Chapter 11Managing E-Business Applications

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

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 processesModel work and information flows

Application of e-business technologies allows a firm to improve operations by restructuringDe-optimized business processes create the

opportunity, IT helps capture the benefitsThis is truly business process innovation

AnalysisFirst goal is to identify those activities

the firm should not be doingEliminate redundant, wasteful activities

Second, is to find essential processes that can be accomplished more effectively outside the firmOutsource non-core business processes

Payroll processing, desktop support

SynthesisFor the activities that remain, innovative

new processes need to be devisedThese new processes must look to leverage IT

and communication technologiesMany times great efficiencies can be created

when sequential processes are redesigned to work in parallelParallelism may be created within a firm and

between firms using IT and Internet linked systems

Distributed SystemsDistributed systems consist of powerful

workstations attached to LANs connecting workers to databases, servers, and storageYields operational flexibility and increased

responsiveness to business pressuresReplaces rigid top-down systems with local

expertiseMore employees can have access to more

and higher quality data

Client/Server Operations

Client/server operations divide the complete application (presentation, function, data management) into two parts connected via a high speed networkThis networked architecture changes and

rearranges workflowAffects people, processes, and organizationsRequires restructuring of hardware, software,

telecommunications, and applications

Client/Server Operations

PC-based Web browsers have provided businesses with the universal/generic clientMany 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

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

Building Client/Server Applications

Successful implementation of client/server systems results from planningNo 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

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

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

CommunicationThe 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

DatabasesFirms must clarify issues of ownership,

control, and responsibilityIntegrity 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

Security IssuesAs technology dispersion brings

powerful systems and applications to the level of the department, critical IT management responsibilities migrate with themDisaster recovery planning and

managementAsset securityPhysical access controls

Political IssuesMigration 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

Staffing and Personnel Issues

The most critical factorConsiderable training is required to

support this transformationNot all employees can adapt and take full

advantage of the new toolsLeadership changes are required to

effectively lead re-engineered departments

Understanding and addressing these stresses in a formal manner is critical

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 doneCalled by many names: Help Desk,

Customer Support,It receives assistance from IT, but includes

non-IT members as well

Info CenterSupports the firm’s IT migration by

centralizing support, purchasing, and application licensingHelps to maintain compatibility across the

firm for hardware and softwareActs as a central maintenance depotData gathered by the info center during

support activities can be used to glean customer preferences and trends

Help Desk FunctionsConduct or provide user trainingProvide development assistanceEvaluate new applicationsDistribute customer informationAnswer routine customer questionsAssist in problem determinationGather planning information

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

Intranets and Extranets

Intranet – an internal Web site containing company-specific information with access restricted to the employees of the firmUsed 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)

Intranets and Extranets

Extranet – private networks based on Web protocols and standards linking corporations togetherData is secured and private, off the public

InternetWeb standards make it easy to create and

remove shared contentUse of extranets to link suppliers and their

customers helps decrease inventory, increase returns, and reduce carrying cost

Developing and Using Intranets and Extranets

Deployment of a corporate intranet is the first step in preparing to deploy an e-businessIntroduce employees to digitized business

processesEncourage business process redesignRequire deployment of middleware

SecurityAccess controlCommunications systems (e-mail, IM, etc.)

Developing and Using Intranets and Extranets

The second step is to connect the intranet to the InternetAllows employees to:

obtain external informationcorrespond 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

Developing and Using Intranets and Extranets

Finally, an extranet is created linking suppliers, select customers, and internal staff; an embryonic B2B implementation is createdPlace ordersReceive invoicesFunds transfersCheck stocking levels

B2CPermits millions of customers to select

and order products, make payments, or return merchandiseThese 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

Management IssuesE-business places greater demands on

the firm’s managers and technical personnelNew tools are used: XML, HTML, JAVANew processes are neededUptime, reliability, and disaster recovery

must be impeccableIT managers must focus on the firm’s e-

business goals, and other dept. managers must understand IT operations

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 commitmentDepth of financial resourcesPhysical assetsAvailability and uptimeStability

Application HostingApplication programs are supplied to a

business on a lease type basisThe applications continue to reside at the

hosting company and are accessed via the InternetPayroll, inventory, order fulfillment, billing

As firms re-evaluate core activities, ASP solutions can take over most of IT functionsRadiology departments outsource storage of

images and reportsRetailers outsource data warehousing / mining

E-SourcingAt the extreme, firms would transfer

physical IT assets (hardware, software, people, networks) to the e-sourcing firmA large e-sourcing firm can offer scalability,

flexibility, and economies of scaleTrades ownership of assets for increased

access to data warehousing, IT expertise, and management skills

Confirms the concept of computing as a utility

Implementing E-Business Systems

Implementing client/server or Internet technology poses many unique and difficult challenges to IT managersOrganizational factorsInformation infrastructure issuesSystems management issuesOther management issues

Organizational Factors

When implementing networked / e-business systems, management must have a unified strategic vision

Most new business processes cause a flattening of corporate structureSenior management must understand and

be ready to transition redundant managers and management levels into new areas of responsibility

Information Infrastructure

Most firms have some pre-existing infrastructure; new equipment must mesh with existing equipmentSome 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

Systems Management

When transitioning from centralized to distributed systems, physical asset management must be addressedWorkstation securityPassword managementLicense requirementsSoftware installation and controlConfiguration management

Management IssuesQuantifying benefits of networked systems

to organizations is difficult because they most often have their greatest impact on organizational effectivenessMost firms classify these investments as

strategic with a return anticipated in the futureCommonly these systems do not result in cost

savings to the firm but increased revenueE-business investments must be directed from

the highest levels of the firm

Policy ConsiderationsHardware and software compatibility

Presents a tradeoff between ease of data interchange, economies of scale in procurement, training and support vs. overall capability

Middleware standardsE-mail infrastructure, network management

systems, authentication servicesOwnership and responsibility for

distributed hardware, applications, data

People Considerations

Effective intranets, extranets, and other e-business systems directly affect traditional reporting relationshipsIncreasing 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

Managing Expectations

Installation of distributed systems must be done in a stepwise processUse 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 addressedEase of use and interface design can make or

break a project

Change ManagementThree 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

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