DISC 112 Computer and

Problem Solving
Sessions 7-8
Recap
• How do organizations compete with Information Technology?
• “businesses will continue to invest in IT as they anticipate revenue
growth, but their spending patterns will shift”
• What kind of IT can meet the needs of your business both for
sustaining business and for competitive advantage?
• Strategic business objectives determine IT requirements
• “IT must be conceived of broadly to encompass the information
that businesses create and use as well as a wide spectrum of
increasingly convergent and linked technologies that process the
information”
Mastering the Three Worlds of IT
Three Varieties of Work-Changing IT
• Functional IT
• Make the execution of standalone tasks more efficient
• Examples: any specialist software for people in key functional areas within an
organization
• Network IT
• Means by which people may communicate with each other
• Facilitate collaboration
• Fostering emergence
• Enterprise IT
• To restructure interactions among groups of employees or with business
partners
Managing the three types of IT
• Functional IT
• Will any of the new software on the market enable our people (engineers, scientists, analysts etc.) to do
their jobs more efficiently?
• Are our function technologies outdated? If so, why? What has changed?
• Network IT
• How do our people collaborate?
• Do we have ways of letting qualitative information flow horizontally and vertically within the company as
well as back and forth with customers and suppliers?
• Enterprise IT
• In what ways are our current processes not supporting the needs of the business? Which ones need to be
redesigned? Which ones should be extended to our customers and suppliers?
• Are there best practices that should be embedded in our enterprise IT endeavors so that they can be
deployed more widely?
• Are there important business activities, events, or trends that we should monitor? Are the data unavailable
or stored across so many systems that the information is difficult to assemble?
Information Requirements
• Market
• Competition
• Customers: prospective, existing,
returning
• Production
• Planning
• Operations
• Logistics
• Distribution
• Advertising and Sales
• Customer service and support
• HR
• Accounting and Finance
Accounting and Finance
• Accounting Information Systems
• Order processing (related to inventory control and accounts receivable)
• Inventory control (inventory and shipment management)
• Accounts receivable/payable
• Payroll
• General ledger etc.
• Financial management systems
• Cash management
• Investment management
• Financial planning
Marketing and Sales
• Marketing Information Systems
• Interactive marketing
• Market research/forecasting
• Advertising/promotion
• Product and sales management
• Salesforce automation
• Enhance performance of salespeople in the field
Production, Quality Control and Distribution
• Distribution systems
• Forecasting capability for better inventory management
• Tracking shipments
• Managing and tracking inventory moving in and out of warehouses
• Quality control systems
• Manage and track quality of products and services
• Material Requirements Planning
• Monitor and control production processes
• Scheduling of production jobs and processes
Human Resource Management Software
• Managing one or more HR functions
• Staffing
• Training and Development
• Performance evaluation
• Managing compensations
Transaction Processing Systems
Integrating Information
• Accounting software manages everyday transactions
• Billing software helps the company reconcile purchases with customer
payments
• Financial software helps managers budget, forecast, and analyze
 Information Silos
Transaction Financial Marketing &
AIS
Processing System Sales
Customer Data

DB DB DB DB
Executive IS

Market-related
Human
Data ??? ???
Resource
Combined
DB
Purchased Data Ext
DB DB
Data
Integrated Information Systems
• Cross-functional F&A HR MKT SALES ???

Information Systems
• Enterprise Resource Planni
ng ENTERPRISE SOFTWARE
(ERP)
• Customer Relationship
Management (CRM)
• Supply Chain CONSOLIDATED SINGLE-
Management (SCM) SOURCE OF DATA
 Enterprise Software
F&A HR MKT SALES ???

ENTERPRISE SOFTWARE

Customer Data

Market-related Data
CONSOLIDATED SINGLE-
Cleaning Data
SOURCE OF DATA
Purchased Data
Using Information Systems to Manage
Supply Chains
• Decide when and what to produce, store and move
• Rapidly communicate orders
• Track the status of orders
• Check inventory availability and monitor inventory levels
• Reduce inventory, transportation, and warehousing costs
• Track shipments
• Plan production based on actual customer demand
• Rapidly communicate changes in product design
Nike’s supply chain [illustrative]
Different (Supply Chain) Business
requirements?
Customer Relationship Management
Promoting Customer Loyalty
Local Examples
• Agha Steel SAP on Cloud
• Fauji Fertilizer
• K-Electric customer experience
• Computerization of Karachi Metropolitan Corporation (KMC)
• Lahore Development Authority (SAP-ERP)
• PIA
• Systems Limited
• Stylo Shoes and Confiz (Cloud-based Enterprise Solutions)
• Al Rahim Textile
• DG Cement Cloud Computing for Environmental Goals
• Utility Services Corporation’s (USC) ERP procurement hits a snag
The right Information System?
• What happened when it went wrong?
• Software firms sued over “bad implementations”
• Botched software project plagues city payroll
• Overproducing the wrong shoes – the new supply chain management
software “just didn’t do it”
Prominent Failures
• Nike – “just didn’t do it” (2000-2001)
• Huge variety of SKUs
• System integration issues with other new software
• Outcome: overproduction of slow moving products
• Aftermath: several months for recovering and removal of unwanted inventory
• Hershey’s bittersweet lesson (September 1999)
• Timing of deployment was a critical issue – right before the start of the major
holiday season of the year
• Outcome: Kisses and Jolly Ranches worth $100 million failed to reach the
various outlets in time
• Aftermath: took a year for the markets to regain faith in Hershey’s
Prominent Failures
• Fox Meyer (1993-1996)*
• $5 billion Pharmaceutical company
• 4th largest distributor of pharmaceuticals in the US
• Embarked on an ERP (SAP R/3) and warehouse-automation project (Pinnacle)
with Andersen Consulting in 1993
• Project went on for about two years
• Bankrupt in 1996!
• Challenges
• changing scope of the project (ability to handle increasing volume of customer
transactions)
• Lack of skilled in-house personnel to manage the integration and execution challenges
What can we learn from the failures?
• Enterprise deployment = “Betting the company”
• Legacy systems are running (fine?)
• Change will impact several key functions of the business
• Understand the current business process and requirements in detail
• IT will not solve underlying business process and/or management related
challenges
• This will help inform the vendor selection process
• Choose an industry-specific vendor
• Will help inform decisions regarding customization
What can we learn from the failures?
• Business process owners and stakeholders must be heavily involved
early (and throughout the process)
• They will help understand business requirements
• They will help in transition from legacy to new system (as it is deployed)
• They have to be trained because most likely they will be the new users of the
system
• Their “buy-in” through early involvement will reduce “resistance to change” –
they are less likely to feel “threatened” by the new system
• Do not delay testing (with sample and real data)
• Understand and test relationship with legacy/current systems
Conversion Strategies
• Direct cutover
• Unplug old system, plug in the new one
• Pilot
• Small-scale deployment of the full system and then complete roll out
• Phased
• Modular deployment of the system till the old one is retired
• Parallel
• Run both old and new systems in parallel
Supplemental Reading
• “Mastering the Three Worlds of Information Technology”, Andrew
McAfee, HBR, November 2006, pp. 141-149
• You can find it through our library E Database
• In terms of timing, the article appears sometime after Carr’s article

• Zara’s logistics
• CIO of Indus Motors presented at a conference in San Francisco early
this month. He talked about migrating to the latest SAP HANNA
platform. His talk covers pretty much everything we have discussed in
class in the context of his company