Chapter 8 Accessing Organizational Information – Data Warehouse

History of Data Warehousing

In the 1990’s executives became less concerned with the day-to-day business operations and more concerned with overall business functions

The data warehouse provided the ability to support decision making without disrupting the day-to-day operations, because:

• Operational information is mainly current – does not include the history for better decision making
• Issue of quality information
• Without information history, it is difficult to tell how and why things change over time.

Data Warehouse Fundamentals

Data warehouse – a logical collection of information – gathered from many different operational databases – that supports business analysis activities and decision-making tasks

The primary purpose of a data warehouse is to combined information throughout an organization into a single repository for decision-making purposes – data warehouse support only analytical processing

Data Warehouse Model

Extraction, transformation, and loading (ETL) – a process that extracts information from internal and external databases, transforms the information using a common set of enterprise definitions, and loads the information into a data warehouse. 

Data warehouse  then send subsets of the information to data mart.

Data mart – contains a subset of data warehouse information

Multidimensional Analysis and Data Mining 

Cube – common term for the representation of multidimensional information

Once a cube of information is created, users can begin to slice and dice the cube to drill down into the information.

Users can analyze information in a number of different ways and with number of different dimensions.

Data mining – the process of analyzing data to extract information not offered by the raw data alone. Also known as "knowledge discovery" – computer-assisted tools and techniques for sifting through and analyzing vast data stores in order to find trends, patterns, and correlations that can guide decision making and increase understanding. 

To perform data mining users need data-mining tools

Data-mining tool – uses a variety of techniques to find patterns and relationships in large volumes of information. Eg: retailers can use knowledge of these patterns to improve the placement of items in the layout of a mail-order catalog page or Web page.

Information Cleansing or Scrubbing 

An organization must maintain high-quality data in the data warehouse

Information cleansing or scrubbing – a process that weeds out and fixes or discards inconsistent, incorrect, or incomplete information

Occur during ETL process and second on the information once if is in the data warehouse

Contact information in an operational system

Standardizing Customer name from Operational Systems

Information cleansing activities

Accurate and complete information

Business Intelligence

Business intelligence – refers to applications and technologies that are used to gather, provide access, analyze data, and information to support decision making effort.

these systems will illustrate business intelligence in the areas of customer profiling, customer support, market research, market segmentation, product profitability, statistical analysis, and inventory and distribution analysis to name a few

Eg: Excel, Access 

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Chapter 7 Storing Organizational Information

Relational Database Fundamentals

Information is everywhere in an organization

Information is stored in databases
Database – maintains information about various types of objects (inventory), events (transactions), people (employees), and places (warehouses)

Database models include:

• Hierarchical database model – information is organized into a tree-like structure (using parent/child relationships) in such a way that it cannot have too many relationships
• Network database model – a flexible way of representing objects and their relationships
• Relational database model – stores information in the form of logically related two-dimensional tables

Entities and Attributes

Entity – a person, place, thing, transaction, or event about which information is stored

• The rows in each table contain the entities
• In Figure 7.1 CUSTOMER includes Dave’s Sub Shop and Pizza Palace entities

Attributes (fields, columns) – characteristics or properties of an entity class

• The columns in each table contain the attributes
• In Figure 7.1 attributes for CUSTOMER include Customer ID, Customer Name, Contact Name

Keys and Relationships

Primary keys and foreign keys identify the various entity classes (tables) in the database

• Primary key – a field (or group of fields) that uniquely identifies a given entity in a table
• Foreign key – a primary key of one table that appears an attribute in another table and acts to provide a logical relationship among the two tables

Potential relational database for Coca-Cola

Relational Database Advantages

Database advantages from a business perspective include

• Increased flexibility
• Increased scalability and performance
• Reduced information redundancy
• Increased information integrity (quality)
• Increased information security

Increased flexibility

A well-designed database should:

• Handle changes quickly and easily
• Provide users with different views
• Have only one physical view
• Physical view – deals with the physical storage of information on a storage device
• Have multiple logical views
• Logical view – focuses on how users logically access information 

Increased scalability and performance

A database must scale to meet increased demand,  while maintaining acceptable performance levels

• Scalability – refers to how well a system can adapt to increased demands
• Performance – measures how quickly a system performs a certain process or transaction

