UNIVERSITI TEKNOLOGI MARA

KAMPUS SAMARAHAN

MGT 300

INFORMATION TECHNOLOGY IN BUSINESS

INDIVIDUAL ASSIGNMENT

(Summary Unit 3)

Name : Nur sha’iylia bt Wahid Marican

No matrik: 2012627782

Group : Bm1114C

Chapter 9 – Enabling the Organization-Decision Making

Decision Making

Reasons for Growth of Decision Making Information System

ѽ People need to analyse large amounts of information – Improvements in technology

itself, innovations in communication,

ѽ People must make decisions quickly – Time is of the essence and people simply do

not have time to sift through all the information manually.

ѽ People must apply sophisticated analysis techniques, such as modelling and

forecasting, to make good decisions – Information systems substantially reduce the

time required to perform these sophisticated analysis techniques

ѽ People must protect the corporate asset of organizational information – Information

systems offer the security required to ensure organizational information remains safe.

Model – A simplified representation or abstraction of reality

Transaction Processing System- Moving up through the organizational pyramid users move

from requiring transactional information to analytical information

Transaction processing system – the basic business system that serves the operational level

(analysis) in an organization

Online transaction processing (OLTP) – the capturing of transaction and event information

using technology to :-

1. Process the information according to defined business rules,

2. Store the information,

3. Update existing information to reflect the new information

Online analytical processing (OLAP) – the manipulation of information to create business

intelligence in support of strategic decision making

Decision support systems

Decision support system (DSS) – models information to support managers and business

professionals during the decision-making process

1. Three quantitative models used by DSSs include are Sensitivity analysis – the study

of the impact that changes in one (or more) parts of the model have on other parts of

the model.

2. What-if analysis – checks the impact of a change in an assumption on the proposed

solution

3. Goal-seeking analysis – finds the inputs necessary to achieve a goal such as a desired

level of outputs

What-if analysis- checks the impact of a change in a variable or assumption on the model . A

use would be able to observe and evaluate any changes that occurred to the values in the

model , especially to a variable such as profits.

Goal-seeking analysis- finds the inputs necessary to achieve a goal such as a desired level of

output.

Executive information system

Executive information system (EIS) – A specialized DSS that supports senior level

executives within the organization

Most EISs offering the following capabilities.

1. Consolidation are involves the aggregation of information and features simple roll-ups

to complex groupings of interrelated information.

2. Drill-down are enables users to get details, and details of information.

3. Slice-and-dice are looks at information from different perspectives

Digital dashboard are integrates information from multiple components and presents it in a

united display

Artificial intelligence (AI)

The ultimate goal of AI is the ability to build a system that can mimic human intelligence

Intelligent system – various commercial applications of artificial intelligence

Artificial intelligence (AI) – simulates human intelligence such as the ability to reason and

learn. Four most common categories of AI include;

1. Expert system – computerized advisory programs that imitate the reasoning processes

of experts in solving difficult problems

2. Neural network – attempts to emulate the way the human brain works

Fuzzy logic – a mathematical method of handling imprecise or subjective information

3. Genetic algorithm – an artificial intelligent system that mimics the evolutionary,

survival-of-the-fittest process to generate increasingly better solutions to a problem

4. Intelligent agent – special-purposed knowledge-based information system that

accomplishes specific tasks on behalf of its users

Data-mining software includes many forms of AI such as neutral networks and expert

systems

Chapter 10 – Extending the Organization – Supply Chain Management

BASICS OF SUPPLY CHAIN

SCM – the management of information flows between and among stages in a supply chain to

maximize total supply chain effectiveness and profitability

The supply chain has three main links.

1. Materials flows from suppliers and their upstream suppliers at all levels

2. Transformation of materials into semi-finished products, or the organization’s own

production processes

3. Distribution of products to customers and their downstream customers at all levels

There are 5 basics supply chain management chains .

1. Plan- prepare to manage all resources required to meet demand

2. Source – build relationshio with suppliers to procure raw materials

3. Make – manufacture products and create production schedule

4. Deliver – plan for transportation goods to customers

5. Deliver – supports customer and product returns

INFORMATION TECHNOLOGY’S ROLE IN THE SUPPLY CHAIN

Information technology’s primary role in SCM is creating the integrations or tight process

and information linkages between functions within a firm such as marketing, sales, finance,

manufacturing, and distribution – and between firms, which allow the smooth, synchronized

flow of both information and product between customers, suppliers and transportation

providers across the supply chain

The Integrated Supply Chain

There have 4 factors driving supply chain management :

1. Visibility.

ѽ Supply Chain Visibility is the ability to view all areas up and down the supply

chain. Changing supply chains requires a comprehensive strategy buoyed by

information technology. Organizations can use technology tools that help them

integrate upstream and downstream, with both customers and suppliers.

