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Documenti di Cultura
Innovation
Anindita Hazra
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or copied in any form or by any means, electronic, mechanical, photographic or otherwise, without the prior
written permission of the author and the publisher.
Published by: Amity Directorate of Distance & Online Education, Noida
Contents
Page No.
UNIT I
Lesson 1
Hospitality Industry
Lesson 2
21
Lesson 3
29
UNIT II
Lesson 4
Hospitality Organisations
41
Lesson 5
Accommodation Department
54
Lesson 6
60
Lesson 7
Hotel Organisation
72
Lesson 8
75
UNIT III
Lesson 9
89
Lesson 10
97
UNIT IV
Lesson 11
109
UNIT V
Lesson 12
Hospitality Marketing
121
Lesson 13
Market Segmentation
128
Lesson 14
Target Market
140
Lesson 15
154
Lesson 16
165
Lesson 17
174
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Innovation
UNIT I
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and Sustainable Enterprise
LESSON
1
INNOVATION
CONTENTS
1.0
1.1
Introduction
1.2
What is Innovation?
1.3
Need of Innovation
1.4
Objectives of Innovation
1.5
Technology Innovation
1.6
Importance of Innovation
1.7
1.8
Let us Sum up
1.9
1.10
Keyword
1.11
1.12
Suggested Readings
What is innovation
Importance of innovation
1.1 INTRODUCTION
A good enterprise idea becomes a business opportunity when it generates value. Yes,
but how much? The rule of thumb shared by many venture capitalists and other risk
capital investors is that the entrepreneur should have a gross margin of 35-40 per cent
or better.
However, this will depend on the particular market and industry in which your new
product or service is being launched. There are different opportunities for different
people. Some industries operate with much smaller margins - so it is potentially
unhelpful to try and be prescriptive about it.
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Innovation is an essential feature for all businesses, from the smallest to the largest.
You will probably have encountered the terms creativity and innovation in a wide
variety of settings. Both words are used interchangeably.
However, they do in fact mean very different things - especially in the context of
entrepreneurship and enterprise creation. Creativity is the generating new ideas. The
innovation is all about ensuring that these ideas are successfully exploited. Managing
this process can be extremely important for the ultimate success of your enterprise.
more valuable then just giving each business unit the responsibility for innovation
without help.
If each business unit were fully responsible for their own innovation without the help
of the innovation consultants, the success wouldnt be as great because the day to day
operations of the business unit prevent the long term and exploratory focus needed.
Plus, the business unit leaders are expert in their own product and market, not
necessarily innovation. It is also a different mindset between operating and
innovating. Innovating is more ambiguous and risky and takes a more entrepreneurial
creative skill set than operations.
In addition, innovation consultants possess specific knowledge about innovation
processes that would take individuals in the business units a long time to learn and
develop and they most prominently, they dont have the additional time to work on it.
These generalists were critical for innovation success not only because they are expert
on innovation but because they also serve as organizational connectors who can bring
best practices from one business unit or product area to the next. They facilitate
sharing of information and resources for innovation.
The good news is that it doesnt take a large team to pull this off. It can be done with
as few as 1-2 professionals to start, but these professionals must be fully engaged in
innovation. So it is to be established an innovation position or team within the
organization that can connect and facilitate innovation initiatives throughout the
organizations.
Improved quality
Reduced materials
Replacement of products/services
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Conformance to regulations
These goals vary between improvements to products, processes and services and
dispel a popular myth that innovation deals mainly with new product development.
Most of the goals could apply to any organisation be it a manufacturing facility,
marketing firm, hospital or local government.
strongest competitive advantage is unique products and services and the distinct
business processes that power them to market innovation by another name. In
another survey, the organizations believe that the innovation is a strategic priority.
The importance of innovation in all sectors is growing, and growing significantly.
In todays ever-changing economic landscape, inventiveness has become a key factor
influencing strategic planning. Efficiency, while a necessary condition for business
success, is insufficient to sustain growth over decades. While new levels of efficiency
and productivity require inventive solutions, the goal of efficiency is not the same as
the goal of innovation.
If innovation and the balance sheet are inextricably linked, companies cannot afford to
rely upon flashes of brilliance by individual inventors working alone. Hoping that
what is cooking in the lab will turn up trumps is not a reasonable approach for a
custodian of stockholder value.
Very often, innovation results from the planned and deliberate recombination of ideas,
people, and objects from the past that spark new technological revolutions, sought
after service concepts and effective business models.
Yet to stand as valuable innovations, new products and services must be sufficiently
robust to progress efficiently through the end-to-end commercialisation process and
into the hands of customers. How does this happen? Leading companies continuously
seek out and institutionalize the insights and tools they will need if they are to stay at
the leading edge and be top-rated stars in their sector.
Some companies build enduring capacities for breakthrough innovation. They find
ways to circumvent the years, if not decades, it can take to move from invention to
commercial exploitation of a new technology. They manage the associated risks and
continuously enhance their ability to solve the complex engineering and business
process design problems that would otherwise place limits on their ability to envisage,
and then create sustainable value from, the next generation in their industry.
Innovation is important now because we are facing a number of key challenges.
Globalisation, the technological and knowledge revolutions, cultural debate and
climate change are issues that face us all at some level.
They mean that as well as wanting to innovate in order to improve a process or
product and add value, we also have to innovate because there is an overwhelming
imperative to do so. These issues pose challenges for the private sector, for public
services and for governments and policy makers.
For example, globalisation and shifting patterns of trade and commerce with
manufacturing increasingly being undertaken in countries where labour costs are
lower mean that different skills will be required by the workforce of the future.
Migration patterns and shifting demographics along with climate change will also
impact on the futures of the young people in our society. All this leads us to consider
that innovation is now an essential component of any kind of system.
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3. Evaluation
4. Trial
5. Adoption
In the awareness stage "the individual is exposed to the innovation but lacks complete
information about it". At the interest or information stage "the individual becomes
interested in the new idea and seeks additional information about it". At the evaluation
stage the "individual mentally applies the innovation to his present and anticipated
future situation, and then decides whether or not to try it". During the trial stage "the
individual makes full use of the innovation". At the adoption stage "the individual
decides to continue the full use of the innovation".
Check Your Progress 2
Fill in the blanks:
1. The term innovation comes from the Latin word . .
2. . is the successful exploitation of new ideas.
3. Firms who are active in technological innovation usually adopt
. organizational practices.
1.10 KEYWORD
Innovation: It can be defined as a specific tool of entrepreneurs, the means by which
they exploit change as an opportunity for a different business or service.
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LESSON
2
KNOWLEDGE MANAGEMENT
CONTENTS
2.0
2.1
Introduction
2.2
2.3
2.3.2
2.3.3
2.4
2.5
2.6
2.7
Let us Sum up
2.8
2.9
Keywords
2.10
2.11
Suggested Readings
2.1 INTRODUCTION
In todays networked & seamless world, where data and information is available a
plenty, it certainly does create a chaos in an organization if the knowledge resources
are not handled in a proper and smart manner. The concept is a recent one and is in the
developmental stage, a close look at the fundamentals would enable us to appreciate
its utility and effectiveness in todays knowledge based economy.
The concept of knowledge management addresses this lesson.
The idea is that information, knowledge, and wisdom are more than simply
collections. Rather, the whole represents more than the sum of its parts and has a
synergy of its own.
We begin with data, which is just a meaningless point in space and time, without
reference to either space or time. It is like an event out of context, a letter out of
context, a word out of context. The key concept here being "out of context", and since
it is out of context, it is without a meaningful relation to anything else.
When we encounter a piece of data, if it gets our attention at all, our first action is
usually to attempt to find a way to attribute meaning to it. We do this by associating it
with other things. If you see the number 5, you can immediately associate it with
cardinal numbers and relate it to being greater than 4 and less than 6, whether this was
implied by this particular instance or not.
If you see a single word, such as "time," there is a tendency to immediately form
associations with previous contexts within which you have found "time" to be
meaningful. This might be, "being on time," "a stitch in time saves nine," "time never
stops," etc. The implication here is that when there is no context, there is little or no
meaning. So, we create context but, more often than not, that context is somewhat
akin to conjecture, yet it fabricates meaning.
A collection of data is not information. It implies that a collection of data for which
there is no relation between the pieces of data is not information. The pieces of data
may represent information, yet whether or not it is information depends on the
understanding of the one perceiving the data.
While information entails an understanding of the relations between data, it generally
does not provide a foundation for why the data is what it is, nor an indication as to
how the data is likely to change over time. Information has a tendency to be relatively
static in time and linear in nature. Information is a relationship between data and,
quite simply, is what it is, with great dependence on context for its meaning and with
little implication for the future.
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Beyond relation there is pattern, where pattern is more than simply a relation of
relations. Pattern embodies both a consistency and completeness of relations which, to
an extent, creates its own context. Pattern also serves as an archetype with both an
implied repeatability and predictability.
When a pattern relation exists amidst the data and information, the pattern has the
potential to represent knowledge. It only becomes knowledge, however, when one is
able to realize and understand the patterns and their implications.
The patterns representing knowledge have a tendency to be more self-contextualizing.
That is, the pattern tends, to a great extent, to create its own context rather than being
context dependent to the same extent that information is. A pattern which represents
knowledge also provides, when the pattern is understood, a high level of reliability or
predictability as to how the pattern will evolve over time, for patterns are seldom
static. Patterns which represent knowledge have a completeness to them that
information simply does not contain.
Wisdom arises when one understands the foundational principles responsible for the
patterns representing knowledge being what they are. And wisdom, even more so than
knowledge, tends to create its own context. These foundational principles are
universal and completely context independent. Of course, this last statement is sort of
a redundant word game, for if the principle was context dependent, then it couldn't be
universally true now could it?
So, in summary the following associations can reasonably be made:
z
Example
This example uses a bank savings account to show how data, information, knowledge,
and wisdom relate to principal, interest rate, and interest.
z
Data: The numbers 100 or 5%, completely out of context, are just pieces of data.
Interest, principal, and interest rate, out of context, are not much more than data as
each has multiple meanings which are context dependent.
Knowledge: If you put $100 in your savings account, and the bank pays 5%
interest yearly, then at the end of one year the bank will compute the interest of $5
and add it to the principal and you will have $105 in the bank. This pattern
represents knowledge, which, when you understand it, allows you to understand
how the pattern will evolve over time and the results it will produce. In
understanding the pattern, you know, and what you know is knowledge. If you
deposit more money in my account, you will earn more interest, while if you
withdraw money from your account, you will earn less interest.