Reduced information redundancy

• Databases reduce information redundancy. Redundancy – the duplication of information or storing the same information in multiple places 
• Inconsistency is one of the primary problems with redundant information

Increase Information Integrity (Quality)

Information integrity – measures the quality of information

Integrity constraint – rules that help ensure the quality of information

• Relational integrity constraint
• Business-critical integrity constraint 

Increased Information Security

Information is an organizational asset and must be protected

Databases offer several security features including:

• Password – provides authentication of the user
• Access level – determines who has access to the different types of information 
• Access control – determines types of user access, such as read-only access

Database Management Systems

Database management systems (DBMS) – software through which users and application programs interact with a database

DATA-DRIVEN WEB SITES

Data-driven Web sites – an interactive Web site kept constantly updated and relevant to the needs of its customers through the use of a database

Data-Driven Web Site Business Advantages

• Development
• Content Management
• Future Expandability
• Minimizing Human Error
• Cutting Production and Update Costs
• More Efficient
• Improved Stability

Data-Driven Business Intelligence

BI in a data-driven Web site

Integrating Information among Multiple Databases

Integration – allows separate systems to communicate directly with each other

• Forward integration – takes information entered into a given system and sends it automatically to all downstream systems and processes
• Backward integration – takes information entered into a given system and sends it automatically to all upstream systems and processes

Forward integration 

Backward integration

Building a central repository specifically for integrated information

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Chapter 6 Valuing Organizational Information

Organizational Information

- Information is everywhere in an organization

- Employees must be able to obtain and analyze the many different levels, formats, and granularities of organizational information to make decisions

- Successfully collecting, compiling, sorting, and analyzing information can provide tremendous insight into how an organization is performing

Levels, formats, and granularities of organizational information

The Value of Transactional and Analytical Information 

- Transactional information verses analytical information

The Value of Timely Information 

Timeliness is an aspect of information that depends on the situation

• Real-time information – immediate, up-to-date information
• Real-time system – provides real-time information in response to query requests

The Value of Quality Information 

- Business decisions are only as good as the quality of the information used to make the decisions

- You never want to find yourself using technology to help you make a bad decision faster

The Value of Quality Information 

Characteristics of high-quality information include:

• Accuracy
• Completeness
• Consistency
• Uniqueness 
• Timeliness

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 businesses upon

IT Roles and Responsibilities 

Information technology is a relatively new functional area, having only been around formally for around 40 years

Recent IT-related strategic positions:

• Chief Information Officer (CIO)
• Chief Technology Officer (CTO)
• Chief Security Officer (CSO)
• Chief Privacy Officer (CPO)
• Chief Knowledge Office (CKO)

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:

• Manager – ensuring the delivery of all IT projects, on time and within budget
• Leader – ensuring the strategic vision of IT is in line with the strategic vision of the organization
• Communicator – building and maintaining strong executive relationships

Average CIO compensation by industry

What concerns CIOs the most

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 information 

Chief Knowledge Office (CKO) - responsible for collecting, maintaining, and distributing the organization’s knowledge

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  
• This 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 and security are two fundamental building blocks that organizations must base their businesses on to be successful 
• In recent years, such events as the Enron and Martha Stewart, along with 9/11 have shed new light on the meaning of ethics and security

Ethics

Ethics – the principles and standards that guide our behavior toward other people

Privacy is a major ethical issue

Privacy – 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

1. Intellectual property - Intangible creative work that is embodied in physical form
2. Copyright - The legal protection afforded an expression of an idea, such as a song, video game, and some types of proprietary documents
3. Fair use doctrine - In certain situations, it is legal to use copyrighted material
4. Pirated software - The unauthorized use, duplication, distribution, or sale of copyrighted software
5. Counterfeit software - Software that is manufactured to look like the real thing and sold as such

One of the main ingredients in trust is privacy

Primary reasons privacy issues lost trust for e-business

Security

• Organizational information is intellectual capital - it must be protected 
• Information security – 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

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Chapter 4 Measuring the Success of Strategic Initiatives

Key performance indicator – measures that are tied to business drivers

Metrics are detailed measures that feed KPIs

Performance metrics fall into the nebulous area of business intelligence that is neither technology, nor business centered, but requires input from both IT and business professionals

