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E-Business: Information Technology and Business
Minder Chen, Ph.D.
Associate Professor
Decision Sciences and MIS Area Coordinator
School of Management
George Mason University
Email: [email protected]
Sept. 22, 2004
forHunan University
EMBA Student
Exchange Program
E-Business - 2 © Minder Chen, 1996-2004
Outline
• Information Hierarchy
• Extended Enterprise & Enterprise Resource Planning (ERP)
• Information Architecture and Enabling Technologies
• Business Process Reengineering / Management
• Electronic Commerce
• Conclusions
E-Business - 3 © Minder Chen, 1996-2004
Information Life Cycle
DecisionDecision
ActionAction
DataData
InformationInformation
• Intelligence• Design • Choice
E-Business - 4 © Minder Chen, 1996-2004
Even the Caveman Needs Knowledge to Survive
The information-knowledge-wisdom hierarchy. The caveman has lots of information; he selects and organizes useful information into knowledge, but he does not achieve wisdom until he has integrated his knowledge into a whole that is more than useful than the sum of its parts. Source: Harlan Cleveland, "Information as a Resource," The Futurist, December 1982, 34-39.
E-Business - 5 © Minder Chen, 1996-2004
Information Hierarchy
Knowledge
Information
Event
Data
Learning: Integration into strategic policy through experience
Analysis: Application to decision making
Observation: Description of events
Wisdom
E-Business - 6 © Minder Chen, 1996-2004
Nolan 的信息时代演进图
自动化
信息化组织再造
DP – Mainframe/Mini 时代
Micro 时代
网络时代
1960 1980 1995 2010
产业经济 转型与再造 信息经济
创造性毁灭时代 虚拟组织时代
层级式组织层级式组织
矩阵式组织网络式组织
E-Business - 7 © Minder Chen, 1996-2004
E-Business and E-Commerce
E-Business
E-Commerce
Internet Commerce
Commerce
E-Business - 8 © Minder Chen, 1996-2004
The Extended Enterprise
E-Business: Virtual and Dynamic Enterprise
SuppliersBackOffice
FrontOffice
Customers
Buy Make/Add Value Sell
Supply Chain Back Office Integration Demand Chain
ManufacturingFinance
Engineering
SalesSupport/Service
Marketing
Supply Chain Management Customer Relationship Management
Enterprise Resource Planning
© Minder Chen, 2001-2002
E-Business - 9 © Minder Chen, 1996-2004
A Federation of Information Systems
E-Business - 10 © Minder Chen, 1996-2004
ERP系統架構
中央資料庫
銷售與發送應用
報告應用 財務
應用
製造應用
存貨與供應應用人力資源
管理應用
服務應用
供應商顧客
經理與股東
員工
銷售與顧客服務人員
後勤管理與工作人員
E-Business - 11 © Minder Chen, 1996-2004
R/3 Logistics Process Flow
報價報價
核對發票核對發票
請購單請購單
收貨收貨
採購單採購單
報價報價
SD:銷售管理
供應商供應商
開立發票開立發票
經銷商
客戶
經銷商
客戶訂單訂單
交貨交貨
詢價詢價
進貨進貨 出貨出貨
倉庫管理倉庫管理
基準生產計劃
基準生產計劃
MRPMRP
物料預測物料預測
PP :生產計劃管理MM:採購管理
詢價詢價
計劃訂單計劃訂單
採購分析採購分析 生產分析生產分析 品質分析品質分析 銷售分析銷售分析庫存分析庫存分析
庫存管理庫存管理
核發
A / PA / P A / RA / R GLGLGLGL
ERSERS
F IF I F IF ILIS
核發
銷售活動銷售活動銷售計劃銷售計劃
MM:庫存管理
生產工單
生產控制
E-Business - 12 © Minder Chen, 1996-2004
Information Systems Triad
OperationalDatabase
InformationalDatabase
EnterpriseWorkflow
OLTP DSSEIS
Data Information
Knowledge
Messaging Systems
Workgroup Workflow
BusinessProcessWorkflow
E-Business - 13 © Minder Chen, 1996-2004
Information System Applications
E-Business - 14 © Minder Chen, 1996-2004
Information Needs
E-Business - 15 © Minder Chen, 1996-2004
Architecture of Data Warehouse
CorporateOperationalDatabase
Information WarehouseEnd UserAccess Tools
• EIS• DSS• Report Writers• Spreadsheets
Summarized
Detailed
PastCurrent
DataBridging
BusinessEvent
Information
• Data extraction• Data filtering• Table joining• Translation• Re-Formatting
Projected
Derived
Data Bridging/Transformation
E-Business - 16 © Minder Chen, 1996-2004
Dimensional ModelProduct• Name• Description• Size• Price
Promotion• Description• Discount• Media
Market Region• Description• District• Region• Demographics
Time• Weekday• Holiday• Fiscal
Product
Market
Promotion
Time
• Dollars• Units• Price• Cost
Time
RegionProduct
E-Business - 17 © Minder Chen, 1996-2004
Pivot Table in Excel
E-Business - 18 © Minder Chen, 1996-2004
Team Work & Groupware
Same TimeSame Time Different TimeDifferent Time
