CHAPTER 5: ORGANIZATIONAL STRUCTURES THAT SUPPORT STRATEGIC INITIATIVES

Organizational Structures

• Organizational employees must work closely together to develop strategic initiatives that create competitive advantages.
• Ethics and security are two fundamental building blocks that organizations must base their business upon.

IT Roles and Responsibilities

• IT is a relatively new functional area.
• Recent IT-related strategic positions:
• Chief Information Officer (CIO)
• oversees all uses of IT and ensures the strategic alignment of IT with business goals and objectives.
• Broad CIO functions include:
1. Manager
2. Leader
3. Communicator

• Chief Technology Officer (CTO)
• responsible for ensuring the throughput, speed, accuracy, availability, and reliability of IT.

• Chief Security Officer (CSO)
• responsible for ensuring the security of IT systems.

• Chief Privacy Officer (CPO)
• responsible for ensuring the ethical and legal use of info.

• Chief Knowledge Office (CKO)
• responsible for collecting, maintaining, and distributing the organization's knowledge.

GRAPH 1: Skills pivotal for success in executive IT roles

The Gap Between Business Personnel and IT Personnel

• Business personnel possess expertise in functional areas such as marketing, accounting, and sales.
• IT personnel have the technological expertise.
• The typically causes a communications gap between the business personnel and IT personnel.

Improving Communications

• Business personnel must seek to increase their understanding of IT.
• IT personnel must seek to increase their understanding of the business.
• It is the responsibility of the CIO to ensure effective communication between business personnel and IT personnel.

Organizational Fundamentals - Ethics and Security

• Ethics - the principles and standards that guide our behaviour toward other people.

• Privacy is a major ethical issue. Privacy means the right to be left alone when you want to be, to have control over your own personal possessions, and not to be observed without your consent.

• Issues affected by technology advances:
• Intellectual property
• Copyright
• Fair use doctrine
• Pirated software
• Counterfeit software

• Primary reasons privacy issues lost trust for e-business.
• Loss of personal privacy is a top concern for Americans in the 21st century.
• Among Internet users, 37% would be "a lot" more inclined to purchase a product on a Web site that had a privacy policy.
• Privacy/security is the number one factor that would convert Internet researchers into Internet buyers.

• Security 

• Organizational information is intellectual capital - it must be protected.

• Information security is the protection of information from accidental or intentional misuse by persons inside or outside an organization.

• E-business automatically creates tremendous information security risks for organizations.

-END OF CHAPTER 5-

CHAPTER 4: MEASURING THE SUCCESS OF STRATEGIC INITIATIVES

Measuring Information Technology's Success

• Key performance indicator - measures that are tied to business drivers.
• Metrics are detailed measures that feed KPIs.

Efficiency and Effectiveness

• Efficiency IT metric - measures the performance of the IT system itself including throughput, speed, and availability.
• Effectiveness IT metric - measures the impact IT has on business processes and activities including customer satisfaction, conversion rates, and sell-through increases.

Benchmarking - Base Lining Metrics

• A process of continuously measuring system results, comparing those results to optimal system performance (benchmark values), and identifying steps and procedures to improve system performance.

Efficiency IT Metrics

• Efficiency IT metrics focus on technology and include:
• Throughput - the amount of information that can travel through a system at any point.

• Transaction speed - the amount of time a system takes to perform a transaction.

• System availability - the number of hours a system is available for users.

• Information accuracy - the extent to which a system generates the correct results when executing the same transaction numerous times.

• Web traffic - Includes a host of benchmarks such as the number of page views, the number of unique visitors, and the average time spent viewing a Web page.

• Response time - the time it takes to respond to user interactions such as a mouse click.

Effectiveness IT Metrics

• Effectiveness IT metrics focus on an organization's goals, strategies, and objectives and include:
• Usability - the ease with which people perform transactions and/or find information. A popular usability metric on the Internet is degrees if freedom, which measures the number of clicks required to find desired information.

• Customer satisfaction - measured by such benchmarks as satisfaction surveys, percentage of existing customers retained, and increases in revenue dollars per customer.

• Conversion rates - the number of customers an organization "touches" for the first time and persuades to purchase its products or services. 

• Financial - such as return on investment, cost-benefit analysis, and break-even analysis.

The Interrelationships of Efficiency and Effectiveness IT Metrics

• Security is an issue for any organization offering products or services over the internet.
• It is inefficient for an organization to implement Internet security, since it slows down processing.
• Interrelationship between efficiency and effectiveness:

Metrics for Strategic Initiatives

• For measuring and managing strategic initiatives include:

• Web Site Metrics:
• Abandoned registrations
• Abandoned shopping cards
• Click-through
• Conversion rate
• Cost-per-thousand
• Page exposures
• Total hits
• Unique visitors

• Supply Chain Management Metrics:
• Back order
• Customer order promised cycle time
• Customer order actual cycle time
• Inventory replenishment cycle time
• Inventory turns (inventory turnover)

• Customer Relationship Management Metrics:
• Sales metrics
• Service metrics
• Marketing metrics

• Business Process Re-engineering (BPR) and Enterprise Resource Planning (ERP) Metrics:
• The balanced scorecard enables organizations to measure and manage strategic initiatives.

CHAPTER 3: STRATEGIC INITIATIVES FOR IMPLEMENTING COMPETITIVE ADVANTAGES

STRATEGIC INITIATIVES

• Supply Chain Management (SCM)
• Customer Relationship Management (CRM)
• Business Process Reengineering (BPR)
• Enterprise Resource Planning (ERP)

Supply Chain Management

1. Software that involves in managing information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability.
2. Four basic components of supply chain:
• Supply chain strategy - managing all resources to meet customer demand.
• Supply chain partner - partners that deliver finished products, raw materials, and services.
• Supply chain operation - schedule for production activities.
• Supply chain logistics - product delivery process.
3. Effective and efficient SCM systems can enable an organization to:
• Decrease the power of its buyer
• Increase its own supplier power

Customer Relationship Management

1. Involves managing all aspects of a customer's relationship with an organization to increase customer loyalty and retention and an organization's profitability.
2. CRM is not just technology, but a strategy, process and business goal that an organization must embrace on an enterprise wide level.
3. CRM can enable an organization to:
• Identify types of customers
• Design individual customer marketing campaigns
• Treat each customer as an individual.
• Understand customer buying behaviours.

Business Process Reengineering

1. Business process - a set of activities that accomplish a specific task, such as processing a customer's order.
2. Business process reengineering (BPR) - the analysis and redesign of workflow within and between enterprises.
3. A company can improve the way it travels the road by moving from foot to horse and then horse to car.

Finding Opportunity Using BPR

1. BPR looks at taking a different path, such as an aeroplane which ignore the road completely.
2. Types of change an organization can achieve, along with the magnitudes of change and the potential business benefit.

Enterprise Resource Planning

1. Integrates all departments and functions throughout an organization into a single IT system so that employees can make decisions by viewing enterprise wide information on all business operations.
2. The keyword in ERP is "enterprise"
3. ERP systems collect data from across an organization and correlates the data generating an enterprise wide view.

- END OF CHAPTER 3 -