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 :

Regardless of what is measured, how it is measured, and whether it is for the sake of efficiency or effectiveness, there must be benchmarks – baseline values the system seeks to attain

Benchmarking – 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 focus on technology and include:

• Throughput
• Transaction speed
• System availability
• Information accuracy
• Web traffic
• Response time

1. Throughput - The amount of information that can travel through a system at any point
2. Transaction speed - The amount of time a system takes to perform a transaction
3. System availability - The number of hours a system is available for users
4. Information accuracy - The extent to which a system generates the correct results when executing the same transaction numerous times
5. 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
6. 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
• Customer satisfaction
• Conversion rates
• Financial

Usability - The ease with which people perform transactions and/or find information. A popular usability metric on the Internet is degrees of 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. This is a popular metric for evaluating the effectiveness of banner, pop-up, and pop-under ads on the Internet.

Financial - Such as return on investment (the earning power of an organization’s assets), cost-benefit analysis (the comparison of projected revenues and costs including development, maintenance, fixed, and variable), and break-even analysis (the point at which constant revenues equal ongoing costs

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

• However, to be effective it must implement Internet security 
• Secure Internet connections must offer encryption and Secure Sockets Layers (SSL denoted by the lock symbol in the lower right corner of a browser)

Metrics for Strategic Initiatives

Metrics for measuring and managing strategic initiatives include:

1. Web site metrics
2. Supply chain management (SCM) metrics
3. Customer relationship management (CRM) metrics
4. Business process reengineering (BPR) metrics
5. Enterprise resource planning (ERP) metrics

Web site metrics

Web site metrics include:

• Abandoned registrations - Number of visitors who start the process of completing a registration page and then abandon the activity.
• Abandoned shopping cards - Number of visitors who create a shopping cart and start shopping and then abandon the activity before paying for the merchandise.
• Click-through - Count of the number of people who visit a site, click on an ad, and are taken to the site of the advertiser
• Conversion rate - Percentage of potential customers who visit a site and actually buy something.
• Cost-per-thousand - Sales dollars generated per dollar of advertising. This is commonly used to make the case for spending money to appear on a search engine
• Page exposures - Average number of page exposures to an individual visitor.
• Total hits - Number of visits to a Web site, many of which may be by the same visitor.
• Unique visitors - Number of unique visitors to a site in a given time. This is commonly used by Nielsen/Net ratings to rank the most popular Web sites

SUPPLY CHAIN MANAGEMENT METRICS

• Back order - An unfilled customer order. A back order is demand (immediate or past due) against an item whose current stock level is insufficient to satisfy demand.

• Customer order promised cycle time - The anticipated or agreed upon cycle time of a purchase order. It is a gap between the purchase order creation date and the requested delivery date.

• Customer order actual cycle time - The average time it takes to actually fill a customer’s purchase order. This measure can be viewed on an order or an order line level.

• Inventory replenishment cycle time - Measure of the manufacturing cycle time plus the time included to deploy the product to the appropriate distribution center

• Inventory turns (inventory turnover) - The number of times that a company’s inventory cycles or turns over per year. It is one of the most commonly used supply chain metrics.

CUSTOMER RELATIONSHIP MANAGEMENT METRICS

Customer relationship management metrics measure user satisfaction and interaction and include

• Sales metrics
• Service metrics
• Marketing metrics
  

BPR AND ERP METRICS

The balanced scorecard enables organizations to measure and manage strategic initiatives

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Chapter 3 Strategic Initiatives for Implementing Competitive Advantages

Strategic Initiatives
Organizations can undertake high-profile strategic initiatives including:

• Supply chain management (SCM)
• Customer relationship management (CRM)
• Business process reengineering (BPR)
• Enterprise resource planning (ERP)

Supply Chain Management

Supply Chain Management (SCM) – involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability

Four basic components of supply chain management include:

• Supply chain strategy – strategy for managing all resources to meet customer demand
• Supply chain partner – partners throughout the supply chain that deliver finished products, raw materials, and services.
• Supply chain operation – schedule for production activities
• Supply chain logistics – product delivery process

Wal-Mart and Procter & Gamble (P&G) SCM

Effective and efficient SCM systems can enable an organization to:

