the digital firm: electronic commerce and electronic business
DESCRIPTION
THE DIGITAL FIRM: ELECTRONIC COMMERCE AND ELECTRONIC BUSINESS. Internet Technology and The Digital Firm. Information technology infrastructure: Provides a universal and easy-to-use set of technologies and technology standards that can be adopted by all organizations - PowerPoint PPT PresentationTRANSCRIPT
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THE DIGITAL FIRM: ELECTRONIC
COMMERCE AND ELECTRONIC
BUSINESS
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Internet Technology and The Digital Firm
• Information technology infrastructure: Provides a universal and easy-to-use set of technologies and technology standards that can be adopted by all organizations
• Direct communication between trading partners: Disintermediation removes intermediate layers, streamlines process
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• Round-the-clock service: Web sites available to consumers 24 hours a day
• Extended distribution channels: Outlets created for attracting customers who otherwise would not patronize
• Reduced transaction costs: Costs of searching for buyers, sellers, etc. reduced
Internet Technology and the Digital Firm
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Business Model: • Defines an enterprise
• Describes how the enterprise delivers a product or service
• Shows how the enterprise creates wealth
New Business Models and Value Propositions
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• Information asymmetry: One party in a transaction has more information than the other
• Increases richness: Depth and detail of information
• Increases reach: Number of people contacted
The Changing Economies of Information
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Internet Business Models
• Information broker: Provide info on products, pricing, etc.
• Transaction broker: Buyers view rates, terms from various sources
• Online Marketplace: Concentrates information from several providers
• Content provider: Creates revenue through providing client for a fee, and advertising
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• On-line service provider: Provides service, support for hardware, software products
• Virtual community: Chat room, on-line meeting place
• Portal: Initial point of entry to Web, specialized content, services
• Virtual storefront: Sells goods, services on-line
Internet Business Models
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• Syndicator: Aggregate information from several sources sold to other companies
• Auction: Electronic clearinghouse products, prices, change in response to demand
• Dynamic pricing: real-time interactions between buyers and sellers determine worth of items
• Banner ad: Graphic advertising display, linked to the advertiser’s Web site
Internet Business Models
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Categories of Electronic Commerce
• Business-to-customer (B2C): Retailing of products and services directly to individual customers
• Business-to-business (B2B): Sales of goods and services among businesses
• Consumer-to-consumer (C2C): Individuals use Web for private sales or exchange
ELECTRONIC COMMERCE
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Business-To-Consumer
• Customer-centered retailing: Closer, yet more cost-effective relationship with customers
• Web sites: Provide information on products, services, prices, orders
ELECTRONIC COMMERCE
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Business-To-Consumer
• Disintermediation: The removal of organizations or business process layers responsible for certain intermediary steps in a value chain
• Reintermediation: The shifting of the intermediary role in a value chain to a new source
ELECTRONIC COMMERCE
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Benefits of Disintermediation to the Consumer
Manufacturer
Manufacturer
Manufacturer
Distributor Retailer
Retailer
Customer
Customer
Customer
Cost/
Sweater
$48.50
$40.34
$20.45
ELECTRONIC COMMERCE
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Interactive Marketing and Personalization
Web personalization:
• Benefits of using individual sales people
• Dramatically lower costs
ELECTRONIC COMMERCE
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M-Commerce and Next Generation Marketing
Mobile commerce (m-commerce):• Wireless devices used to conduct both
business-to-consumer and business-to-business e-commerce transactions over the Internet
• Extend personalization by delivering new value-added services directly to customers at any time and place
ELECTRONIC COMMERCE
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Customer Personalization
ELECTRONIC COMMERCE
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Business-To-Business Electronic Commerce
Automation of purchase, sale transactions from business to business
• Private industrial networks: Coordination between companies for efficient supply chain management and collaborative activities
• Electronic hubs: On-line marketplaces, point-to-point connections, integrated information
ELECTRONIC COMMERCE
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A Private Industrial Network
ELECTRONIC COMMERCE
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A Net Marketplace
ELECTRONIC COMMERCE