Multi-media presentation systems Key-pad based voting tools Facilitated meetings using a PC Networked PCs based GDSS
Project/team rooms Shared offices
Screen sharing Audio/video conferencing
E-mail Data & file sharing Group authoring tools Computer conferencing Work flow management systems
DifferentPlace
DifferentPlace
SamePlace
SamePlace
E-Business - 19 © Minder Chen, 1996-2004
Generic Problem-Solving Process and TeamSpirit
Share informationDiscussion forumStructured brainstormingBrainstorming
Idea consolidation
Rate alternativeRank alternativesSelect alternatives Multicriteria evaluation
Idea generation
Idea Organization
Alternative Evaluation
TeamSpirit Toolbox
Ge
ne
ric
Pro
ble
m S
olv
ing
Pro
ce
ssD
ivergen
t D
ivergen
t
Th
inkin
gT
hin
king
Co
nverg
ent
Co
nverg
ent
Th
inkin
gT
hin
king
TeamSpirit MeetingManagement Tool
TeamSpirit is a Web-based group decision support system / creative group problem solving system. Every user can create and facilitate meetings.
E-Business - 20 © Minder Chen, 1996-2004
Select a Meeting Agenda to Participate
E-Business - 21 © Minder Chen, 1996-2004
Multi-Aspect Brainstorming
E-Business - 22 © Minder Chen, 1996-2004
Rate Alternatives
E-Business - 23 © Minder Chen, 1996-2004
E-Business - 24 © Minder Chen, 1996-2004
Multicriteria Evaluation Tool
E-Business - 25 © Minder Chen, 1996-2004
• Business Processes
• People-to-people connections
Individual
Teams
Enterprise Portal Strategy
Division
Enterprise
• Spectrum of sites – centralized in large scale farms or standalone
• Rich out-of-box solution for collaboration and portals
• Consistent user, developer and admin experience
E-Business - 26 © Minder Chen, 1996-2004
Information AggregationEmployee or partner site aggregating information and applicationsEmployee or partner site aggregating information and applications
• Capabilities– Customizable
presentation & personalization
– Content and Document management and publishing
– Business Intelligence
– Information aggregation and search
– Taxonomy
– Enterprise Application Integration
E-Business - 27 © Minder Chen, 1996-2004
Types of ProcessesDimensions & Type Examples IT Enabling Effects
Order from a supplier
Develop a new product
Approve a bank loan
Manufacture a product
Prepare a proposal
Fill a customer order
Develop a budget
Lower transaction costsEliminate intermediaries
Work across geographyGreater concurrency
Integrate role and task
Increase outcome flexibilityControl process
Routinize complex decision
Reduce time and costsIncrease output quality
Improve analysisIncrease participation
Adapted from: Davenport, T. H. and Short, J. E., "The New Industrial Engineering: Information Technology and Business Process Redesign," Sloan Management Review, Summer 1990, p. 17.
Organization Entity• Interorganizational
• Interfunctinal
• Interpersonal
Objects• Physical
• Informational
Activities• Operational
• Managerial
E-Business - 28 © Minder Chen, 1996-2004
IT Capability and Their Organizational Impacts
Capability Organizational Impact and Benefit
Transactional Transform unstructured processes into routinized transactions
Geographical Transfer information across long distances easily to make processes independent of geographical areas
Automational Reduce or reduce human labor in a process
Analytical Bring complex analytical methods to bear in a process
Informational Analyze and present vast amount of detailed information about a process
Parallel Change sequential tasks in a process into parallel ones
Knowledge Mgmt. Capture and disseminate expertise to amplify human cognition
Tracking Allow real-time and detailed tracking of tasks status, and inputs and outputs of a process
Disintermediation Remove intermediaries and connect two parties in a process directly
Adapted from: Davenport, T. H. and Short, J. E., "The New Industrial Engineering: Information Technology and Business Process Redesign," Sloan Management Review, Summer 1990, p. 17.
E-Business - 29 © Minder Chen, 1996-2004
Field operations are on their own
Field operations are on their own
High bandwidth networks, remote access, wireless network
High bandwidth networks, remote access, wireless network
Simultaneous centralization and decentralization
Simultaneous centralization and decentralization
New Thinking
Old Assumption Enabling Technology New Thinking
Only specialists can perform complex work
Only specialists can perform complex work
Knowledge base
systems, expert systems
Knowledge base
systems, expert systemsCase managers handle a case with no handoff
Case managers handle a case with no handoff
Managerial hierarchy is required for control& supervision
Managerial hierarchy is required for control& supervision
Accessible data & analytic tools, exception monitoring
Accessible data & analytic tools, exception monitoring
Self-managed teamsSelf-managed teams
Product development is a sequential activity
Product development is a sequential activity Common CAD/CAM
systems
Common CAD/CAM
systems Concurrent engineeringConcurrent engineering
We treat all
customers alike
We treat all
customers alike Comprehensive
customer data base
Comprehensive
customer data base Target marketing, customerized & personalized services
Target marketing, customerized & personalized services
We don't know what's in the order until we receive it
We don't know what's in the order until we receive it
Modeling and forecasting and inter-organizational IS
Modeling and forecasting and inter-organizational IS
Predictive order
processing
Predictive order
processing
E-Business - 30 © Minder Chen, 1996-2004
Process Classification Scheme: AA Global Best Practice KB
Produce & deliver for
product organization
Produce & deliver for
service organization
Invoice & service
customers
Understand market & customer
Develop vision & strategy
Design products &
services
Market & sell
Develop & manage human resources
Manage information/knowledge
Manage financial & physical resources
Execute environmental management program
Manage external relationships
Manage improvement and change
Operating processes
Ma
na
ge
men
t &
su
pp
ort
p
roce
ss
es
Source: “A Note on Knowledge Management,” Harvard Business School 9-398-031, 1997.
E-Business - 31 © Minder Chen, 1996-2004
• 30 steps, 5 departments, 19 persons
• Issuance application processing cycle time: 24 hours minimum; average 22 days
• only 17 minutes in actually processing the application
Department AStep 1
Department AStep 2
Department EStep 19
. . . .
Issuance Application
Issuance Policy
New Life Insurance Policy Application Process at Mutual Benefits Life Before Reengineering*
*Source: Adapted from Rethinking the Corporate Workplace: Case Manager at Mutual Benefit Life, Harvard Business School case 9-492-015, 1991.
E-Business - 32 © Minder Chen, 1996-2004
The New Life Insurance Policy Application Process Handled by Case Managers
Case Manager
UnderwriterPhysician
Mainframe
LAN Server
PC Workstation
• application processing cycle time: 4 hours minimum; 2-5 days average
• Application handling capacity double
• Cut 100 field office positions
E-Business - 33 © Minder Chen, 1996-2004
Reengineering Example
Which line is shorter and faster?
Cash LaneNo more than 10 items
E-Business - 34 © Minder Chen, 1996-2004
Reengineered Process
Key Concept: • One queue for multiple
service points• Multiple services
workstation
E-Business - 35 © Minder Chen, 1996-2004
Empowered Customer-Focus Processes
Values and Quality delivered to
Customers timely
Empowered Font-line worker
Customer-facing Process
Manager as Coach
Teamwork
E-Business - 36 © Minder Chen, 1996-2004
Boss-Focus Processes
Tug of WarOut on a limb
Aiming the wrong target
De-powerment
Front-line Worker
Customer
E-Business - 37 © Minder Chen, 1996-2004
Customers
• Obsess over your customers
• Remember that the Web is an infant– What do you have to offer that the physical world
cannot in order to attract customers?
• If you make one customer unhappy, he won't tell five friends -- he'll tell 5,000 on newsgroups, list servers, and so on.
– "Word of mouth" factor gets amplified on the Net
• The shifts of balance of power away from business and toward customer.
- Jeff Bezos
E-Business - 38 © Minder Chen, 1996-2004
MOT Analysis Example
• Prio to MOT – Recognition
– Information gathering
– Comparison
• MOT – Applying for Credit Card
– Receiving Credit Card
– Using Credit Card
– Providing Information
– Changing and Upgrading
– Gifts giving
– Emergency Assisting
• After MOT– No usage follow-up
– Stop membership follow-up
E-Business - 39 © Minder Chen, 1996-2004
End-to-End Processes
Customer
Manufacturing Inventory Mgmt.
Shipping
Marketing/Sales
Account Receivable
E-Business - 40 © Minder Chen, 1996-2004
Think from the Customer Back
The CustomerThe Customer
Management
Organization
Functions/Processes
Activities/Tasks
DefineOutcomes
RedesignOutputs
DetermineActivities
DefineJob Responsibilities
DevelopOrganization Structure
* Adapted from The Price Waterhouse Change Integration Team, Better Change, Irwin, 1995, p. 163.
E-Business - 41 © Minder Chen, 1996-2004
Reengineering & Customers*
• Paradigm Shift: – Make and sell Sense and service
– Mass marketing Micro-marketing
– Transaction marketing Relationship marketing
• IT Enablers– Multimedia: e-Learning
– Communication networks: Internet and intranet
– Scanning technologies: RFID
– Electronics commerce
– Customer databases: CRM
– Mobile computing
Source: James I. Cash, Jr., "Listen To Your Customers", Information Week, Feb. 27, 1995, p. 108.