• Decrease the power of its buyers
• Increase its own supplier power
• Increase switching costs to reduce the threat of substitute products or services
• Create entry barriers thereby reducing the threat of new entrants
• Increase efficiencies while seeking a competitive advantage through cost leadership

Effective and efficient SCM systems effect on Porter’s Five Forces

Customer Relationship Management 

Customer relationship management (CRM) – involves managing all aspects of a customer’s relationship with an organization to increase customer loyalty and retention and an organization's profitability

Many organizations, such as Charles Schwab and Kaiser Permanente, have obtained great success through the implementation of CRM systems

CRM is not just technology, but a strategy, process, and business goal that an organization must embrace on an enterprisewide level

CRM can enable an organization to:

• Identify types of customers
• Design individual customer marketing campaigns 
• Treat each customer as an individual
• Understand customer buying behaviors

Business Process Reengineering 

Business process – a standardized set of activities that accomplish a specific task, such as processing a customer’s order

Business process reengineering (BPR) – the analysis and redesign of workflow within and between enterprises

• The purpose of BPR is to make all business processes best-in-class

Reengineering the Corporation – book written by Michael Hammer and James Champy that recommends seven principles for BPR

Finding Opportunity Using BPR

A company can improve the way it travels the road by moving from foot to horse and then horse to car

BPR looks at taking a different path, such as an airplane which ignore the road completely

Types of change an organization can achieve, along with the magnitudes of change and the potential business benefit

Enterprise Resource Planning

Enterprise resource planning (ERP) – integrates all departments and functions throughout an organization into a single IT system so that employees can make decisions by viewing enterprisewide information on all business operations

Keyword in ERP is “enterprise”

ERP systems collect data from across an organization and correlates the data generating an enterprisewide view

Chapter 2 Identifying Competitive Advantages

What is competitive advantage?

• A product or service that an organization’s customers place a greater value on than similar offerings from a competitor.
• Unfortunately, CA is temporary because competitors keep duplicate the strategy. 
• Then, the company should start the new competitive advantage.

Five forces Model

Michael Porter’s Five Forces Model is useful tool to aid organization in challenging decision whether to join a new industry or industry segment

• Buyer power
• Supplier power
• Threat of substitute products or services.
• Threats of new entrants.
• Rivalry among existing companies.

Buyer power 

• High – when buyers have many choices of whom to buy.
• Low – when their choices are few.
• To reduce buyer power (and create competitive advantage), an organization must make it more attractive to buy from the company not from the competitors.
• Best practices of IT-based

Supplier power

• High – when buyers have few choices of whom to buy from. 
• Low – when their choices are many.
• Best practices of IT to create competitive advantage.
• E.g. B2B marketplace – private exchange allow a single buyer to posts it needs and then open the bidding to any supplier who  would care to bid. Reverse auction is an auction format in which increasingly lower bids. 

Threat of Substitute products & Services

• High – when there are many alternatives to a product or service. 
• Low – when there are few alternatives from which to choose.
• Ideally, an organization would like to be on a market in which there are few substitutes of their product or services. 
• Best practices of IT 
• E.g. Electronic product -same function different brands

Threat of new entrants

• High – when it is easy for new competitors to enter a market.
• Low – when there are significant entry barriers to entering a market. 
• Entry barriers is a product or service feature that customers have come to expect from organizations and must be offered by entering organization to compete and survive.
• Best practices of IT
• E.g. new bank must offers online paying bills, acc monitoring to compete.

Rivalry among existence competitors

• High – when competition is fierce in a market
• Low – when competition is more complacent
• Best Practices of IT
• Wal-mart and its suppliers using IT-enabled system for communication and track product at aisles by effective tagging system. 
• Reduce cost by using effective supply chain.

The Three Generics Strategies

Cost Leadership

• Becoming a low-cost producer in the industry allows the company to lower prices to customers.  
• Competitors with higher costs cannot afford to compete with the low-cost leader on price.

 Differentiation

• Create competitive advantage by distinguishing their products on one or more features important to their customers.  
• Unique features or benefits may justify price differences and/or stimulate demand.
• Ex: i-care by Proton 

The Value Chains- Targeting Business Processes

• Supply Chain - a chain or series of processes that adds value to product & service for customer.
• Add value to its products and services that support a profit margin for the firm