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Exchanges: Third-party net marketplace
• Primarily transaction oriented
• Connects buyers and suppliers for spot purchasing
ELECTRONIC COMMERCE
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Electronic Commerce Payment Systems
SYSTEM DESCRIPTION
CREDIT CARDS SECURE SITE PRESERVES INFORMATION
ELECTRONIC CASH DIGITAL CURRENCY USED FOR MICROPAYMENTS
PERSON-TO-PERSON SEND MONEY TO SITES UNABLE TO USE CREDIT CARDS
DIGITAL WALLET SOFTWARE STORES CREDIT CARD INFORMATION
ELECTRONIC CHECK CHECK WITH ENCRIPTED DIGITAL SIGNATURE
SMART CARD MICROCHIP STORES ELECTRONIC CASH
ELECTRONIC BILL PAYMENT ELECTRONIC FUNDS TRANSFER
ELECTRONIC COMMERCE
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Electronic Commerce Information Flows
ELECTRONIC COMMERCE
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• Benefits
• Functional applications
• Supply chain management
How Intranets Support Electronic Business
ELECTRONIC BUSINESS AND THE DIGITAL FIRM
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• Connectivity: accessible from most computing platforms
• Can be tied to internal corporate systems and core transaction databases
• Can create interactive applications
• Scalable to larger or smaller computing platforms
Benefits of Intranets
ELECTRONIC BUSINESS AND THE DIGITAL FIRM
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• Easy-to-use, universal Web interface
• Low start-up costs
• Richer, more responsive information environment
• Reduced information distribution costs
Benefits of Intranets
ELECTRONIC BUSINESS AND THE DIGITAL FIRM
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• Finance and accounting
• Human resources
• Sales and marketing
• Manufacturing and production
Functional Applications of Intranet
ELECTRONIC BUSINESS AND THE DIGITAL FIRM
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Functional Applications of Intranets
ELECTRONIC BUSINESS AND THE DIGITAL FIRM
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• Unproven business models
• Business process change requirements
• Channel conflicts
• Legal issues
• Security and privacy
MANGEMENT CHALLENGES & OPPORTUNITIES
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TELECOMMUNICATIONS
AND
NETWORKS
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THE TELECOMMUNICATIONS REVOLUTION
• Telecommunications: Communication of information by electronic means
• The marriage of computers and communications: The 1996 Telecommunications Deregulation and Reform Act
• The Information Superhighway: High-speed digital telecommunications networks, accessible by the general public
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COMPONENTS AND FUNCTIONS OF A TELECOMMUNICATIONS SYSTEM
• Computers to process information
• Terminals or any input/output devices that send or receive data
• Communications processors
• Communications software
Telecommunications System Components
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COMPONENTS AND FUNCTIONS OF A TELECOMMUNICATIONS SYSTEM
Components of a Telecommunications System
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COMPONENTS AND FUNCTIONS OF A TELECOMMUNICATIONS SYSTEM
• Transmit information• Establish interface between sender and
the receiver• Route messages along most efficient
paths• Perform elementary processing of
information • Perform editorial tasks on data • Convert message speed or format• Control flow of information
Functions of Telecommunications Systems
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COMPONENTS AND FUNCTIONS OF A TELECOMMUNICATIONS SYSTEM
Analog signal
• Continuous waveform
• Passes through communications medium
• Used for voice communications
Types of Signals: Analog and Digital
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COMPONENTS AND FUNCTIONS OF A TELECOMMUNICATIONS SYSTEM
Digital signal
• Discrete waveform
• Transmits data coded into two discrete states as 1-bits and 0-bits
• Used for data communications
Modem
• Translates computer’s digital signals into analog and vice versa
Types of Signals: Analog and Digital
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COMPONENTS AND FUNCTIONS OF A TELECOMMUNICATIONS SYSTEM
Functions of the Modem
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COMPONENTS AND FUNCTIONS OF A TELECOMMUNICATIONS SYSTEM
• Twisted wire: Telephone systems
• Coaxial cable: Cable television
• Fiber optics and optical networks: Dense wave division multiplexing (DWDM)
Communications Channels
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COMPONENTS AND FUNCTIONS OF A TELECOMMUNICATIONS SYSTEM
• Wireless transmission: Microwave, Satellites, Paging systems, Cellular telephones, Personal communication Services, Personal digital assistants, Mobile data networks
• Transmission: Baud, bandwidth
Communications Channels
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COMPONENTS AND FUNCTIONS OF A TELECOMMUNICATIONS SYSTEM
Frequency Ranges for Communications Media and Devices
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COMPONENTS AND FUNCTIONS OF A TELECOMMUNICATIONS SYSTEM
Amoco’s Satellite Transmission System
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COMPONENTS AND FUNCTIONS OF A TELECOMMUNICATIONS SYSTEM
• Front-end processor: Manages communications for the host computer
• Concentrator: Collects and temporarily stores messages
• Controller: Supervises communication traffic
• Multiplexer: Enables single communication channel to carry data transmissions
Communications Processors and Software
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COMMUNICATIONS NETWORKS
• Star Network: All computers and other devices are connected to a central host computer
• Bus Network: Links a number of computers by a single circuit
• Ring Network: All computers are linked by a closed loop
Network Topologies
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A Star Network Topology
COMMUNICATIONS NETWORKS
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A Bus Network Topology
COMMUNICATIONS NETWORKS
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A Ring Network Topology
COMMUNICATIONS NETWORKS
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Private Branch Exchanges
• Central switching system
• Handle firm’s voice and digital communications
Private Branch Exchanges, Local Area Networks (LANs), and Wide Area Networks (WANs)
COMMUNICATIONS NETWORKS
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Local Area Networks
• Telecommunication network
• Require its own dedicated channels
• Encompass a limited distance
• Gateway, router, Network Operating System (NOS), peer-to-peer
Private Branch Exchanges, Local Area Networks (LANs), and Wide Area Networks (WANs)
COMMUNICATIONS NETWORKS
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COMMUNICATIONS NETWORKS
A Local Area Network (LAN)
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Wide Area Networks (WANs)
• Telecommunication network
• Span large geographical distance
• Consist of variety of cable, satellite, and microwave technologies
• Switched lines, dedicated lines
Private Branch Exchanges, Local Area Networks (LANs), and Wide Area Networks (WANs)
COMMUNICATIONS NETWORKS
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Value-Added Networks (VANs)
• Private, multipath, data-only, third-party-managed network
Other Network Services
• Packet switching, Frame Relay, Asynchronous transfer mode (ATM)
• Integrated Services Digital Network (ISDN), Digital subscriber line (DSL), Cable modems, T1 line, Broadband
Network Services and Broadband Technologies
COMMUNICATIONS NETWORKS
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Packed-Switched Networks and Packet Communications
COMMUNICATIONS NETWORKS
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Converged network• Network with technology • Enables voice and data to run over a
single network
Unified messaging• System combining voice messages,
email, and fax
Network Convergence
COMMUNICATIONS NETWORKS
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• E-mail: Eliminates telephone tag and costly long-distance telephone charges
• Groupware: Enables work groups at different locations to participate in discussion forums and work on shared documents and projects
Electronic Mail and Groupware
Electronic Commerce and Electronic Business Technologies
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• Voice mail: Digitizes spoken message and transmits it over a network
• Fax: Digitizes and transmits documents over telephone lines
Voice Mail and FaxVoice Mail and Fax
Electronic Commerce and Electronic Business Technologies
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• Teleconferencing: Ability to confer with a group of people simultaneously
• Data conferencing: Two or more users can edit and modify data files simultaneously
• Videoconferencing: Participants are able to see each other over video screens
Teleconferencing, Data-conferencing, and Videoconferencing
Electronic Commerce and Electronic Business Technologies
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• Distance learning: Education or training delivered over a distance to individuals in one or more locations
• E-learning: Instruction delivered online using the Internet or private networks
Digital Information Services, Distance Learning and E-Learning
Electronic Commerce and Electronic Business Technologies
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• Direct computer-to-computer exchange between two organizations of standard business transaction documents
Electronic Data Interchange (EDI)
Electronic Commerce and Electronic Business Technologies
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Electronic Data Interchange (EDI)
Electronic Commerce and Electronic Business Technologies
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Enhancing ManagementDecision Making for the Digital Firm
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Decision-Support Systems (DSS)
• Computer system at the management level of an organization
• Combines data, analytical tools, and models
• Supports semi-structured and unstructured decision making
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Decision-Support Systems (DSS)
MIS
• Provides reports based on routine flow of data
• Assists in general control of the organization
MIS and DSS
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Decision-Support Systems (DSS)
DSS
• Emphasizes change, flexibility, rapid response, models, assumptions, ad-hoc queries, and display graphics
MIS and DSS
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Decision-Support Systems (DSS)
Model-Driven DSS
• Primarily stand-alone
• Uses model to perform “what-if” and other kinds of analysis
Types of Decision-Support Systems
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Decision-Support Systems (DSS)
• Data-driven DSS: Supports decision making by allowing users to extract and analyze useful information previously buried in large databases
• Data-mining: Finds hidden patterns and relationships in large databases to infer rules from them and predict future behavior
Types of Decision-Support Systems
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Decision-Support Systems (DSS)
Cargo revenue optimization of Continental Airlines
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Decision-Support Systems (DSS)
• Associations: Occurrences linked to a single event
• Sequences: Events linked over time
Types of Decision-Support Systems
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Decision-Support Systems (DSS)
• Classification: Recognizing patterns that describe the group to which an item belongs
• Clustering: Similar to classification when no groups have yet been defined. Discovers different groupings within data
Types of Decision-Support Systems
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Decision-Support Systems (DSS)
Overview of a decision-support system (DSS)
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Decision-Support Systems (DSS)
• DSS Database: Collection of current or historical data from a number of applications or groups. Can be a small PC database or a massive data warehouse
Components of DSS
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Decision-Support Systems (DSS)
• DSS Software System: Collection of software tools used for data analysis, such as OLAP tools, data-mining tools, or a collections of mathematical and analytical models
Components of DSS
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Decision-Support Systems (DSS)
• Model: Abstract representation illustrating components or relationships of a phenomenon
• Sensitivity Analysis: Models that ask “what-if” questions repeatedly to determine the impact of changes in one or more factors on the outcomes
Components of DSS
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Decision-Support Systems (DSS)
Sensitivity analysis
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Decision-Support Systems (DSS)
Examples of Decision-Support Systems
• General Accident Insurance: Customer buying patterns and fraud detection
• Bank of America: Customer profiles• Frito-Lay, Inc.: Price, advertising, and
promotion selection
DSS Applications and the Digital Firm
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Decision-Support Systems (DSS)
Examples of Decision-Support Systems
• Southern Railway: Train dispatching and routing
• Texas Oil and Gas Corporation: Evaluation of potential drilling sites
• The Gap: Inventory stocking and merchandising
DSS Applications and the Digital Firm
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Decision-Support Systems (DSS)
Examples of Decision-Support Systems
• United Airlines: Flight scheduling, passenger demand forecasting
• U.S. Department of Defense: Defense contract analysis
DSS Applications and the Digital Firm
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Decision-Support Systems (DSS)
• By analyzing several years of sales data for similar items, the software estimates a “seasonal demand curve” for each item and predicts how many units would sell each week at various prices.
• The software uses sales history to predict how sensitive customer demand will be to price changes
DSS for Pricing Decisions
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Decision-Support Systems (DSS)
• Can help firms model inventory stocking levels, production schedules, or transportation plans
• Can provide firms with information on key performance indicators such as lead time, cycle time, inventory turns, or total supply chain costs
DSS for Supply Chain Management
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Decision-Support Systems (DSS)
DSS for customer analysis and segmentation
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Decision-Support Systems (DSS)
Predictive Analysis
• Use of data-mining techniques, historical data, and assumptions about future conditions to predict outcomes of events
DSS for Customer Relationship Management
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Decision-Support Systems (DSS)
• Data Visualization: Technology for helping users see patterns and relationships in large amounts of data by presenting the data in graphical form
• Geographic Information System (GIS): System with software that can analyze and display data using digitized maps to enhance planning and decision making
Data Visualization and Geographic Information Systems (GIS)
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Decision-Support Systems (DSS)
Customer Decision-Support System (CDSS)
• System to support the decision-making process of an existing or potential customer
Web-Based Customer Decision-Support Systems
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Group Decision-Support Systems (GDSS)
• Group Decision-Support System (GDSS): An interactive computer-based system to facilitate the solution to unstructured problems by a set of decision makers working together as a group
What is a GDSS?