ѽ The bullwhip effect occurs when distorted product demand information passes

from one entity to the next throughout the supply chain.

2. CUSTOMER BEHAVIOR-

ѽ The behaviour of customers has changed the way businesses complete.

Customers will leave if a company does not continually meet their

expectations. They are more demanding because they have information readily

available, they know exactly what they want, and they know when and how

they want it.

ѽ Demand planning software generates demand forecasts using statistical tools

and forecasting techniques. Companies can respond faster and more

effectively to consumer demands through supply chain enhancements such as

demand planning software.

ѽ Once an organization understands customer demand and its effect on the

supply chain it can begin to estimate the impact that its supply chain will have

on its customers and ultimately the organization’s performance.

3. COMPETITION

ѽ Supply chain planning (SCP) software uses advanced mathematical

algorithms to improve the flow and efficiency of the supply chain while

reducing inventory. SCP depends entirely on information for its accuracy.

ѽ Supply chain execution (SCE) software automates the different steps and

stages of the supply chain. This could be as simple as electronically routing

orders from a manufacturer to a supplier.

4. SPEED

ѽ These systems raise the accuracy, frequency and speed of communication

between suppliers and customers, as well as between internal users.

ѽ Another aspect of speed is the company’s ability to satisfy continually

changing customer requirements efficiently, accurately and quickly.

ѽ Factors fostering supply chain speed

(a) Pleasing customer has become something of a corporate obsessio .

(b) Information is crucial to managers’ abilities to reduce inventory and

human resource requirement to a competitive level.

(c) Information flows are essential to strategic planning for food

deployment of resources.

Supply chain management success factors ( 7 principles)

1) Segment customers by service needs, regardless of industry and then tailor services to

those particular segments

2) Customize the logistics network and focus intensively on the service requirement and on

the profitability of the preidentified customer segment

3) Listen to signal of market demand and plan accordingly. Planning must span the entire

chain to detect signal of changing demand

4) Differentiate products closer to the customer, since companies can no longer afford to

hold inventory to compensate for poor demand forecasting.

5) Strategically manages sources information technology strategy that supports different

levels of decision making and provides a clear view invisibility of the flow of products

services and information

6) Adopt performance evaluation measures that apply to every link in the supply chain and

measure true profitability at every stage

MAKE THE SALE TO SUPPLIERS

The hardest part of any SCM system is its complexity because a large part of the system

extends beyond the company’s walls. Not only will the people in the organization need to

change the way they work, but also the people from each supplier that is added to the network

must change. Be sure suppliers are on board with the benefits that the SCM system will

provide.

WEAN EMPLOYEES OFF TRADITIONAL BUSINESS PRACTICES

Operations people typically deal with phone calls, faxes and orders scrawled on paper and

will most likely want to keep it that way. Unfortunately, an organization cannot disconnect

the telephones and fax machines just because it is implementing a supply chain management

system. If the organization cannot convince people that using the software will be worth their

time, they will easily find ways to work around it, which will quickly decrease the changes of

success for the SCM system.

ENSURE THE SCM SYSTEM SUPPORTS THE ORGANIZATION GOALS

It is important to select SCM software that gives organizations an advantage in the areas most

crucial to their business success. If the organizational goals support highly efficient strategies,

be sure the supply chain design has the same goals.

DEPLOY IN INCREMENTAL PHASE AND MEASURE AND COMMUNICATE SUCCESS

Design the development of the SCM system in incremental phases. For instance, instead of

installing a complete supply chain management system across the company and all suppliers

at once, start by getting it working with a few key suppliers, and then move on to the other

suppliers..

BE FUTURE ORIENTED

The supply chain design must anticipate the future state of the business. Because the SCM

system likely will last for many more years than originally planned, managers need to explore

how flexible the systems will be when (not if) changes are required in the future. The key is

to be certain that the software will meet future needs, not only current needs.

Chapter 11 – Building a Customer-Centric Organization – Customer

Relationship Management

CRM enables an organization to:

♫ Provide better customer service

♫ Make call centres more efficient

♫ Cross sell products more effectively

♫ Helps sales staff close deals faster

♫ Simplify marketing and sales processes

♫ Discover new customers

♫ Increase customer revenues

RECENCY, FREQUENCY AND MONETARY VALUE

An organization can find its most valuable customers by using a formula that industry

insiders call FRM:

♫ How recently a customer purchased items (recency)

♫ How frequently a customer purchased items (frequency)

♫ How much a customer speeds on each purchased (monetary value)

THE EVALUATION OF CRM

CRM reporting technologies help organizations identify their customers across other

applications. CRM analysis technologies help organizations segment their customers into

categories such as best and worst customers. CRM predicting technologies help organizations

predict customer behaviour, such as which customers are at risk of leaving.

USING ANALYTICAL CRM TO ENHANCE DECISION

♫ Operational CRM – supports traditional transactional processing for day-to-day front-

office operations or systems that deal directly with the customers

♫ Analytical CRM – supports back-office operations and strategic analysis and includes

all system that do not deal directly with the customers

CUSTOMER RELATIONSHIP MANAGEMENT SUCCESS FACTORS

♫ Clearly communicate the CRM strategy

♫ Define information needs and flows

♫ Build an integrated view of the customer

♫ Implement in iterations

♫ Scalability for organizational growth

Chapter 12 - Integrating The Organization From The End To End -

Enterprise Resource Planning

Enterprise Resource Planning (ERP)

It serves as the organization’s backbone in providing fundamental decision making support.

It enables people in different business areas to communicate.

ERP system helps an organization to obtain operational efficiencies, lower costs, improve

supplier and customer relations, and increase revenues and market share.

The heart of an ERP system is a central database that collects information from and feeds

information into all the ERP system’s individual application components (called modules),

supporting diverse business function such as accounting, manufacturing, marketing, and

human resources.

ERP automates business processes such as order fulfillment- taking an order from a

customer, shipping the purchase, and then billing for it.

Bringing the Organization Together

ERP enables employees across the organization to share information across a single,

centralized database.

With extended portal capabilities, an organization can also involve its suppliers and

customers to participate in the workflow process, allowing ERP to penetrate the entire value

chain, and help the organization achieve greater operational efficiency.

The Evolution of ERP

Although ERP solutions were developed to deliver automation across multiple units of an

organization, to help facilitate the manufacturing process and address issues such as raw

materials, inventory, order entry, and distribution, ERP was unable to extend to other

functional areas of the company such as sales, marketing, and shipping. It could not tie to any

CRM capabilities that would allow organizations to capture customer-specific information,

nor did it work with websites or portals used for customer service or order fulfilment

Integrating SCM, CRM, and ERP

Integration allows the unlocking of information to make it available to any user, anywhere,

anytime. 2 main competitors in ERP market: 1. Oracle 2. Sap

Primary Users and Business Benefits of Strategic Initiatives.

Integration Tools- An integrated enterprise infuses support areas, such as finance and human

resources, with a strong customer orientation.

Integration are achieved using:

* Middleware- several different types of software that sit in the middle of and provide

connectivity between two or more software applications. It translates information between

disparate systems.

* Enterprise application integration (EAI) middleware- represents a new approach to

middleware by packaging together commonly used functionality, such as providing prebuilt

links to popular enterprise applications, which reduces the time necessary to develop

solutions that integrate applications from multiple vendors.

Integration between SCM, CRM, and ERP Applications.

Companies run on independent applications, such as SCM, CRM, and ERP. If one

application performs poorly, the entire customer value delivery system is affected.

Enterprise Resource Planning’s Explosive Growth:

Reasons of ERP being proven to be such a powerful force:

ERP is a logical solution to the mess of incompatible applications that had sprung up

in most businesses.

ERP addresses the need for global information sharing and reporting.

ERP is used to avoid the pain and expense of fixing legacy systems

To qualify as a true ERP solution, the system not only must integrate various

organization processes, but also must be:

Flexible- an ERP system should be flexible in order to respond to the changing needs of an

enterprise.

Modular and open- an ERP system has to have open system architecture, meaning that any

module can be interfaced with or detached whenever required without affecting the other

modules. The system should support multiple hardware platforms for organizations that have

a heterogeneous collection of systems. It must also support third- party add-on components.

Comprehensive- an ERP system should be able to support a variety of organizational

functions and must be suitable for a wide range of business organizations.

Beyond the company- an ERP system must not be confined to organizational boundaries but

rather support online connectivity to business partners or customers.