Wisdom: Getting wisdom out of this is a bit tricky, and is, in fact, founded in
systems principles. The principle is that any action which produces a result which
encourages more of the same action produces an emergent characteristic called
growth. And, nothing grows forever for sooner or later growth runs into limits.
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If one studied all the individual components of this pattern, which represents
knowledge, they would never discover the emergent characteristic of growth. Only
when the pattern connects, interacts, and evolves over time, does the principle exhibit
the characteristic of growth.
Now, if this knowledge is valid, why doesn't everyone simply become rich by putting
money in a savings account and letting it grow? The answer has to do with the fact
that the pattern described above is only a small part of a more elaborate pattern which
operates over time.
People don't get rich because they either don't put money in a savings account in the
first place, or when they do, in time, they find things they need or want more than
being rich, so they withdraw money. Withdrawing money depletes the principal and
subsequently the interest they earn on that principal.
Check Your Progress 1
Fill in the blanks:
1. . relates to description, definition, or perspective.
2. . comprises strategy, practice, method, or approach.
3. . embodies principle, insight, moral, or archetype.
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As work is done, people learn. This happens naturally to a greater or lesser degree
depending on individual personality and intelligence, and on the degree to which the
corporate environment encourages independent action and experimentation.
It is also typical of businesses that, in various ways, they explicitly set about the task
of learning. They do this by conducting Research and Development and by
systematically collecting and analysing data about their operations, customers, and
markets.
If all this happens now, why is there a need to 'manage' knowledge? The answer lies
in three relatively recent major developments in corporate environments:
z
In short, the quality and quantity of readily communicable knowledge was low. This is
an issue that needs to be managed.
Supporting knowledge workers' enhanced needs for access to knowledge, and for
capturing, cycling and leveraging the knowledge they generate, are issues that need to
be managed.
Customer-focused accountability
Employee empowerment
Although the names of the original programmes are now much less commonly used,
the concepts embodied in them have wrought a fundamental and permanent change in
the way businesses are managed. The individual tools and techniques involved have
become an integral part of accepted management practices.
Process-oriented management is 'knowledge work' at the corporate level. It
systematically generates new and better knowledge about how best to tackle the
thousands of interdependent tasks that an organisation relies on in order to be effective
and to improve. But a major problem for process-oriented management is getting it to
'stick'. Like an open fire, much of the heat is going up the chimney. This is because:
z
The techniques used rely on close contact between individuals, so the benefits of
the knowledge generated have tended to be local rather than necessarily
organisation-wide.
Initiatives that share process-oriented approaches are often kept separate with
their own implementation teams; for example 'quality assurance' is seen as
different to 'continuous Improvement', and in turn 'Best Practice' is often made
distinct from 'Business Process Re-engineering.
These are problems of knowledge that need to be managed if the organisation is to get
maximum benefit from its process-orientation.
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Business Strategy need to work together with the prerequisite that the implementation
folks are present when the knowledge strategy is laid out.
Revolutionary companies across the world have begun to develop a new set of
processes for coaching people on how to contribute to a business strategy. There are a
lot of case studies about these companies and a great deal of information can be learnt
of them.
So how can companies make sure that everyone is contributing to a business strategy
or better a knowledge strategy, let's assume that the company decided to merge its
knowledge strategy with its business strategy. Below are few helpful tips(scenarios)
that illustrate how this is possible.
First, goals are set with the whole group in mind, remember our implementation
people, well they get the privilege of having an actually say when it comes to setting
the strategy for next year. Open discussion is encouraged and people seem not to be
afraid to express their opinion. Dialogue in it purest form. What a joy!
Second, the whole plan is not focused only on results. It also focuses on why they
want to achieve the results that they want to achieve? How is there vision going to add
value to their customer base? And also what are the means and methods for achieving
this vision? The actual resources that they are going to use or engage for setting and
executing the strategy.
Third, everyone understands that the environment is constantly changing; therefore
they are not in love with their first strategy. Strategies need to have room for
flexibility and this is not difficult once you know your purpose of engaging in that
strategy in the first place. That's why it is so clear to know the WHY you are doing
anything? What is the ultimate result that you are seeking from it?
Fourth, constructive feedback is encouraged and actually recommendation are
immediately implemented or included for future planning.
Fifth, these knowledge companies focus a lot on personal development and growth
they understand that only then companies can actually be able to engage everyone in a
strategy when people are acknowledged through the entire year not only for one day.
You cannot expect people will want to work for you and contribute their best if you
do not do your part.
As a corporate employer, you will need to be able to see that each person within your
company has the capacity of adding value to your corporate strategy. The real
challenge here is to have all these people work for your strategy for the entire year.
Their voices need to heart, valued and actually given credit for. This is a radical
strategically breakthrough but it is needed if you want to engage your whole company
in contributing to your knowledge- business strategy.
This new thinking of managing and leading companies is revolutionary, cutting edge
and it requires time, space and ongoing support. Many will argue that companies do
not have time to spend time in developing, nurturing their front line managers and
senior executives on how to play this new game called "knowledge leadership
management."
Energise: This refers to putting in zeal to explore new ideas, best practices and
inspiring people to experiment.
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Combine: This refers to the "BIG PICTURE" or the "VISION" part that is taking
a holistic view of all the collaborative processes.
Integrate: This is related to the combining role above and integrates all the
messages in the form of values, performance management policies, etc.
There are many approaches for developing a knowledge management strategy, each
supported by a holistic model of knowledge management processes.
Each of these approaches has its strengths, and in practice, a success knowledge
management programme must encompass both.
A model that focuses strongly on the needs analysis activities with staff is described
here to drive a primarily bottom-up strategy, as follows:
1. Identify the key staff groups within the organisation. These groups deliver the
greatest business value, or are involved in the most important business activities.
2. Conduct comprehensive and holistic needs analysis activities with selected staff
groups, to identify key needs and issues.
3. Supplement this research with input from senior management and organisational
strategy documents, to determine an overall strategic focus.
4. Based on these findings, develop recommendations for addressing the issues and
needs identified.
5. Implement a series of strategic and tactical initiatives, based on the
recommendations. These will select suitable knowledge management techniques
and approaches.
Check Your Progress 2
Fill in the blanks:
1. Knowledge management can be classified into two main approaches
and .
2. Process-oriented management is 'knowledge work' at the
level.
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2.9 KEYWORDS
Data: It is a distinct piece of information.
Information: It is a relationship between data and, quite simply, is what it is, with
great dependence on context for its meaning and with little implication for the future.
Knowledge: It may be defined as actionable information which has been refined for a
specific purpose.
Pattern: It embodies both a consistency and completeness of relations which, to an
extent, creates its own context.
Wisdom: It is the judicious application of knowledge.
Knowledge assets: Those are the knowledge regarding markets, products,
technologies and organisations, that a business owns or needs to own and which
enable its business processes to generate profits, add value, etc.
Knowledge management: It is a process which involves the identification and
analysis of available and required knowledge assets and knowledge asset related
processes, and the subsequent planning and control of actions to develop both the
assets and the processes so as to fulfill organisational objectives.
Socialise: It is an effort to bring people together, encourage collaborative behavior,
peer assistance and knowledge sharing.
Energise: It refers to putting in zeal to explore new ideas, best practices and inspiring
people to experiment.
Combine: It refers to the "BIG PICTURE" or the "VISION" part that is taking a
holistic view of all the collaborative processes.
Integrate: It is related to the combining role above and integrates all the messages in
the form of values, performance management policies, etc.
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LESSON
3
KNOWLEDGE MANAGEMENT SYSTEM
IN ORGANISATION
CONTENTS
3.0
3.1
Introduction
3.2
3.3
3.4
3.5
3.6
3.7
Let us Sum up
3.8
3.9
Keywords
3.10
3.11
Suggested Readings
3.1 INTRODUCTION
Managing knowledge means delivering the information and data people need to be
effective on their jobs. Knowledge is different from information in that information
can be measured in pounds per square inch, millions of instructions per second,
terabytes. Knowledge is managing the information to become effective. Information is
meaningless unless it can be organized and retrieved in a timely manner and fashion.
Now, if you are thinking that employees are the vital thrust to any organization, you
are correct. Proving employees with the tools and information in which they can
process information effectively, can only result in a successful organization.
After all, without employees there is no corporation. And without skillful and
informed employees, a company will perish. If the skillful and informed employees
leave the organization without the organization capturing that information, that
knowledge walks out the door.
How long will it take for the organization to recover after the knowledge leaves. A
few weeks, a couple of months, years! Who knows! But what if you had a simple
approach to retain the knowledge that was intertwined into your day-to-day operation.
What if you had a systematic procedure to capture the knowledge of your employees?
How much would you invest to ensure the continued success of your organization?
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Step 3: Hire Information Technology consultants or use in-house IT staff to build the
network. Organizations must determine whether it is more cost-effective for them to
build the system themselves or to hire an outside consultant to perform the endeavor.
The organization may lack the appropriate staff to build the database, set up the user
permissions, and maintain the system. If this is the case it may be more effective to
hire a consultant. Requests For Proposals (RFPs) may be distributed to several
vendors to determine the best price and the most qualified company.
Step 4: Train employees how access and to load information into the Knowledge
Management system. Once the Knowledge Management system is developed and
implemented, employees should be trained on how to use the system. Even the most
well-designed system will have limited use if employees are not trained to use the
system properly. This may also be a task the contractor can perform (if one was
hired).
Additionally, leadership and management staff within the organization may consider
explaining the importance of the system and how they feel it will improve the
organization. When senior leadership believes in the system it may help to motivate
employees and increase their desire to use it.
Step 5: Obtain feedback in the form of surveys and/or informal meetings to determine
the effectiveness of the Knowledge Management system. The system should be
helping to improve employee effectiveness, efficiency, and overall productivity. If it
is not accomplishing this, it may need to be adapted. Feedback from those using the
system may be helpful to management staff and may assist them in determining what
to change.
Step 6: Implement changes and make improvement and feedback an iterative process.
Organizations may decide to consider making improvements on the Knowledge
Management system based on feedback provided by users.
