type basis • The applications continue to reside at the hosting company and are accessed via the Internet • Payroll, inventory, order fulfillment, billing • As firms re-evaluate core activities, ASP solutions can take over most of IT functions • Radiology departments outsource storage of images and reports • Retailers outsource data warehousing / mining

32. E-Sourcing • At the extreme, firms would transfer physical IT assets (hardware, software, people, networks) to the e-sourcing firm • A large e-sourcing firm can offer scalability, flexibility, and economies of scale • Trades ownership of assets for increased access to data warehousing, IT expertise, and management skills • Confirms the concept of computing as a utility

33. Implementing E-Business Systems • Implementing client/server or Internet technology poses many unique and difficult challenges to IT managers • Organizational factors • Information infrastructure issues • Systems management issues • Other management issues

34. Organizational Factors • When implementing networked / e-business systems, management must have a unified strategic vision • Most new business processes cause a flattening of corporate structure • Senior management must understand and be ready to transition redundant managers and management levels into new areas of responsibility

35. Information Infrastructure • Most firms have some pre-existing infrastructure; new equipment must mesh with existing equipment • Some vendors supply hardware, software, and networks as a package; integration with existing systems must also be provided • Claims of interoperability and open design must be scrutinized • IT staff must have the skills and training to support the new systems

36. Systems Management • When transitioning from centralized to distributed systems, physical asset management must be addressed • Workstation security • Password management • License requirements • Software installation and control • Configuration management

37. Management Issues • Quantifying benefits of networked systems to organizations is difficult because they most often have their greatest impact on organizational effectiveness • Most firms classify these investments as strategic with a return anticipated in the future • Commonly these systems do not result in cost savings to the firm but increased revenue • E-business investments must be directed from the highest levels of the firm

38. Policy Considerations • Hardware and software compatibility • Presents a tradeoff between ease of data interchange, economies of scale in procurement, training and support vs. overall capability • Middleware standards • E-mail infrastructure, network management systems, authentication services • Ownership and responsibility for distributed hardware, applications, data

39. People Considerations • Effective intranets, extranets, and other e-business systems directly affect traditional reporting relationships • Increasing employees span of communication shift their perspective of their place in the firm • Loyalties move from the immediate manager to the department, or other individuals in the hierarchy • Managers must constantly focus on building good communication with employees

40. Managing Expectations • Installation of distributed systems must be done in a stepwise process • Use of prototype test-beds and an iterative approach helps ease technology transitions • Prototyping helps to ground plans on real world interactions • Human factors must be addressed • Ease of use and interface design can make or break a project

41. Change Management • Three phases • First – during prototyping, the next target group of users should be informed and brought up to speed on the project • Second – as new users are introduced to the system, they should be paired with experienced users; additional staff needs to be available • Third – feedback from the new users needs to be incorporated into the application

42. Summary • Networked application systems are one of the most important developments in IT history • Managers must select and implement systems that work in their specific environments and be capable of managing the resulting profound changes that ensue • Distributed computing has high potential payoff, and can create a win – win situation