TravelocityMicrosoft expediaPriceline.com
E-Business - 43 © Minder Chen, 1996-2004
Is EC Appropriate for You?
Industries who set up virtual storefronts
E-Business - 44 © Minder Chen, 1996-2004
EC Strategies: 4 Cs
CommerceCommerce
ContentContentCommunityCommunity
CustomersCustomers
Your competitor is just one-click away
E-Business - 45 © Minder Chen, 1996-2004
Virtual Communities
Virtual Community
Users
• Money
• Content• Demographics
Providers
• Content• Hard goods• Games• Services
Other Websites
Advertisers
• Advertising
E-Business - 46 © Minder Chen, 1996-2004
EC and Business Processes
Seller Customer
Co
rpo
rate
Dat
abas
es
Provide Info
Get customer
Provide info
Fulfill order
Support
Identify need
Find source
Evaluate offerings
Purchase
Operate, Maintain, Repair
Phone, fax, e-mail
Web site
Newsgroups
Net communities
Web site
EDI
Web site, phone, fax, e-mail, e-mailing list
Credit cards, e-cashP.O.s
Demos, reviews
Send info
Data sheets, catalogs, demos
Request info
Web surfing
Web searches, web ads
Deliver soft goods electronically
E-Business - 47 © Minder Chen, 1996-2004
Business Models Based on the Value Chain in the Market Place
Raw material producer
Manufacturer
Distributor
Retailer
Consumer
ExchangeExchange
Examples: • B2B: alibaba.com• B2C: Amazon.com
• C2B: Priceline.com• C2C: eBay.com
C2B
B2C
B2C C2CNew Middleman
• Independent market operators
• Consortia
Service Providers: • Logistics• Financial
E-Business - 48 © Minder Chen, 1996-2004
Trading PartnersSuppliersDistributorsBusiness Partners
E-Business Integration Imperatives
Heterogeneous PlatformsERP Application PackagesProprietary ApplicationsLegacy Applications
Consumers
REQUIREMENTSStandards based integrationConfigurable across applicationsBusiness process orientedLoosely coupledSupports an incremental approachScaleable, available, secure, manageable
B2BIntegration
EAI
B2CInternet /
Virtual Private Network
E-Business - 49 © Minder Chen, 1996-2004
The B2C Business Models – Bricks, Clicks, Revolution and Evolution
Bricks Clicks
Bricks & Clicks
• Sat on the sidelines for the explosion • Evolved to online commerce• Online services are incremental• Not huge differentiators for clients• Source of convenience• Took advantage of lessons learned• Assets CHEAP from Click failures
• Mergers or sales of assets to Bricks• Folding bricks ventures into portfolio• Narrow focus of offerings
eBay, Amazon, Webvan, Wingspan Bank, Yahoo
Gap, Safeway, Wallmart
• Bricks organizations set up separate click organizations to give the required freedom to operate in the fast moving Click environment
or• Clicks organizations were created through VC capital
Wells Fargo, Safeway, Barnes and Noble
E-Business - 50 © Minder Chen, 1996-2004
IT Technology Driven vs. Business Pulled
Information Technology
Information Technology
BusinessReengineering
BusinessReengineering
How can IT support business strategies and business processes?
Technology-driven
Business Vision & Strategy
Business Vision & Strategy
Business-pulled
How can business strategies be changed business processes be transformed using IT?
E-Business - 51 © Minder Chen, 1996-2004
The Zachman Framework for Enterprise Architecture
What How Where Who When Where
Data Function Network People Time Motivation
E-Business - 52 © Minder Chen, 1996-2004
人事 物
地利
天時
天時、地利、人和Business environments • Market demands• Technology development• Social trends
Geographic distribution Localization
E-Business - 53 © Minder Chen, 1996-2004
人事 物
Man: Human Resource, EmployeesMarket: Customers
Machine: Property , Facility
, TechnologyMaterial:
Raw material , Product
Method: Technique , Process
, Project , Task
Money: Accounting , Finance , Investment
$$$ Message: Information
Man, Market, Money, Method, Machine, Material, Message
錢財訊息
資材
方法
人才顧客
E-Business - 54 © Minder Chen, 1996-2004
朱子註解「格物、致知」
「所謂致知在格物者,言欲致吾之知,在即物而窮其理也。蓋人心之靈莫不有知,而天下之物莫不有理,惟於理有未窮,故其知有不盡也。是以大學始教,必使學者即凡天下之物,莫不因其已知之理而益窮之,以求至乎其極。至於用力之久,而一旦豁然貫通焉,則眾物之表裡精粗無不到,而吾心之全體大用無不明矣。此謂物格,此謂知之至也。 」