If this type of system is not improved over time and adapted to fit the changes in the
organization it may become obsolete. Incremental improvements may help the system
to become better over time and may help keep employees motivated to continue
sharing their knowledge to improve the organization as a whole.
Check Your Progress 1
Fill in the blanks:
1. Knowledge is managing the . to become effective.
2. Full form of VPN is . .
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Organisational culture has been characterized as the glue that holds organizations
together and isnt just one aspect of the game - it is the game. Culture can support
linkages between technology adoption and organizational growth, it can be a critical
success factor in manufacturing strategy and play a crucial role in determining the
success or failure of mergers and acquisitions.
On a more micro level, researchers have found significant relationships between the
fit of employees and the prevailing organizational culture and a number of
important outcomes such as job commitment and turnover.
As we would expect, organizational culture has also been found to play a significant
role in a number of IT management processes. These can include technology driven
change, E-business initiatives, groupware development and deployment, new
technology and adoption, computer-based monitoring, and management of new
systems development.
But many unanswered questions remain regarding the meaning and content of
organizational culture, the methods by which it should be measured and more
fundamentally, the feasibility of cultural management and change, especially when
attempting to operationalise specific organisational goals.
While debates around these issues continue, culture has been accepted as a "fact of
organizational life" by managers and has become an integral aspect of many
organizational development programs. Previous work on organizational cultures has
focused on descriptors of culture, and frequently resulted in dimensions of culture, or
a typology of culture.
Certain types of organizational cultures, or certain styles of cultures have been
associated with either positive or negative outcomes for both the effectiveness of the
organization and for individual employees within the organization. Positive outcomes
for individuals might include motivation and satisfaction while negative outcomes for
individuals might include job insecurity and stress.
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common social system or clan and are bonded together through the development of a
sense of affiliation and belonging.
The upper right quadrant, referred to as the open systems perspective, is characterized
by flexibility and an external focus. These adaptive adhocracies emphasize
innovation, creativity, adaptation, growth, external support, and resource acquisition.
Members are bonded together through being inspired and challenged.
The lower right quadrant, referred to as the rational goal perspective, is characterized
by predictability and an external focus. These market type organizations value
competitiveness, productivity, goal clarity, efficiency, and accomplishment. Members
are bonded together through goal orientation and competition.
The lower left quadrant, referred to as the internal process perspective or hierarchy
culture, is characterized by predictability and an internal focus. The emphasis is on
information management, documentation, stability, routinisation, centralisation,
continuity, and control.
In a hierarchy culture, members are bonded together through internal controls that
maintain rules, policies and procedures. Organizations are seldom characterised by a
single cultural type. Organizations tend to develop a dominant organizational culture
over time as the organization adapts and responds to the challenges and changes in the
environment.
Organizations with all four quadrants represented are considered to be balanced and
perform well. Leaders in these organizations are able to balance conflicting demands,
suggesting that high performance requires the simultaneous mastery of seemingly
contradictory or paradoxical capabilities.
In contrast, cultures considered imbalanced tend to emphasize values associated with
rational goals (market) and internal process (hierarchy) cultures at the expense of
values that characterize other cultures. This results in less effective organizational
performance.
work and knowledge flow in often highly informal patterns, based on who people
actually communicate with in doing their work.
Social network analysis is being applied by many leading companies around the world
to gain insights into this "invisible organisation," and to design interventions that
enhance the productivity and effectiveness of knowledge work.
Collaboration: In an economy based on highly specialised knowledge, collaboration
is essential. Many of the approaches pioneered in knowledge management, such as
communities of practice, are extremely relevant and useful. However what is critical
now is a focus on fostering collaboration between individuals, teams, divisions, and
organisations.
Collaboration tools such as video conferencing and web conferencing are becoming
standard. Now companies are working as a top priority on developing the skills and
culture that enable high-value collaboration. However implementing a whole new set
of businesses processes is also required to unlock the full potential of collaboration.
Relevance: In a world of massive information overload, we want to see only
information that is highly relevant to our work and interests. Among the many
evolving technologies that support this, there are two key practices that will be central
to enhancing information relevance.
Implicit profiling learns from what we search for and look at, when, and for how long,
to improve over time at understanding what we find useful. Collaborative filtering
allows us to draw on the insights and discoveries of people who have similar profiles
and interests to us. Amazon.com uses similar approaches in a basic form to point us to
books and CDs we might like. The future lies in finding relevance for individuals
from vast oceans of information.
Workflow: Knowledge work literally flows through an organisation. The next decade
will see companies shifting their business processes to platforms that enable smooth
and efficient workflow. Once this shift is made, you can reconfigure at will how work
is done, and even allow clients and suppliers to participate in your processes, creating
powerful lock-in.
The emerging discipline of "workflow learning" integrates access to every type of
learning-whether it is information, E-learning modules, or human experts-into the
everyday flow of work, so these are available as and when they are needed.
Knowledge-based relationships: In our global hyper-connected economy, the drive to
commoditisation is relentless. What this means is that an increasing proportion of
business value resides in trusting, knowledge-based relationships, that allow
companies to create value with clients, suppliers, and alliance partners in ways they
could not do otherwise.
Organisations are realising that outsourcing and off-shoring only work if there are
effective flows of knowledge between companies. Professional firms are finding not
only that clients are increasingly demanding knowledge transfer, but also that
engaging in knowledge-based relationships increases customer loyalty and
profitability. Relationships are the future of society and business, and rich knowledge
exchange will be at their heart.
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tax regulations, and the need to increase the scale of their companies in order to meet
the demands of the global industry.
z
Case 2: Lenovo has launched its innovation centre in India. The centre will enable
large enterprises and SMBs that are customers of Lenovo as well as its business
partners, solution providers and independent software vendors to collaborate on
the development of personal computing solutions.
Case 3: IBM has expanded its IBM Innovation Center in Bangalore in response
what it sees as a growing demand for IT resources by the burgeoning technology
community in India. The center is intended to assist smaller players in the tech
world, from start-up companies and software developers to IT professionals and
academics, in growing their IT skills, creating new software and hardware
applications and services, and introducing their innovations to the global
marketplace. It also provides IBM with an early chance to become partnered with
these potential innovators. The center is equipped with labs and infrastructure for
working with technologies such as RFID, Pervasive and SOA. IBMs business
partners will also be able to test, develop and demonstrate Software as a Service
business models and even conduct proof of concepts. The center also features
remote access capability and technical support from IBM.
Case 4: GE also has its Innovation Center in India, where they create world-class
products and solutions for their global business. They work on global programs in
areas of expertise such as - Mechanisms, contacts, thermal; Machine design &
analysis; custom engineering; Electronic Test Automation; Human Machine
Interface design; UPS Systems; Electronics design; New product introductions.
Check Your Progress 2
1. Information is meaningless unless it can be organized and retrieved in a
manner and fashion.
2. Effective is at the heart of organizational performance and
enables organizations to realise the value of human capital.
3. Implement changes and
process.
make
improvement
and
feedback
an
technical problem that could be solved by appropriate use of computers, the problem
for competitive intelligence people was in finding, understanding, synthesizing, and
disseminating relevant information. Soon, however, it was discovered that perfect
information leads to information overload. As a result, systems that could categorize
information based on user needs were actively studied. Effective knowledge
management is at the heart of organizational performance and enables organizations to
realise the value of human capital. However, organizational culture underpins
knowledge management by influencing how members learn and share knowledge.
Paradoxically, organizational culture has been identified as the main impediment to
knowledge management and yet very little is known about how organizational culture
contributes to or impedes knowledge management. Organizations need to develop
cultures where their members are encouraged to share knowledge in order to gain a
strategic advantage. Therefore, the impact of organizational culture in terms of
knowledge management requires further research.
3.9 KEYWORDS
Knowledge: It may be defined as actionable information which has been refined for a
specific purpose.
Managing knowledge: It means delivering the information and data people need to be
effective on their jobs.
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Thomas, J Kuegler, Web Advertising and Marketing, Jr. 3rd Edition-Prentice-Hall of India,
New Delhi.
Dr. Ravi Kalakota, E-Business Roadmap for Success, Pearson Education.
Ravi Kalakota, Andrew B. Whinston, "Frontiers of Electronic Commerce", Addition-Wesley
2000.
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Technology in Business
UNIT II
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Technology in Business
LESSON
4
TECHNOLOGY IN BUSINESS
CONTENTS
4.0
4.1
Introduction
4.2
Technology in Business
4.3
Technology Transfer
4.4
Joint Venture
4.4.1
4.4.2
4.4.3
4.4.4
4.5
4.6
Know-How
4.7
Let us Sum up
4.8
4.9
Keywords
4.10
4.11
Suggested Readings
4.1 INTRODUCTION
During the last quarter of this century Information Technology (IT) has transformed
the way of human life as no other technology has. IT has potential of converting our
society into a truly knowledge based society. IT also gives us a chance in ensuring
that such an evolution leads to an equitable society. Now, there is no area of human
life, which is not affected by information technology in one way or the other. To
ensure that people reap the benefits of this epoch making development, it is
imperative that the technology should be commercialized.
Globalisation-driven by science and technology discoveries and innovation-has been
an inevitable and irreversible trend of civilization. Some argue that globalization is a
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double-edged sword is that along with perceived benefits it erodes local culture and
tradition. All countries need to evaluate the pros and cons of these processes while
working toward their own balanced strategy to meet unavoidable challenges.
In this lesson the importance and impact of technology in business will be discussed.
Using the internet to access information to ensure the most appropriate decisions
are made.
leveraged to create efficient and effective channels to exchange information and can
be the catalyst for global integration.
The single greatest benefit of technology is its ability to multiply effort. This
multiplier of technology turns the effort of one person into many.
Any business can leverage technology to work:
z
Faster
Productively
Predictably
Safer
Efficiently
With the advances in technology any business can now do more with less.
Technology innovations have created new jobs, promoted the growth of new markets,
and increased international trade and investment but one of the biggest technology
challenges we need to address, which makes us unique to first-world countries, is the
major divide between mobile and Internet users.
What is evidenced today is that only a small minority access the Internet while the
majority of the population uses their mobile phones for various tasks yet there is little
to bridge the two users together.
The greatest opportunity that exists in our global emergence is the ability to
understand how to use all this technology to our advantage, bridge the gap between
mobile and Internet users, and in turn solve the various communication and
technology problems that we are faced with as a developing country.
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The priority that is given to each of these factors varies from institution to institution.
The ultimate benefits of technology transfer, however, are the public benefits derived
from the products that reach the market and the jobs that result from the development
and sale of products.
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approaches are associated with raising of venture capital (VC) as a means of funding
the development process, a practice more common in the US than in the EU, which
has a more conservative approach to VC funding.
In recent years, there has been a marked increase in technology transfer intermediaries
specialized in their field. They work on behalf of research institutions, governments
and even large multinationals. Where start-ups and spin-outs are the clients,
commercial fees are sometimes waived in lieu of an equity stake in the business.
As a result of the potential complexity of the technology transfer process, technology
transfer organizations are often multidisciplinary, including economists, engineers,
lawyers, marketers and scientists. The dynamics of the technology transfer process has
attracted attention in its own right, and there are several dedicated societies and
journals.
Check Your Progress 1
Fill in the blanks:
1. The single greatest benefit of technology is its ability to .
effort.
2. Technology transfer is a crucial and dynamic factor in social and
economic . .
3. Office of Technology Transfer is also known as . .
More resources
Greater capacity
In some cases, a large company can decide to form a joint venture with a smaller
business in order to quickly acquire critical intellectual property, technology, or
resources otherwise hard to obtain, even with plenty of cash at their disposal.
Competitive Goals
z
Pre-empting competition
Speed to market
Improved agility
Strategic Goals
z
Synergies
Transfer of technology/skills
Diversification
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Businesses of any size can use joint ventures to strengthen long-term relationships or
to collaborate on short-term projects.
A successful joint venture can offer:
z
Increased capacity
A joint venture can also be very flexible. For example, a joint venture can have a
limited life span and only cover part of what you do, thus limiting the commitment for
both parties and the business' exposure.
Joint ventures are especially popular with businesses in the transport and travel
industries that operate in different countries.
Partnering with another business can be complex. It takes time and effort to build the
right relationship. Problems are likely to arise if:
z
The objectives of the venture are not 100 per cent clear and communicated to
everyone involved
The partners don't provide sufficient leadership and support in the early stages.
Success in a joint venture depends on thorough research and analysis of aims and
objectives. This should be followed up with effective communication of the business
plan to everyone involved.
As the mission and vision cascade from company leaders through divisions and
departments, the alignment between the two must become stronger. Examine the
policy and procedure within the departments, and seek out the alignment.
4.6 KNOW-HOW
Context of industrial property, now generally viewed as Intellectual Property (IP),
know-how (or knowhow as it is sometimes written) is a component in the transfer of
technology in national and international environments, co-existing with or separate
from other IP rights such as patents, trademarks and copyright and is an economic
asset.
Know-how can be defined as confidentially held, or better, 'closely-held' information
in the form of unpatented inventions, formulae, designs, drawings, procedures and
methods, together with accumulated skills and experience in the hands of a licensor
firm's professional personnel which could assist a transferee/licensee of the object
product in its manufacture and use and bring to it a competitive advantage. It can be
further supported with privately-maintained expert knowledge on the operation,
maintenance, use/application of the object product and of its sale, usage or disposition.
The inherent proprietary value of know-how lies embedded in the legal protection
afforded to trade secrets in general law, particularly, 'case law'. Know-how, in short, is
"private intellectual property". The 'trade secret law' varies from country to country,
unlike the case for patents, trademarks and copyright where there are formal
'conventions' through which subscribing countries grant the same protection to the
'property' as the others; examples of which are the Paris Convention for the Protection
of Industrial Property and the World Intellectual Property Organization (WIPO),
under United Nations, a supportive organization designed "to encourage creative
activity, [and] to promote the protection of intellectual property throughout the
world".
Know-how shall mean technical data, formulae, standards, technical information,
specifications, processes, methods, code books, raw materials, as well as all
information, knowledge, assistance, trade practices and secrets, and improvements
thereto, divulged, disclosed, or in any way communicated to the Licensee under this
Agreement, unless such information was, at the time of disclosure, or thereafter
becomes part of the general knowledge or literature which is generally available for
public use from other lawful sources. The burden of proving that any information
disclosed hereunder is not confidential information shall rest on the licensee.
Check Your Progress 2
1. What is the main difference between joint venture and merger?
...
...
2. What is the primary purpose of standardized policy and procedure?
...
...
3. Write the use of technology in business in one sentence.
...
...
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dynamic factor in social and economic development. Technology has been transferred
intentionally or unintentionally. Sometimes the technology has taken a new form at
each transfer, absorbing local traditions of design or local market preferences and
there is value added during the process of technology transfer. Commercializing firms
may use technology transfer as a vehicle to connect their research and development
efforts to marketing, manufacturing, and management expertise. A joint venture is a
strategic alliance where two or more parties, usually businesses, form a partnership to
share markets, intellectual property, assets, knowledge, and, of course, profits.
Furthermore, due to local regulations, some markets can only be penetrated via joint
venturing with a local business. A joint venture can also be very flexible. Joint
ventures are especially popular with businesses in the transport and travel industries
that operate in different countries.
4.9 KEYWORDS
Technology Transfer: It is the practice of transferring scientific findings from one
organization to another for further development so that new products such as
medicines, educational tools, electronic devices, safety equipment and health services
can become available to the public.
Joint Venture: It is a strategic alliance where two or more parties, usually businesses,
form a partnership to share markets, intellectual property, assets, knowledge, and, of
course, profits.
Deep and Deep, Technology Transfer and Joint Ventures Abroad, R. R. Azad, Publications,
New Delhi.
Thomas, J Kuegler, Web Advertising and Marketing, Jr. 3rd Edition-Prentice-Hall of India,
New Delhi.
Dr. Ravi Kalakota, E-Business Roadmap for Success, Pearson Education.
Ravi Kalakota, Andrew B. Whinston, "Frontiers of Electronic Commerce", Addition-Wesley
2000.
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LESSON
5
TECHNOLOGY IN INDIAN BUSINESS
CONTENTS
5.0 Aims and Objectives
5.1 Introduction
5.2 India's Technology Base and Capabilities
5.3 Preference of Indian Technology
5.4 Major Constraints and Problems
5.5 Operational Constraints
5.6 Problems in Indian Business Environment
5.7 Problems in Finalization of Agreement
5.8 Innovation in Small, Medium and Large Enterprises
5.9 Let us Sum up
5.10 Lesson End Activity
5.11 Keywords
5.12 Questions for Discussion
5.13 Suggested Readings
5.1 INTRODUCTION
The tradition of Science and Technology (S&T) in India is over 5,000 years old. A
renaissance was witnessed in the first half of the 20th century. The S&T infrastructure
has grown up from about Rs. 10 million at the time of independence in 1947 to Rs. 30
billion. Significant achievements have been made in the areas of nuclear and space
science, electronics and defence. The government is committed to making S&T an
integral part of the socio-economic development of the country.
India has the third largest scientific and technical manpower in the world; 162
universities award 4,000 doctorates and 35,000 postgraduate degrees and the Council
of Scientific and Industrial Research runs 40 research laboratories that have made
Customer Expectations
Quality/Reliability
Explicitly
Implicitly
Cost
Explicitly
Implicitly
Delivery Time
Explicitly
Explicitly
Implicitly
Explicitly
Implicitly
Explicitly
When properly scaled, attention to a business process can pay rich rewards; however,
the company has to be aware of the implications prior to defining a project. When the
scale of the effort is too small, little can be accomplished beyond incremental
improvements.
The term reengineering was originally applied to such sweeping changes as a new
sales and delivery mechanism that increased sales by 60%, reducing the cycle time to
process an order from 10 days to 10 minutes; or a new manufacturing facility that
delivered 10% more products in 25% of the space using 50% of traditional employees.
Hammer and Champy, in Reengineering the Corporation, describe it as fundamental,
radical, dramatic business process change. Davenport used the term innovation, to
distinguish it from incremental improvements.
Symmetrix, one of the pioneers in business process redesign, believes strongly in
reinventing only the critical business process. To make this 80/20 cut, it focuses on a
deep understanding of the economic implications to the proposed changes. By doing
so, it concentrates its efforts on the changes that will substantially improve the
business.
The word reengineering today often implies changes from the most mundane to the
most significant. The term commonly used is BPR (business process redesign).
Not all companies wish to make massive changes to their business processes. The
changes companies require are on a continuum from streamlining to reinvention
(Figure 5.1). Streamlining a business process implies making incremental changes to
the current process to increase quality, decrease cycle time or reduce cost.
Reinventing a business process means scrapping the current one and creating a
process that truly meets the needs of the company. This usually requires a fresh look
at the purpose of the business and the core competencies needed to serve that purpose.
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Projects are often identified at points along this continuum. While some companies
engage in massive full-scale reengineering, many are content to solve major business
problems that plague them today while setting the stage for future efforts. Thus, many
reengineering efforts, especially those that are combined with the implementation of
ERP, are grouped somewhere in the middle of the streamline-to-reinvent continuum.
As such, the effort may be a combination of solving old problems and creative
redesign of selected processes.
Streamline
Reinvent
Magnitude of change
Many companies identify changes that are meant to streamline their business
processes and find that to implement change successfully, the project team will need
to reinvent the corporate approach and that change will have major implications for
individuals, jobs and structures. One organisation made up of several divisions
decided to centralise its accounts.
On the face of it, management reasoned, centralisation was not a change in the way
the process operated, only a change in location. When the business owners considered
the change, they realised its value, but identified numerous changes they would have
to make in their operations to extract accounts payable. The organisational impact of
the change pushed it in the direction of reinvention on this continuum.
ERP is well suited to efforts anywhere on this continuum, although a company should
develop a high level design prior to the implementation of any project at the far right
(reinvent) of this line.
There is another dimension worth notingthe scale of the change effort involved
(Figure 5.2).
Projects at any point on the streamline-to-reinvent continuum can involve small to
large portions of the business. The more departments and people involved in the
change, the greater the scale and therefore, complexity of the effort.
Small
Large
Scale of effort
A company can decide to start a BPR project with a small element of the business for
any number of good reasons such as:
z
The project may be a pilot to test the changes prior to involving the entire
corporation.
The purpose may be to test a hardware or software product, or to gain the skills
needed in the long-term.
Projects that include major sections of the company will be undertaken by those who
feel they are ready for a larger scale project or who feel the large scale is essential.
We can align these two dimensions in a matrix (Figure 5.3) that will give us a sense of
the sizeand thus difficultyof the undertaking. The indications of possible
difficulties within each quadrant are examples to illustrate the concepts.
In the lower left quadrant, a company may decide to automate the cash applications
process, increasing the speed and quality of this relatively minor process. In the upper
left quadrant, a company may implement a process to standardise the human resource
services. In this example, the change will streamline the collection and delivery of
information to employees across the entire corporation.
Moving to the lower right quadrant, a company may decide that its highest leverage
move is to completely reinvent the lead management process, a minor segment of the
business.
And finally, the effort with the greatest amount of change across the largest portion of
the company may be to implement a new business model across all the strategic
business units that might entail changing the order management, the sales and
distribution and the supporting financial processes.
S
c
a
l
e
H u m a n re so u rce
m anagem ent
s y s te m
D e v e lo p n e w
b u s in e s s m o d e l
A u to m a te c a s h
a p p lic a tio n s
L e a d g e n e r a tio n
m anagem ent
s y s te m
o
f
e
f
f
o
r
t
M a g n itu d e o f c h a n g e
Identifying the correct quadrant helps the project team and the executive sponsor to
choose the appropriate project process and to appreciate the amount of change
required. This knowledge will positively influence their success rate.
The larger the scale and the closer to reinvent the project is, the more attention must
be paid to the critical success factors and the change management issues. Nothing will
cause a project to fail more spectacularly than less than full attention to these matters.
If you wish to streamline a process, you will engage in detailed analysis of the current
approach, seeking to understand, for example, the gaps in time between each valueadded action. An order may enter the company and go to one department to be
checked for availability; to another group to check that all the pieces of equipment
being ordered actually work together; to sales, in the case of a custom order, to apply
the correct price and relevant discounts; over to the accounts receivable department
for a credit check, back to the order desk to identify the funding source; and so forth.
Many companies have discovered numerous handoffs in their process and inevitably
the customer order, in this case, waits for the next person to be ready to add their
value to the paper. Eliminating those gaps when no value is added by grouping
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activities together or by automating some or all of the process, will shorten the overall
process time and usually lower the cost.
At the other end of the continuum, to reinvent a process you may spend some time to
understand the nature of the current process, but you will quickly move to look at the
business problem. It is useful to start, in the case of a sales order, with the end of the
cyclea satisfied customer. Understanding what the customer wants and needed from
you will begin the process of looking at how your company processes orders. In this
case, you may discover the customer is very familiar with your product line and can
be equipped with the ability to send in orders electronically.
The entire process may be automated with a few individuals available to solve
problems, should they occur. The system should detect these exemptions early rather
than waiting until the customer takes receipt of the product.
The process for reengineering consists of four basic steps: choose a process,
understand it to the extent needed, redesign it and implement the change.
Nothing about this simply stated process is easy. The entire process must be identified
by executive management as essential to the companys success or survival; else why
do it at all? Each step will take considerable deliberation and will be broken into
several components. Along the way, the ultimate recipients of the changes must be
kept involved and informed. The process requires a combination of attention to detail
and creative out of the box thinking which is scarce.
In the past several years, information technology has been recognised as a major force
in reengineering. It is typically identified as an enabler of the changes required. That
is, reengineers develop a conceptual approach to changing the business processes
expecting that IT will make it possible. For example, reengineering the sales order
process means providing a wide range of products, scheduling customer and financial
information online to the order entry people. This is not possible without an integrated
networked information system.
ERP has changed the nature of the reengineering process in two ways: first, it
provides a system that is integrated and based on best practices. It makes available, as
a matter of course, many of the improvements that companies identify in the process
of reengineering. In this respect, it serves as the technology enabler identified by most
reengineers and writers on the subject.
Second and more importantly, ERP is a driver, not merely an enabler of substantive
change. ERP forces the implementation team to specify how it wants to organise and
run the business in an integrated way, at a detailed level. Many companies have not
done this and continue to operate with mixed and often conflicting organisational
structures, processes and standards. This lack of clarity and integration is often based
on history or on culture. The successful implementation of ERP requires you to define
these elements.
ERP will not actually conduct the reengineering for you, but will trigger you to do it
for yourself. With this force in hand, even companies who simply wanted to replace
their 20-year old legacy systems that cannot communicate with one another, will do
some level of reengineering because of the structure of ERP itself and probably more
than they imagined was needed.
With the advent of ERP, information systems have, more than ever, become a major
force in creating efficient and effective business processes. This change in status, from
support function to key driver of change carries with it several significant
implications:
z
When companies have chosen ERP, the question arises, When should I do
reengineering? The approach you take will, of course, depend upon your business
situation and thus, your motivation for choosing ERP. To provide some structure for
answering this question, let us return to the scale/magnitude matrix and add to it
an indication within each quadrant of the type of approach that is more successful.
(See Figure 5.4).
S
c
a
l
e
o
f
e
f
f
o
r
t
Human resouce
management
system
Streamline
before/during
Streamline
during
Automat e cash
applications
Develop new
business model
Reinvent
before
Reinvent
before/during
Lead generation
management
system
In the lower left quadrant, the project team can successfully undertake reengineering
during implementation. The system will require identification of the structure,
procedures, relationships and standards and will provide the latest in best practices for
the modules selected.
In the upper left quadrant, the project team should engage in a BPR process to identify
the problems and issues caused by their current processes (streamlining). It should
define a high level design for those changes, but move onto the system as quickly as
possible to identify the details of the changes. Thus, it will do reengineering both
before and during the ERP implementation.
In the lower right quadrant, the project team is tasked with reinventing one of its
business processes. It should begin by designing in some detail, the changes the
company wishes to implement.
In some cases, the system did not provide some functionality and they were faced with
the decision as to whether to eliminate it from their design or to provide a system
work-around that they would have to maintain in the future. The outcomes of these
decisions depended upon the criticality of the missing feature. Many companies have
accepted a somewhat less than perfect solution to save them the time and expense a
fix would entail.
The upper right quadrant identifies efforts that are focused on reinventing significant
portions of the business. These changed projects will take significant time and effort
and are usually accomplished with the help of a consulting firm having expertise and
experience in managing major changes. A successful effort here will focus on the
dramatic, radical changes that are essential to long term survival and growth. Major
reengineering projects should be undertaken prior to implementing ERP. As in the
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lower right quadrant, some relatively minor decisions may be impacted when ERP is
implemented.
This matrix provides some indication of what type of process redesign to attempt
under various circumstances. In any case, it will be counterproductive to delve too far
into the details of the new business environment without understanding something
about ERP.
What about reengineering after the implementation? Some companies assume that
they will implement, without going to the trouble of BPR project and address, any
needed changes after the fact. In cases where the corporate structure and processes fit
well with ERP, this approach is possible, though not recommended.
In cases where ERP requires greater or a different structure than the company
possesses, the project teams will find themselves making decisions that will affect the
company for years to come. Thus, they may reengineer their company without the
benefit of a structured process for doing so. We strongly advise against this approach,
although it may be successful.
Companies that have implemented ERP in several different projects may find their
staff has become very experienced with certain modules. There is so much richness
inherent in ERP that it takes considerable experience to even begin to understand what
it will do. A representative of one manufacturing company, stated that they were
starting to use the system to suggest improvements they might make in the future.
This approach is a creative use of reengineering after implementation.
It is useful to note here that the change in status of IS that results from ERP will
mandate a change in the skills and attitudes of IS individuals. IS will become
increasingly considered by line management as belonging to the business.
The difference in the words and concepts used by business people and IS has already
changed dramatically with the introduction of ERP. Business people talk offhandedly
about line speeds, data feeds, response times and good or bad GUIs. ERP project
teams are typically made up of more business people than IS people. A business
person is the best choice to carry out the detailed customisation, to make entries in the
tables and to define how the system should collect and report the data.
Correspondingly, IS people more than ever speak of the business progress flow and
creatively introduce ideas to reduce costs or improve cycle times. The IS department
is responsible for ensuring that the technical architecture is appropriate to the business
needs and that it can expand as those needs grow.
It must track interfaces, revisions and systems performance. The IS department will
provide the individuals who will write the programmes. These are the customised
reports and interfaces between ERP and other systems and must be written in ERPs
proprietary language.
In the old days (five years ago or so), system users applied IS to their department
when they wanted a new system or a fix to an old one. The business analysts and
programmers assigned would confer with the business owners as to their
requirements. They then began a long, involved process of analysis, design, coding,
testing and finally implementation.
Assuming the business needs stayed the same during this process, the system was
developed with little involvement by users. Usually those needs changed, delaying
implementation and causing universal frustration. Eventually, the system would be
unveiled, to cries of delight, amazement or possibly consternation.
If everyone were to implement ERP where would there be an IS competitive
advantage? Companies have astonishingly varying degrees of success with
implementation. The difference is in their abilities to address each of the critical
success factors that we will discuss in the next lesson.
A companys ability to select a project it can support and manage, to appoint the right
people to the various positions and to walk the line between energising people and
calming their fears is no small task. More than ever, the ability to manage change
must become the job of everyone involved, not just that of a consultant or the project
leader.
Thus, successfully and skillfully managing change is the distinctive competency that
emerges from the integration of reengineering and information technology. This skill
has been required in the past but has been ignored or given lip service. It is needed
even more today and is still given less attention than required. Companies that
recognise this factor will be more successful than those that do not.
The issue is not the technology. Technology, as ever, is neutral. The issue is the ability
to make creative use of that technology and to manage the massive change the system
produces. Managing the changed process, with the same degree of discipline and rigor
as the technology, will begin to happen more regularly when organisations see this as
a core competency and start to manage it as a competitive advantage.
Reengineering (and ERP is a form of reengineering) must be seen as a mechanism for
organisational change. Teams that approach the implementation of ERP with this
mindset are more successful than those that do not. With ERP implementation comes
the need to help employees cope with massive changes in their jobs, their
organisational positioning, their decision-making processes, even their pay.
This is true at all levels of the company. It includes the order entry clerk who is now
asked to make decisions that commit the company to a course of action and the
operations manager who discovers that his or her empire has grown or shrunk by 50%
and that he or she is required to manage in a vastly different way.
Way attention to assisting people to see the potential in the redesign for themselves
and for their company.
It is clear from the fundamental definition that BPR and ERP are quite different from
each other. While BPR focuses more on the transformation aspect of the business
processes, using innovative business concepts, ERP focuses on the automation aspect
of the business processes, using ICT to achieve the same objective.
This can be explained by an example. If a large fertilizer plant has two strong
functional departments (namely operations and maintenance) located far from each
other, there will be considerable delay in sending a work order from the operations
department to maintenance department in case of an equipment breakdown. This
delay would result in low availability of the equipment, hence, higher costs and longer
lead times.
An ERP can make the delay almost zero, where work order generation and
communication is automatic and instant, thereby reducing the delay in attending it,
increasing the availability of the equipment and decreasing cost. A BPR, however,
may result in drastically changing the business process, where there are no separate
departments for operation and maintenance. Additionally, maintenance (at least 95%
of the cases, except where exceptionally high expertise is required) may also be
required to be carried out by the operations man.
This would not only make him more responsible for operations but also eliminate the
need for generating a work order for maintenance department. Of course, this will lead
to multi-skills concepts etc. This BPR would also increase the availability of the
machines (by eliminating delays), reduce cost etc. and may not need automation at all.
Thus, the approach of BPR and ERP can be quite different in achieving the same
goalmore availability of equipment and lesser cost.
For instance, many ERP solutions have graduated from the APICS definition and
presently include many features like human resource management modules, supply
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chain modules (linking suppliers and customers), product data management, electronic
data interchange, engineering change management, multi-currency and multi-location
plants facilities, which is allowing many drastically transformed business processes to
be adopted quickly.
Most consultants take advantage of this overlap and confusion. They talk, whatever is
convenient, at the point of sale to puzzled Indian executives, in order to clinch the deal
and meet their own business interests. The fact is that both ERP and BPR go hand in
hand to helping companies face the 3C crisis.
When it comes to overcoming the 3C crisis, BPR and ERP are complementary to each
other. But questions which top management may ask are:
Whether to transform the business processes first through BPR and then adopt ERP;
or first adopt an ERP solution with world-class proven practices and then keep on
doing reengineering: or adopt them together, business process module wise, one after
the other, till the complete business is covered.
Why reinvent the wheel? Why not adopt proven world-class business practices, as a
part of ERP solutions? Why copy a best-in-class practice of the same industry, when
each enterprise has a different market segment, customer expectations and overall
unique business within the same industry? Why not copy best practices of other
industries? (e.g., copy best distribution process of paint manufacturer for a detergent
manufacturer).
Why aim for major changes (both BPR or ERP) which a company cannot sustain and
risk failure (as clear from many not-so-successful implementations of both BPR and
ERP)? Can we afford a long and time consuming process of implementation (2-4
years) to face the 3C Crisis?
However, with time, BPR has become more and more dependent upon the availability
of ICT; on the other hand, ERP has been upgrading itself in terms of adapting various
proven good business processes in the industries. Many of the business
transformations are possible because of availability of ERP with high ICT.
Similarly, many of the good proven industry-wise transformed business processes
have been built in as business templates in ERP solutions.
Since all the arguments and counter-arguments are justified to some extent, there may
not be one best answer to the problem of making the right choice for the top
management. However, if the main consideration for top management is Time and
the Cost resource for implementation, it would be wiser to go in for a Big Bang
approach (Choice 2). This is because of the following reasons:
1. The present state of ERP solutions, if honestly supported by the top management,
with the help of business modellers and a good seasoned vendor can be
implemented in a short duration of 5 to 7 months.
2. The explicit and implicit benefits of ERP solutions start getting realised
immediately.
3. Most of the reputed ERP solutions are quite flexible and support ability to adopt
any reengineered process quickly. Therefore, as processes are being reengineered,
those can be adopted as and when finalised, without having to change the ERP
much.
4. Although adaptation to the accepted best-in-class practices may not be the best for
the unique requirement (and positioning) of the enterprise, if chosen judiciously,
many of those accepted processes as a base may help to get the benefits faster.
The process of BPR, however, can continue process by process, depending upon
the criticality and urgency of the process.
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web-based complaint and monitoring systems. All of these initiatives are designed to
bring about more responsibility and transparency into the system.
E-commerce solutions are not specific to country situations but more so to the kind of
business individual enterprises are in. In the Indian situation today B2B solutions and
usage is much higher both in the software as well as IT-enabled services.
Several central public sector enterprises are implementing ERP, CRM, and SCM in
their business. The major constraint for introducing IT technologies into our
department has been the poor financial condition of several of the public sector
enterprises that we are responsible for in our department. In order to lessen the upfront
financial burden, many of these organisations are resorting to phased implementation
strategies.
Public sector enterprises do send their managers for specialised training including that
relating to technology. We also try to arrange for higher exposure and interaction with
leading companies through visits to exhibitions, conference as well as site visits to
individual companies.
E-government and e-governance are extremely useful tools for developing countries
as they can help them in economic development to try and leap directly into a digital
age. IT infrastructure and business can be built upon existing infrastructure as also
implemented at relatively lower cost with higher return than say for large engineering
undertakings, projects etc. It is today an established fact that using these tools would
be beneficial for developing countries, especially to enhance social and economic
growth.
There is a need for established standards as also certification of such standards by
reputable bodies particularly those recognised by Government so that small and
medium enterprise can rely on such established standards to access and use ecommerce applications and transactions.
E-health is a major potential both for rural and urban health services. It not only can
provide such services in far-flung areas but can also serve as an alternative source of
diagnosis, second opinion and reliable consultation for health related problems.
Several hospitals in India have already begun to offer such services.
E-commerce in India is growing be leaps and bounds in the area of IT solutions; IT
enabled services; and also usage of e-commerce by our export industry. Major growth
in India as India is fast converting into a knowledge super power.
The Right to Information Act recently introduced is a major step towards greater
transparency and efficiency for Government and citizens. There are specific
provisions being made to ensure that people are able to get information more easily
than before. This will result in strengthening of our democracy.
Political stability: Democracy and democratic values are relatively wellentrenched and the political system is largely stable. Handover of power after
general elections held every 5 years is peaceful, and confidence in the stability of
the system is high. However, there are incipient threats to stability from the
extreme left-wing Naxalite movement, which needs to be monitored closely.
z
Rule of law: India ranks above its peers in rule of law due to a relatively wellfunctioning judiciary. However, cases drag on for years, and further
improvements in the legal process are necessary to improve the business climate.
Corruption: Although its score is higher than the developing country mean,
bureaucratic and administrative corruption, and rent-seeking by a large public
sector continue to restrain investor confidence.
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The success of Indias elite students from the IITs and IIMs masks the generally
abysmal state of higher education in India. Higher education remains heavily
regulated, with little to encourage private-sector participation or innovation.
There are, however, changes taking place. Labor market returns to education have
risen in recent years, leading to an increase in demand for better quality, and as a
result the private sector is beginning to step in to fill the supply gap.
A critical risk to the long-term growth potential of India is environmental degradation.
The country remains largely rural, and normal monsoons are the life-blood of the
system. With increased urbanization, industrial development, and a burgeoning need
for energy, India will be a large contributor to global warming.
Climate change can cause erratic monsoons, with grave implications for rural incomes
and overall growth. Already, shortages in water are occurring with concerning
rapidity. If water and electricity are not priced at close to long-run marginal social
cost, the shortages will become critical. In order not to hamper the growth process,
India will need to put in place policies that are increasingly environmentally-friendly.
Although these risks are important, there would need to be dramatic deterioration in
them to fundamentally derail the growth process. Comfort can be derived from the
fact that Indias growth experience in the past 2 decades has been achieved with low
volatility.
More recently, strong economic performance has been achieved during a period of
rising oil prices and with the economy remaining relatively closed. A high level of
reserves, a falling fiscal deficit, low external debt, and a low current account deficit
give further reassurance about the underlying strength of the current growth
momentum.
There is delaying mentality not in the sense that everyone is playing and partying
everyday and not getting things done but in the sense that things do not get done on
time.
Lack of the basic infrastructure stands out. Electricity problem is very visible.
Electricity goes off a couple of times a day on average even during winter, while
Indian people use less electricity during winter than during any other season. Using
UPS (Uninterruptible Power Supply), you can prevent data loss, but if you run a kind
of business that requires you to use electricity the whole time that you work such as
web development, you have zero productivity when electricity is off.
Water supply problem is there, though it is not severe; most businesses, specifically
businesses in the service sector, do not suffer from the problem because they typically
do not use water to run their businesses, but it can become a minor problem. Internet
connection works for the most part, but the connection gets cut off occasionally. This
can result in the loss of productivity also.
Most problems can be managed, and as a matter of fact. However, problems described
here are recognizable and they do affect.
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Efficient flows of technology are not enough and ready supplies of finance and
business skills are also crucial.
Critical to such a culture of innovation are the SMEs which have, in recent years,
proved themselves to be the engines of economic growth and principal sources of
foreign exchange. And SMEs account for a bulk of all Indian businesses and in many
fields provide the channels along which new technologies develop.
SMEs play a pivotal role in the success of the Indian economy due to their ability to
exploit new technologies and to respond quickly to changing market needs. Support
for the creation of new ventures and spin-offs from research institutions and large
companies, as well as the removal of barriers in their way of their rapid growth and
support for the transfer of know-how, also deserve to be accorded the highest priority.
Despite this, with SMEs facing a financial crunch, they are unable to invest in
innovations and R&D. Investing in R&D to innovate in technology by SMEs has to be
encouraged. However a focused approach on advanced technology products which is
of the utmost importance, is missing. And without all these SMEs stand to lose a great
deal. Sadly government intervention including public investment which can act as a
catalyst for SME growth is still a Utopian dream.
Innovation has always been the hallmark of small and medium enterprises. SMEs that
integrate innovation can reap significant benefits. SMEs, irrespective of size, are
primarily engaged in 'incremental technological innovations' with self efforts. But
average innovation expenditure and innovation personnel increased with firm size.
There is a positive relationship between innovation expenditure and value of output,
and negative relationship between innovation intensity and firm size. Innovation
expenditure with labour and capital has a significant influence on the value of output
in each of the sub sectors.
What is needed is a dynamic, self-sustaining culture of innovation for SMEs. But a
big cloud of uncertainty hangs over when our authorities will focus on this area...at
least as of now!
Innovation is an application of inventions in new and tried combinations. It should
aim towards enhancing speed, imagination and excellence in execution in every
interface that is its customers, its employees, its investors, entrepreneurs, the
government and the society.
