Chapter 8 Competitive Advantage with Information Systems across

Chapter 8 Competitive Advantage with Information Systems across Organizations © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Study Questions l l l 8 -2 How do inter-organizational information systems provide competitive advantages? What is the potential conflict concerning information systems between customers and vendors? What are the major categories of inter-organizational information systems? What technology is required for inter-organizational IS? How do inter-organizational information systems benefit small businesses? How will the increasing use of inter-organizational information systems change organizational structures? © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Information Systems That Cross Organizations l Integration of multiple-company operations – – 8 -3 Selling Purchasing Check-clearing Credit card processing © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Value Chain Activities across Organizations Figure 8 -1 8 -4 © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Inbound Logistics l Manufacturers – l Non-manufacturers – – 8 -5 Acquisition, inventory, and control of raw materials and parts Acquisition, inventory, and control of finished products Operations activities only © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Customer-Centric Activities l Principal flows concern activities with customer – – l Solicitation/order, shipment, query/response Facilitates organization’s competitive strategy Information systems must be designed to support different strategies – Lowest cost vendor l – Differentiation based on quality l 8 -6 Dell Computers Laguna Tools © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Potential Conflicts l Processes and flows exist between both company and customers and company and vendors – l For DSI to minimize cost of ordering, vendor must minimize cost of selling Information systems can be designed to minimize processing costs for both customers and suppliers – Off-the-shelf software l – 8 -7 DSI uses Auto. Cad Custom software can be created to achieve mutual benefit © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Categories of Inter-Organizational Information Systems l l 8 -8 E-commerce Customer relationship management (CRM) Supply chain management (SCM) Inter-organizational transactional processing © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

E-Commerce l Buying and selling goods and services over the Web – Vendors sell from Web-storefronts l l – l l Customers access through Web browsers E-commerce clients are thin Types: – 8 -9 Web servers process http protocol Operate order-entry application software B 2 C, B 2 B, B 2 G © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Customer Relationship Management (CRM) l l Track interaction with customers Customer may install portion of vendor’s CRM on their system to facilitate purchasing – – l Vendor creates competitive advantage – 8 -10 Thick-client software Adds sufficient value to overcome risks of unknown software Creates high switching costs © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Supply Chain Management (SCM) l l 8 -11 Integrates primary inbound logistics business activity Systems source, order, settle © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Inter-Organizational Transaction Processing l l Systems process routine transactions between organizations Oldest form of cross-organizational IS – l 8 -12 Automated check clearing Handles repetitive tasks © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

MIS in Use: Dun and Bradstreet Sells Reports Using E-Commerce l l D&B collects and publishes financial data and analysis Use Web-based e-commerce – – 8 -13 Site runs 24/7 Saves data entry and administrative costs Can change product easily Mines customer purchase information © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Inter-Organizational Ordering/Selling Systems l l l 8 -14 Sellers induce buyers with e-commerce and CRM Buyers want sellers to use SCM Organization with system is server; organization utilizing system is client © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Technologies Used in Ordering/Selling Systems l Email – – – l Ftp – – l Greater capacity Can be secured with password protection Thin-client e-commerce – – 8 -15 Limited capacity Attachments may be problematic Security problems Client needs only browser to participate No software installed © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Technologies Used in Ordering/Selling Systems, continued l Thick-client e-commerce – – – l Joint custom applications – – 8 -16 Requires software be installed on client’s system Security risks Can produce administrative problems Both organizations meet to establish requirements System jointly designed © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Benefits of Inter-Organizational Systems l Organizations can focus on their core competencies – – Can outsource most activities Avoid time and expense of building infrastructure l l Reduces capital requirement Requires fewer employees – – 8 -17 Lowers payroll and associated costs Shortens time to market © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Resulting Changes in Organizational Structure from Outsourcing l Inter-organizational information systems produce virtual organizations – l l 8 -18 Value chain activities shared among several entities Organizations look for the opportunity cost of time of employee performing activity to be greater than cost of outsourcing Employees should work in business activity that is directly in line with organization’s specialty, or may be outsourced © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Active Review l l l 8 -19 How do inter-organizational information systems provide competitive advantages? What is the potential conflict concerning information systems between customers and vendors? What are the major categories of inter-organizational information systems? What technology is required for inter-organizational IS? How do inter-organizational information systems benefit small businesses? How will the increasing use of inter-organizational information systems change organizational structures? © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke