Q 1:what is the need of information technology in business?

Ans : Information technology is a modern phenomenon that has dramatically changed the daily lives of individuals and businesses throughout the world. Information technology is driven by the microchip, which owes its existence to the semi-conductor. IT solutions run the gamut from personal computers and computer software to production robotics to communications technology. Leveraging information technology for business success is key to survival in the modern business world.

Information technology (IT) has become a vital and integral part of every business plan. From multi-national corporations who maintain mainframe systems and databases to small businesses that own a single computer, IT plays a role. The reasons for the omnipresent use of computer technology in business can best be determined by looking at how it is being used across the business world.

Data Management

The days of large file rooms, rows of filing cabinets and the mailing of documents is fading fast. Today, most companies store digital versions of documents on servers and storage devices. These documents become instantly available to everyone in the company, regardless of their geographical location. Companies are able to store and maintain a tremendous amount of historical data economically, and employees benefit from immediate access to the documents they need.

Management Information Systems

Storing data is only a benefit if that data can be used effectively. Progressive companies use that data as part of their strategic planning process as well as the tactical execution of that strategy. Management Information Systems (MIS) enable companies to track sales data, expenses and productivity levels. The information can be used to track profitability over time, maximize return on investment and identify areas of improvement. Managers can track sales on a daily basis, allowing them to immediately react to lower-than-expected numbers by boosting employee productivity or reducing the cost of an item.

Customer Relationship Management

Companies are using IT to improve the way they design and manage customer relationships. Customer Relationship Management (CRM) systems capture every interaction a company has with a customer, so that a more enriching experience is possible. If a customer calls a call center with an issue, the customer support representative will be able to see what the customer has purchased, view shipping information, call up the training manual for that item and effectively respond to the issue. The entire interaction is stored in the CRM system, ready to be recalled if the customer calls again. The customer has a better, more focused experience and the company benefits from improved productivity.

Communication

For many companies, email is the principal means of communication between employees, suppliers and customers. Email was one of the early drivers of the Internet, providing a simple and inexpensive means to communicate. Over the years, a number of other communications tools have also evolved, allowing staff to communicate using live chat systems, online meeting tools and video-conferencing systems. Voice over internet protocol (VOIP) telephones and smart-phones offer even more high-tech ways for employees to communicate.

Inventory Management

When it comes to managing inventory, organizations need to maintain enough stock to meet demand without investing in more than they require. Inventory management systems track the quantity of each item a company maintains, triggering an order of additional stock when the quantities fall below a pre-determined amount. These systems are best used when the inventory management system is connected to the point-of-sale (POS) system. The POS system ensures that each time an item is sold, one of that item is removed from the inventory count, creating a closed information loop between all departments

Q2:what do you mean by Business Process Re-engineering?

Ans: Business process reengineering (BPR) is the analysis and redesign of workflow within and between enterprises. 

BPR reached its heyday in the early 1990's when Michael Hammer and James Champy published their best-selling book, "Reengineering the Corporation". The authors promoted the idea that sometimes radical redesign and reorganization of an enterprise (wiping the slate clean) was necessary to lower costs and increase quality of service and that information technology was the key enabler for that radical change. 

Business process re-engineering is a business management strategy, originally pioneered in the early 1990s, focusing on the analysis and design of workflows and business processes within an organization. BPR aimed to help organizations fundamentally rethink how they do their work in order to dramatically improve customer service , cut operational costs , and become world-class competitors.In the mid-1990s, as many as 60% of the Fortune 500 companies claimed to either have initiated reengineering efforts, or to have plans to do so.

BPR seeks to help companies radically restructure their organizations by focusing on the ground-up design of their business processes. According to Davenport (1990) a business process is a set of logically related tasks performed to achieve a defined business outcome. Re-engineering emphasized a holistic focus on business objectives and how processes related to them, encouraging full-scale recreation of processes rather than iterative optimization of subprocesses.

Business process re-engineering is also known as business process redesign, business transformation, or business process change management.

Hammer and Champy felt that the design of workflow in most large corporations was based on assumptions about technology, people, and organizational goals that were no longer valid. They suggested seven principles of reengineering to streamline the work process and thereby achieve significant levels of improvement in quality, time management, and cost:

1. Organize around outcomes, not tasks.2. Identify all the processes in an organization and prioritize them in order of redesign urgency.3. Integrate information processing work into the real work that produces the information.4. Treat geographically dispersed resources as though they were centralized.5. Link parallel activities in the workflow instead of just integrating their results.6. Put the decision point where the work is performed, and build control into the process.7. Capture information once and at the source.

By the mid-1990's, BPR gained the reputation of being a nice way of saying "downsizing." According to Hammer, lack of sustained management commitment and leadership, unrealistic scope and expectations and resistance to change prompted management to abandon the concept of BPR and embrace the next new methodology, enterprise resource planning (ERP).

BPR success & failure factors

BPR projects and efforts have revealed some interesting findings for both academics and practitioners. Some BPR researchers have focused on key factors in the BPR process that enabled a successful outcome. Many lessons were learned and many elements were identified as essential to the success of a BPR activity. Some important BPR success factors, which will be discussed in further details later, include, but are not limited to the following:

1. Organization wide commitment.2. BPR team composition.3. Business needs analysis.4. Adequate IT infrastructure.5. Effective change management.6. Ongoing continuous improvement

Generally, BPR does not only mean change, but rather dramatic change. The constituents of this drastic change include the overhaul of organizational structures, management systems, employee responsibilities and performance measurements, incentive systems, skills development, and the use of IT. BPR can potentially impact every aspect of how business is conducted today. Change on this scale can cause results ranging from enviable success to complete failure. In spite of the depth of change involved in undertaking BPR efforts, a recent survey showed that some 88 percent of CIOs were satisfied with the end result of BPR efforts.Successful BPR can result in enormous reductions in cost or cycle time. It can also potentially create substantial improvements in business operations, quality, customer service, or other business objective . Reengineering can help an aggressive company to stay on top, or transform an organization on the verge of bankruptcy into an effective competitor. The successes have spawned international interest, and major reengineering efforts are being conducted around the world.

On the other hand, BPR projects can fail to meet the inherently high expectations of reengineering. In 1998, it was reported that only 30 percent of reengineering projects were regarded as successful .The earlier promise of BPR has not been fulfilled as some organizations have put forth extensive BPR efforts only to achieve marginal, or even negligible, benefits. Other organizations have succeeded only in destroying the morale and momentum built up over their lifetime. These failures indicate that reengineering involves a great deal of risk besides remarkable rewards.

Many unsuccessful BPR attempts may have been due to the confusion surrounding BPR, and how it should be performed. Organizations were well aware that changes needed to be made, but did not know which areas to change or how to change them. As a result, process reengineering is a management concept that has been formed by trial and error or, in other words, practical experience. As more and more businesses reengineer their processes, knowledge of what caused the successes or failures is becoming apparent.[16] To reap lasting benefits, companies must be willing to examine how strategy and reengineering complement each other by learning to quantify strategy in terms of cost, milestones, and timetables, by accepting ownership of the strategy throughout the organization, by assessing the organization’s current capabilities and process realistically, and by linking strategy to the budgeting process. Otherwise, BPR is only a short-term efficiency exercise.

Q 3:Short note on

1.Information system strategies

2.Business system planning approach

3.Porter’s competitive advantage

Ans:

1. Information system strategies:

Strategic information systems are information systems that are developed in response to corporate business initiative. They are intended to give competitive advantage to the organization. They may deliver a product or service that is at a lower cost, that is differentiated, that focuses on a particular market segment, or is innovative.

Strategic information systems is a computer system that implement business strategies; They are those systems where information services resources are applied to strategic business opportunities in such a way that the computer systems have an impact on the organization’s products and business operations. Strategic information systems are always systems that are developed in response to corporate business initiative. The ideas in several well-known cases came from information Services people, but they were directed at specific corporate business thrusts. In other cases, the ideas came from business operational people, and Information Services supplied the technological capabilities to realize profitable results.

Most information systems are looked on as support activities to the business. They mechanize operations for better efficiency, control, and effectiveness, but they do not, in themselves, increase corporate profitability. They are simply used to provide management with sufficient dependable information to keep the business running smoothly, and they are used for analysis to plan new directions. Strategic information systems, on the other hand, become an integral and necessary part of the business, and they affect the profitability and growth of a company. They open up new markets and new businesses. They directly affect the competitive stance of the organization, giving it an advantage against the competitors.

Most literature on strategic information systems emphasizes the dramatic breakthroughs in computer systems, such as American Airlines' Sabre System and American Hospital Supply’s terminals in customer offices. These, and many other highly successful approaches are most attractive to think about, and it is always possible that an equivalent success may be attained in your organization. There are many possibilities for strategic information systems, however, which may not be dramatic breakthroughs, but which will certainly become a part of corporate decision making and will, increase corporate profitability. The development of any strategic information systems always enhances the image of information Services in the organization, and leads to information management having a more participatory role in the operation of the organization.

2.Business system planning approach

Business system planning is a strategy that calls for evaluating and structuring a platform for the processing of information throughout a business operation. The goal of this type of approach to the strategic management of a company is to make sure that all operations within the company structure make the most efficient use of information relevant to their areas of responsibility, and that communication between different levels of the business are operating at maximum efficiency. While a specific approach to business system planning was created by International Business Machines during the latter decades of the 20th century, variations on that process have since been developed and adapted to fit newer business models.

Over the years, the use of business system planning has provided a number of benefits to businesses of all sizes. One of the key benefits has to do with the ability to create a balanced view of what is and is not working with the current structure of a business, especially the technology that provides the foundation for that structure. By prompting the objective assessment of the system at all levels, this approach can often aid in identifying what is operating at optimal levels that meet the needs of the company, what is not operating at optimal levels but could be adapted or enhanced in order to meet those needs, and what aspects of the technology and the operation need to be removed or replaced in order to strengthen the company infrastructure.

Employing the general concepts of business system planning makes it much easier for owners and managers to identify when and how money should be spent to adapt the overall operation to the changing circumstances within the marketplace. This affects not only matters like the internal operation but ultimately the product line offered by the business, the way that customers are approached and supported by the business, and deciding when changes will be in the best interests of the company.

A company does not have to operate hundreds of locations and have a substantial employee base in order to benefit from the use of business system planning. Even a small business with one central location and a limited staff can take the general principles and apply them to the management of a product line, the internal workings of the business, and even to the task of becoming more visible to potential customers. There are a number of consultants today who work with companies of all sizes and types to help establish the basic framework for business system planning, training key people in how to make the most of the process, and even aid in the launching of the initiative. While there may be some expense on the front end, the benefits derived from this type of systematic approach will usually offset those expenses in a short period of time.

3. Porter’s competitive advantage

Michael E. Porter, Professor of Business Administration, Harvard Business School, has addressed his ideas in two keystone books. Competitive Strategy: Techniques for Analyzing Industries and Competitors, and his newer book, Competitive Advantage, present a framework for helping firms actually create and sustain a competitive advantage in their industry in either cost or differentiation. Dr. Porter’s theories on competitive advantage are not tied to information systems, but are used by others to involve information services technologies._In his book, Dr. Porter says that there are two central questions in competitive strategy:

How structurally attractive is the industry? What is the firm’s relative position in the industry?

Both of these questions are dynamic, and neither is sufficient alone to guide strategic choices. Both can be influenced by competitor behavior, and both can be shaped by a firm’s actions. It is imperative that these questions be answered by analysis, which will be the starting point for good strategic thinking, and will open up possibilities for the role of information systems.Industry profitability is a function of five basic competitive forces:

the threat of new entrants the threat of substitute products or services the bargaining power of suppliers the bargaining power of buyers and the intensity of the rivalry among existing competitors

Porter’s books give techniques for getting a handle on the possible average profitability of an industry over time. The analysis of these forces is the base for estimating a firm’s relative position and competitive advantage. In any industry, the sustained average profitability of competitor’s varies widely. The problem is to determine how a business can outperform the industry average and attain a sustainable competitive advantage. It is possible that the answer lies in information technology together with good management._Porter claims that the principal types of competitive advantage are low cost producer, differentiation, and focus. A firm has a competitive advantage if it is able to deliver its product or service at a lower cost than its competitors. If the quality of its product is satisfactory, this will translate into higher margins and higher returns. Another advantage is gained if the firm is able to differentiate itself in some way. Differentiation leads to offering something that is both unique and is desired, and translates into a premium price. Again, this will lead to higher margins and superior performance._It seems that two types of competitive advantage, lower cost and differentiation, are mutually exclusive. To get lower cost, you sacrifice uniqueness. To get a premium price, there must be extra cost involved in the process. To be a superior performer,_however, you must go for competitive advantage in either cost or differentiation._Another point of Porter’s is that competitive advantage is gained through a strategy bases on scope. It is necessary to look at the breadth of a firm’s activities, and narrow the competitive scope to gain focus in either an industry segment, a geographic area, a customer type, and so on. Competitive advantage is most readily gained by defining the competitive scope in which the firm is operating, and concentrating on it._Based on these ideas of type and scope, Porter gives a useful tool for analysis which he calls The Value Chain . This value chain gives a framework on which a useful analysis can be hung. The basic notion is that to understand competitive advantage in any firm, one cannot look at the firm as a whole. It is necessary to identify the specific activities which the firm performs to do business. Each firm is a collection of the things that it does that all add up to the product being delivered to the customer. These activities are numerous and are unique to every industry, but it is only in these activities where cost advantage or differentiation can be gained. The basic idea is that the firm’s activities can be divided into nine generic types. Five are the primary activities, which are the activities that create the product, market it and deliver it; four are the support activities that cross between the primary activities.

The primary activities are:

Inbound logistics, which includes the receipt and storage of material, and the general management of supplies.

Operations, which are the manufacturing steps or the service steps. Outbound logistics, which are associated with collecting, storing, and physically distributing the

product to buyers. In some companies this is a significant cost, and buyers value speed and consistency.

Marketing and sales includes customer relations, order entry, and price management. After-sales services covers the support of the product in the field, installation, customer training, and so

on.

The support activities are shown across the top of Figure No. 1 because they are a part of all of the firm’s operations. They are not directed to the customer, but they allow the firm to perform its primary activities. The four generic types of support activities are:

Procurement, which includes the contracting for and purchase of raw materials, or any items used by the enterprise. Part of procurement is in the purchasing department, but it is also spread throughout the organization.

Technology development may simply cover operational procedures, or many be involved with the use of complex technology. Today, sophisticated technology is pervasive, and cuts across all activities; it is not just an R&D function.

Human resource management is the recruiting, training, and development of people. Obviously, the cuts across every other activity.

Firm infrastructure is a considerable part of the firm, including the accounting department, the legal department, the planning department, government relations, and so on.

The basic idea is that competitive advantage grows out of the firm’s ability to perform these activities either less expensively than its competitors, or in a unique way. Competitive advantage should be linked precisely to these specific activities, and not thought of broadly at a firm-wide level. This is an attractive way of thinking for most information Services people, as it is, fundamentally, the systems analysis approach. Computer people are trained to reduce systems to their components, look for the best application for each component, then put together an interrelated system._Information technology is also pervasive throughout all parts of the value chain. Every activity that the firm performs has the potential to imbed information technology because it involves information processing. As information technology moves away from repetitive transaction processing and permeates all activities in the value chain, it will be in a better position to be useful in gaining competitive advantage. Value Chain: Key Activities, gives a brief example of a typical analysis of a value chain for a manufacturing company. It is obvious that information processing plays an important role in all these key activities._Porter emphasizes what he call the linkages between the activities that the firm performs. No activities in a firm are independent, yet each department is managed separately. It is most important to understand the cost linkages that are involved so that the firm may get an overall optimization of the production rather than departmental optimizations. A typical linkage might be that if more is spent in procurement, less is spent in operations. If more testing is done in operations, after-sales service costs will be lower. Multifunctional coordination is crucial to competitive advantage, but it is often difficult to see. Insights into linkages give the ability to have overall optimization. Any strategic information system must be analyzed across all departments in the organization._Cost and Competitive Advantage. Cost leadership is one of Porter’s two types of competitive advantage. The cost leader delivers a product of acceptable quality at the lowest possible cost. It attempts to open up a significant and sustainable cost gap over all other competitors. The cost advantage is achieved through superior position in relation to the key cost drivers._Cost leadership translates into above-average profits if the cost leader can command the average prices in the industry. On the other hand, cost leaders must maintain quality that is close to, or equal to, that of the competition. Achieving cost leadership usually requires trade-offs with differentiation. The two are usually incompatible._Note that a firm’s relative cost position cannot be understood by viewing the firm as a whole. Overall cost grows out of the cost performing discrete activities. Cost position is determined by the cumulative cost of performing all value activities._To sustain cost advantage, Porter gives a number of cost drivers which must be understood in detail because the sustainability of cost advantage in an activity depends on the cost drivers of that activity. Again, this type of detail is best obtained by classical systems analysis methods.