The purpose of innovation is to-Reduce costs, improve cycle time, improve quality,
improve productivity, improve comfort level, increase free time, improve customer
base, etc. Thus every piece of information is a path making life better for the
customer. Organizations that are innovative have a clear long term vision. Innovation
attracts rich talent to the organization and provides focus to the aspirations of the
organization. Successful organizations are those who combine such vision with strong
operational capabilities resulting in higher growth and profitability.
In India SMEs are generally depend on jugad (an alternative arrangement, source,
approach, close associates, well known persons, an attempt to get a thing done). Jugad
is not scaleable because it does not have a science or engineering base. It does not
have an organizational base or support, but rather tends to be a one-time activity with
few subsequent improvements. On the other hand successful large organizations
approach innovation in a systematic manner. They create organizational structures and
management processes to nurture innovation.
It is not the result of an understanding of user needs spanning a wide spectrum of
users and is therefore likely to have only restricted application. The difficulties faced
by Indias National Innovation Foundation in commercialising grassroots innovations
are a reflection of the limitations of the jugad approach in a modern economy.
The good news is that some large Indian corporations have displayed the ability to
transcend jugad. Of the six levers of innovation identified by Davila et al, the value
proposition, supply chain, and choice of target customer constituting the business
model; and the product (or service), process technology and enabling technologies
constituting the technology dimension these companies have been particularly
successful on the business model side and backed this up with appropriate choices of
technology.
Arguably the most successful of these has been Bharti Airtels lifetime prepaid
mobile services card that allows a mobile services customer to receive free incoming
calls for 15 years at a cost of 900 rupees (then $20). This innovation opened up a huge
new segment of customers and propelled the growth of the Indian mobile services
industry. Novel supply chain models (such as risk-sharing and pay-by-use
agreements with the suppliers of capital equipment) and a strong yet cost-effective
information technology backbone have allowed the profitable provision of such lowrevenue services.
Other successful innovations have been the global delivery model pioneered by
Indias leading software companies, and the low-cost generic drug molecules from
Indian pharmaceutical companies such as Ranbaxy and Dr. Reddys Laboratories. If
its successful, Tata Motors new low-price car, the Nano, will be an outstanding
example.
Notwithstanding these achievements, India is yet to demonstrate innovation of this
kind on a wide scale. Leading indicators of innovation such as R&D intensity (total
R&D expenditure as a proportion of GDP) and patenting activity are moving upwards,
but at a gentle pace. R&D intensity has never crossed 1% (as compared to roughly 3%
for Korea or Japan). Inventors from India were granted just 546 utility patents by the
U.S. Patent and Trademark office in 2007 against 6,295 granted to inventors from
Korea and 33,354 granted to inventors from Japan.
Check Your Progress 2
Write the full form of the following abbreviations:
1. BPR ..
2. TQM .
3. ERP ..
5.11 KEYWORDS
ERP: ERP stands for Enterprise Resource Planning; it is a system which provides an
integrated information system for all departments and functions across a company that
can serve all those different departments particular needs.
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LESSON
6
TECHNOLOGY TRANSFER
CONTENTS
6.0
6.1
Introduction
6.2
6.3
Collaboration Agreements
6.4
R&D
6.5
Import Substitution
6.6
6.7
6.8
6.9
6.10
Let us Sum up
6.11
6.12
Keywords
6.13
6.14
Suggested Readings
6.1 INTRODUCTION
A fast developing country like India possesses significant domestic scientific and
technological capacity and a large portion of this capacity is employed in public
research organizations. Organizations like academic institutes, national research
laboratories, and sector specific research centres have a sizeable number of
professors, scientists, engineers and researchers, who are at the forefront of
technological innovation in high-technology areas like biotechnology, energy and
information and communications technologies.
Unfortunately, too often the intellectual assets developed by these innovators their
inventions, technologies and know-how are rarely put to any practical or
commercial use or in other words, are not transferred to industry.
Many developing countries including India are still young to provide the institutional
framework necessary for the transfer of technologies from academic institutes and
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The problems faced in technology transfer are diverse in nature. Few of them are
illustrated hereunder:
1. Non-patented technology: The problem in technology transfer when the
technology is non-patented (consisting of trade secret and know-how). Nonpatented technologies form a major chunk of technology transfer agreement
around the globe, especially in the United States and Japan. Interestingly, in
Japan, 50% of such technology transfer agreements cover know-how or trade
secret. Naisbitt, the author of Megatrends in his first chapter describes the
changeover from an industrial society to an information society, mentions knowhow as the new form of wealth. But when such non-patented technology is to be
transferred, it creates complex problems of scope, duration and termination. For
Illustration, if the technology is patented, the transferee pays royalty only for the
life of such patent (i.e. 20 years). Whereas, if such technology is non-patented,
transferee would have to pay royalty for more than 20 years (since the technology
would have no expiry or protection terms).
2. Black Box problem: The second threshold problem is that of maintenance of
secrecy during negotiation of such non-patented technology. Buyer is not
interested to pay unless they knows what exactly are they paying for and the seller
is not interested to disclose his non-patented technology unless he receives
payment. This is the so-called black box problem.
3. Strategic importance of Trade secret: The Black box problem arise because the
owner of such non-patented technology prefers not to file for patent protection.
Why the owner of such technology does not file for patent protection is a strategic
business decision. Patent provides protection for 20 years while trade secret can
be protected indefinitely. Thus, there may be a clear incentive for the owner of
such technology to not avail patent protection. For illustration, Coca Cola is a
trade secret formula, which was strategically not patented but kept as a
confidential trade secret. Thus, when the technology is a trade secret, it creates
even further problems.
4. Patenting Biotechnology in India: Another major problem in the area of biotech
technology is that the Indian Patents Act 1970 recognizes only process patents and
not product patents. This loophole resulted in the burgeoning pharmaceutical
industry, which is based on reverse engineering. Even though biotechnology is
one of the fast-growing areas, its growth is hampered by patent uncertainty.
Similarly, when an educational institution owns such biotechnology, it cannot
patent it in India creating problems in transfer and policing of such technology.
5. Technical problem in Evaluation of technology: Another unique problem is the
problem of evaluation of the technology. The so-called black box problems
present us with a problem of evaluation. Unless the buyer knows what they are
buying, they may not be able to evaluate the economic feasibility of the
technology. This may lead to either underestimate or overestimate the economic
of such technology creating a business blunder. Furthermore, what are the
mechanisms available for a non-profit organization like UoP to evaluate
technology it wish to buy? Evaluating the economics of technology is a difficult
job for a non-profit organization if it has no such business background.
6. Absence of Technology Transfer Center: In India there is a need of Technology
Transfer Center on the basis of National Technology Transfer Center (NTTC) in
the United States. NTTC is a full-service technology-management center,
providing access to federal technology information, knowledge management and
digital learning services, technology assessment, technology marketing, assistance
in finding strategic partners, and electronic-business development services. The
NTTC fosters relationships with national clients, showcases technologies and
facilitates partnerships between clients and. industry.
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6.4 R&D
The scope of international R&D investment and technology flow differs considerable
among the industrialized countries as well as between industries, branches and
company sizes.
The association between industry and globalization of R&D has two extreme cases;
mature technologies and emerging technologies. When the technology is mature, to a
great extent modifiable, and widely disseminated constant and close interaction with
customers is not important.
In this case R&D and production may be separated and the production is more
globalised than research and development. However, rapid technology change in
emerging technologies often requires a close interaction between R&D and
production.
The company size aspect of the global location patterns of R&D investments is
strongly related to financial resources and to absorptive capacity. Both contribute to
the dominance of large companies.
A dispersion of R&D across the border(s) requires extensive resources for the
collection coordination and dissemination of information, and the absorptive capacity
of companies is correlated to a critical mass of accumulated R&D. Some minimum
threshold size of R&D activities exists in every specific location.
The ways in which import substitution efforts may be carried out are varied and
malleable. Import substitution strategies are rarely enacted in isolation, but tend to
form one facet of a broader strategy, becoming inextricably linked with other
development goals and programs such as economic self-sustainability, entrepreneurial
development, or location incentives.
Quite commonly, the import substitution portion of a program or strategy remains
implicit or even incidental - that is, import substitution is not acknowledged as an
underlying basis for the economic development measure and in some cases may not
even be considered as a potential justification.
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The elements in the developmental stage are concerned with the intended end users of
the new technology being developed or modified. These elements are specifically
important in the design stage because they enable the developer to comprehend the
culture of the intended local users, their economic capability, and their levels of
willingness to use the new technology. A careful assessment of these elements should
be a prerequisite for further steps in the transfer process. The implementation process
elements are vehicles that facilitate technology transfer. Most international technology
transfers fail at the implementation stage, perhaps because these elements are
underutilized by the developers of new technology. According to the diagram, the
development of human resources, such as capital and research institutions, is
prerequisites for sustainable development of new technology. These institutions may
be used as training centers for the end users to enhance their participation and
ownership.
The diffusion process is the final stage in this diagram. At this stage individuals or
groups of people decide whether or not to adopt and use the new technology. In most
developing nations, given their traditional and cultural orientations, the role of the
government and opinion leaders is paramount to successful diffusion of any new
technology. Although infrastructure may not be under the control of the developer, it
serves as a measure of the potentiality of the intended end users.
Check Your Progress 1
Fill in the blanks:
1. agreements are executed between
irrespective of whether sponsored funding is anticipated.
institutions
The wisest companies see how technology will make them more agile, market
quicker, reduce sales cycles, and a solve a variety of other sweet problems.
Know the "latest tech features" this month won't be so hot next month.
Grabbing today's latest and greatest features of the so called "technology" won't build
any sustainable advantage. Before you know it, the tech world will introduce newer
and faster features after a few weeks.
You should understand typical technology investments suck. Negative Return on
Investments (ROIs) serve as the hallmark of most tech projects. The reason is the most
tech products have a (1) tech person, a (2) business person - and no one in between to
connect the two. There is a possibility of lack of communication that can be occur
between the management and technologist.
Before purchasing the tech product, first look for tech companies who provide
solutions to your problems. You don't go to the doctor because he uses the latest Type
Vll gauze pads. You don't go to a lawyer because he has a Barrister Bookcase. You
shouldn't go to some nerdy technology company because it uses all the latest technical
jargon. Instead, you go to a technology provider because you need solutions. If they
can't and won't provide solutions to your problems, you'll run far away. They'll likely
and probably - burn your investment and in worse case weaken your company's shortand long-term growth.