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Group Decision-Support Systems (GDSS)
• Hardware: Conference facility, electronic hardware
• Software tools: Tools for organizing ideas, gathering information, and ranking and seeking priorities
• People: Participants, trained facilitator, staff supporting hardware and software
Components of GDSS
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Group Decision-Support Systems (GDSS)
• Electronic questionnaires
• Electronic brainstorming tools
• Idea organizers
• Questionnaire tools
Components of GDSS
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Group Decision-Support Systems (GDSS)
• Tools for voting or setting priorities
• Stakeholder identification and analysis tools
• Policy formation tools
• Group dictionaries
Components of GDSS
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Group Decision-Support Systems (GDSS)
• Each attendee has a workstation
• Workstations are networked and connected to the facilitator’s console
• Data the attendees forward to the group are collected and saved on a file server
• Facilitator projects computer images onto the projection screen
Overview of a GDSS Meeting
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Group Decision-Support Systems (GDSS)
Group system tools
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Group Decision-Support Systems (GDSS)
• Number of attendees can increase while productivity increases
• More collaborative atmosphere
• Software tools follow structured methods for organizing and evaluating ideas and preserving the results of meetings
How GDSS Can Enhance Group Decision Making
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Group Decision-Support Systems (GDSS)
• Increase the number of ideas generated
• Can lead to more participative and democratic decision making
How GDSS Can Enhance Group Decision Making
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Group Decision-Support Systems (GDSS)
Organizational Memory
• Store learning from an organization’s history that can be used for decision making and other purposes
How GDSS Can Enhance Group Decision Making
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Executive Support in the Enterprise
• Focus on the information needs of senior management
• Combine data from internal and external sources
• Create a generalized computing and communications environment that can be focused and applied to a changing array of problems
Executive Support Systems (ESS)
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Executive Support in the Enterprise
• Monitor organizational performance
• Track activities of competitors
• Spot problems
• Identify opportunities
• Forecast trends
Executive Support Systems (ESS)
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Executive Support in the Enterprise
• Bring together data from the entire organization
• Allow managers to select, access, and tailor data
• Enable executive and any subordinates to look at the same data in the same way
The Role of Executive Support Systems in the Organization
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Executive Support in the Enterprise
Drill Down
• The ability to move from summary data to lower and lower levels of detail
The Role of Executive Support Systems in the Organization
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Executive Support in the Enterprise
Developing ESS
• Ease of use
• Facility for environmental scanning
• External and internal sources of information to be used for environmental scanning
The Role of Executive Support Systems in the Organization
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Executive Support in the Enterprise
• Analyze, compare, and highlight trends
• Provide greater clarity and insight into data
• Speed up decision making
Benefits of Executive Support Systems
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Executive Support in the Enterprise
• Improve management performance
• Increase management’s span of control
• Better monitoring of activities
Benefits of Executive Support Systems
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Executive Support in the Enterprise
ESS for Competitive Intelligence
• Identify changing market conditions
• Formulate responses
• Track implementation efforts
• Learn from feedback
Executive Support Systems and the Digital Firm
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Executive Support in the Enterprise
Executive Support Systems and the Digital Firm
Balanced Scorecard
• Model for analyzing firm performance that supplements traditional financial measures with measurements from additional business perspectives, such as customers, internal business processes, and learning and growth
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Executive Support in the Enterprise
Enterprise-Wide Reporting and Analysis
Strategic performance management tools
for enterprise systems
• SAP: Web-enabled mySAP.com™, Management Cockpit
• PeopleSoft: Web-enabled Enterprise Performance Management (EPM)
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Executive Support in the Enterprise
Enterprise-Wide Reporting and Analysis
Activity-Based Costing
• Model for identifying all the company activities that cause costs to occur while producing a specific product or service so that managers can see which products or services are profitable or losing money and make changes to maximize firm profitability
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End of Lecture