Some of the cost drivers which must be analyzed, understood, and controlled are:

Scale. The appropriate type of scale must be found. Policies must be set to reinforce economies of scale in scale-sensitive activities.

Learning. The learning curve must be understood and managed. As the organization tries to learn from competitors, it must strive to keep its own learning proprietary.

Capacity Utilization. Cost can be controlled by the leveling of throughput. Linkages. Linkages should be exploited within the value chain. Work with suppliers and channels can

reduce costs. Interrelationships. Shared activities can reduce costs.

Integration. The possibilities for integration or de-integration should be examined systematically. Timing. If the advantages of being the firs mover or a late mover are understood, they can be exploited. Policies. Policies that enhance the low-cost position or differentiation should be emphasized. Location. When viewed as a whole, the location of individual activities can be optimized. Institutional Factors. Institutional factors should be examined to see whether their change may be

helpful.

Care must be taken in the evaluation and perception of cost drivers because there are pitfalls if the thinking is incremental and indirect activities are ignored. Even though the manufacturing activities, for example, are obvious candidates for analyses, they should not have exclusive focus. Linkages must be exploited and cross-subsidies avoided.

Porter gives five steps to achieving cost leadership:

Identify the appropriate value chain and assign costs and assets to it. Identify the cost drivers of each value activity and see how they interact. Determine the relative costs of competitors and the sources of cost differences. Develop a strategy to lower relative cost position through controlling cost drivers or reconfiguring the

value chain. est the cost reduction strategy for sustainability.

Q4:Explain the value chain model?

Ans: Porter's Value Chain

 

The idea of the value chain is based on the process view of organisations, the idea of seeing a manufacturing (or service) organisation as a system, made up of subsystems each with inputs, transformation processes and outputs. Inputs, transformation processes, and outputs involve the acquisition and consumption of resources - money, labour, materials, equipment, buildings, land, administration and management. How value chain activities are carried out determines costs and affects profits.

Most organisations engage in hundreds, even thousands, of activities in the process of converting inputs to outputs. These activities can be classified generally as either primary or support activities that all businesses must undertake in some form.

According to Porter (1985), the primary activities are:

1. Inbound Logistics - involve relationships with suppliers and include all the activities required to receive, store, and disseminate inputs.

2. Operations - are all the activities required to transform inputs into outputs (products and services).

3. Outbound Logistics - include all the activities required to collect, store, and distribute the output.

4. Marketing and Sales - activities inform buyers about products and services, induce buyers to purchase them, and facilitate their purchase.

5. Service - includes all the activities required to keep the product or service working effectively for the buyer after it is sold and delivered.

Secondary activities are:

1. Procurement - is the acquisition of inputs, or resources, for the firm.2. Human Resource management - consists of all activities involved in recruiting, hiring, 

training, developing, compensating and (if necessary) dismissing or laying off personnel.3. Technological Development - pertains to the equipment, hardware, software, procedures 

and technical knowledge brought to bear in the firm's transformation of inputs into outputs.4. Infrastructure - serves the company's needs and ties its various parts together, it consists of 

functions or departments such as accounting, legal, finance, planning, public affairs, government relations, quality assurance and general managemen