One thing you should remember that the technology can never create your company's
success. It can only complement whatever business operation you're running. Most
tech firms hype their product as if it's some magic pill. It's not. No tech product
ever is.
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6.12 KEYWORDS
Collaboration agreement: It is an agreement which is executed between institutions
irrespective of whether sponsored funding is anticipated.
Import substitution: It is the replacement of goods and services purchased outside a
region with goods and services produced within the region.
Intellectual Property Rights (IPR): Those are rights granted to creators and owners of
works that are the result of human intellectual creativity.
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Web Marketing
UNIT III
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LESSON
7
WEB MARKETING
CONTENTS
7.0
7.1
Introduction
7.2
7.3
7.4
7.5
7.6
Let us Sum up
7.7
7.8
Keyword
7.9
7.10
Suggested Readings
7.1 INTRODUCTION
The Internet is a dynamic beast; it can literally eat you alive and spit you out unless
you go along with the emerging online marketing trends of today. The World Wide
Web is not alive per se.
It is but a virtual avenue for people to come together and create a cyber world. And as
they say, anything goes when it comes to the Web and most anything here goes out of
fashion... quickly. The same is true when it comes to web marketing trends. What may
have been hip and happening a few years, months or even weeks ago may be pass
today.
Nonetheless, most people who engage in web marketing can be equally relentless
when it comes to promoting their websites, products or services. And for those of you
who wish to find out just how exactly you can crest the wave of success, here are
some of the emerging marketing trends for the World Wide Web.
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Most business people and individuals now use search engines when looking to
buy products or services.
Customers trust in the safety of online shopping due to secure systems that
combat fraud.
As the need for websites continues to grow with internet demand, the need to develop
more precise strategies for online marketing to has arisen. Online marketing employs
different techniques to those of traditional marketing. It must not only appeal to
consumers but also generate web site visitors through the clever use of its written
content.
The goals of marketing may remain the same, but in electronic commerce they must
adapt to new means. The web marketing can be divided into the following steps:
z
The backbone of present-day web marketing depends on five measly laws. They are
mutable, flexible, still growing and changing. These laws are:
z
This also allows for higher profit margins, since your costs are low, you make more
profit form sales. Marketing is an integral part of sales, offline, advertisements costs
can burn a whole in your pocket, whereas online you can submit free ads, do ad swaps
with e-zones or use pay per click search engines etc.
Here are some key factors and guidelines that a web marketer needs to take into
account in order to achieve guaranteed success.
z
Web Visibility: Enhanced web visibility can translate into higher sales. If your
products and services are easily reachable to the user on the web, there will
always be a chance to be in the top league. Traditional online marketing skills and
various other methods can be employed to increase your web visibility such as
Search Engine Optimisation, newsletters, affiliate marketing etc. The following
are some of these explained further:
Search Engine Optimisation: Did you know that 90% of all online visitors are
attained through search engines. If your website is search engine friendly, you will
always have a chance to be on the top of a search engines results. You need to
ensure that when someone queries a search engine your web site gets returned in
the top 30 results (or first 3 pages).
This will help generate valuable visitors who can be future customers, adding to
your online sales with a high visibility of your products and services. Key to both
acquisition and retention is having good content that will attract visitors in the
first place and then keep them coming back for more.
Search engine crawlers give preference to those web pages which have crisp and
valuable content with targeted key phrases. Search Engine Optimisation has been
controversial in the past by some companies using unethical ways to get to the top
in search engines. These methods are now banned by all major search engines.
Newsletters: Newsletters are by far the most powerful way to communicate with a
group (people with common interests) on a regular basis. Newsletters are great
not just for customers, but also for getting employees, distributors, commission
sales reps, the media, and any other third party excited about your firm. This is a
platform by which you can communicate with your clients, they generate calls and
inquiries, and because they are permission based, your clients will receive them
favorably.
The most important and effective marketing tool because they have a vast reach
and convert, Buyers into Customers. Newsletter marketing is therefore one of the
best ways to keep in touch with your customers if done with caution. The most
prevalent problem with generating newsletters is SPAM! So avoid predefined
keywords and trigger words. To ensure that your newsletter be read it needs to be
interesting, informative and helpful.
PPC: In a PPC agreement, the advertisers payment is based on clickthrough to the destination site based on a prearranged per-click rate.
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Web Analysis: Set up a procedure to analyse your website activities. You should
be aware about whats happening on your website. There are lots of web analytic
tools and service providers which can help you with a complete tracking of your
website visitors.
You can examine the complete summary of your website visitors by following
those methods. Web analysis can reap benefits for online marketing, since it
allows you to read and monitor your visitors/prospective customers behavior,
where they are concentrated(location), what are their preferences(helps you rate
your products) and further helps in making future marketing strategies and
working on your shortcomings.
People's online expectations have climbed over the last few years and two-thirds
dont ever bother returning to a web site that did not meet their expectations.
Keeping these factors in mind can go a long way in providing great value edition
in your e-commerce and web promotion activities, and make you a rising star in
WWW community, or better still, the only STAR!!
Check Your Progress 1
Fill in the blanks:
1. Search engine crawlers give preference to those web pages which have
crisp and valuable content with key phrases.
2. are by far the most powerful way to communicate with a
group on a regular basis.
3. The most prevalent problem with generating newsletters is .
is a waste of time, money and energy. It just won't happen overnight, instead do some
research and find out what people really want and need then give it to them.
Myth #4: It's FREE to Do Business Online
Compared to opening your first coffee shop or gift shop in your town, internet
business start-up cost and maintenance cost is pretty low. Once you have your domain
set up, you only pay for internet connection, advertising and ongoing educations,
that's it.
Myth #5: It's TOO LATE to Start an Internet Business
Most super affiliate marketers would love to hear people say "It's too late now, too
many competitions, the internet is too complicated, etc...". You know why? the less
people they have to compete with the better which in turn will make them more
money.
The fact is, it's never ever too late to start anything and that includes internet business.
The internet is not going anywhere and you should too. Every year the stats will show
you the number of people shopping online are increasing, their spending dollars are
growing also.
Myth #6: The BIG Money Talk is JUST HYPE
Have you heard of the phrase, "it takes money to make money?" Well it's true,
although you will be hard pressed to find super affiliate to tell how much they spend
on promoting and advertising. Sometimes, you have to dig a little deeper to find the
truth in every hype you read. If you are willing to take the necessary action to make
'big money' happen for you - it will.
Or criticize, be skeptical and sure that 'big money' can't happen for you - and it won't.
If you believe that you will succeed you're right, if you believe that it won't work,
you're right also.
No Spam Site: Do not use spam emails or lists to promote web marketing. Only
use opt-in and verified lists that comply with all conditions of the spam law.
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No Hate Sites: The web marketing cannot be used to promote sites that encourage
hate or discrimination against any group or organization.
No Redirects: The URL you sign up with must be the same site that will show up
when that site gets a visit. This is to insure that there is no one-way linking.
Check Your Progress 2
Fill in the blanks:
1. In web marketing profit margin is .. .
2. The full form of PPC is .. .
3. .. indicates measurement of cost on a per-click basis for
contracts not based on click-through.
7.8 KEYWORD
Web marketing: It is a comprehensive strategy that synergizes a given company's
business model and sales goals with its website function and appearance, focusing on
its target market through proper choice of advertising type, media, and design.
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LESSON
8
WEB PSYCHOLOGY
CONTENTS
8.0
8.1
Introduction
8.2
Web Psychology
8.3
8.4
Let us Sum up
8.5
8.6
Keywords
8.7
8.8
Suggested Readings
8.1 INTRODUCTION
The first business computer appeared in 1960 and since then information technology
has changed the way business or commerce is conducted across the globe. Companies
are re-orienting themselves in the present competitive era where product life-cycles
are coming down everyday.
Globalization of markets is taking place with formation of trade blocks across the
globe, and world moving towards a global village. Complex issues of cultural divide
within even the same trade block forces the businesses to learn more about the
customer, if possible to an individual level.
From mainframes to accounting systems, the personal computer (PC) revolution, local
area networks, electronic data interchange, client/server design, and enterprise
resource planning have all had a hand in shaping today's business organization. The
past few years have been Internet years, however, when companies worldwide have
embraced a change without equal.
It is a change that promises to have more impact and be more lasting than anything we
have seen to date. Technology is setting the pace for how a company does business,
how it launches new products and enters anew market, how it deals with suppliers,
and how it communicates with customers and others in the new marketplace.
We are now living in the ICE (Information Communication of Entertainment) age
which reflects synergetic combination of Information, Communication and
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2. With a good product or idea in your hand, then you can proceed into concocting a
story that would sell your product or idea. Your clients or buyers will not be able
to physically see the product so you have to exert an extra effort to make them
understand, feel your product and understand its value.
The lack of physical communication between the buyer and the seller makes
internet marketing doubly hard. You have to create a mystery behind your
products; something that will catch the buyers attention at first glance.
Remember, you are competing with thousands of other products and ideas that are
reachable just with the click of the computer mouse.
You have to input dreams in your story excite your buyers and make them feel
you are offering them an opportunity they wouldnt get elsewhere.
3. You have to present your buyers with an offer they could not resist. Box in your
offer and make the presentation complete, leaving the buyer and his questions,
answered and satisfied. Provide everything that your prospective buyer would
need before deciding on you product.
The benefit of internet marketing goes beyond the imagination. You can buy and
sell whatever you want, the fastest possible time and the easiest possible way. Use
it to your advantage.
Check Your Progress 1
State whether the following statements are true or false:
1. The first business computer appeared in 1990.
2. While marketing has moved on from the newspapers, to the radios and to
the boob tubes, and now to the computer through the internet, its basics
have not changed much.
are created just to give you the newest programs, or to tell you where you can get it
from. Napster might actually be the most famous one.
The computer is a fix part of every modern office and the greatest part has also an
access to the Internet. Companies already present their products, their services on the
Internet and so they get more flexible.
The next advantage is the faster development. Many universities and research
institutions are also linked. They are able to exchange experiences, novelties and often
they start new projects together. If they are linked, they can save time and money.
Especially at the business sector knowledge is power. If you are the leader of a
product, of a technology or just of an idea you are able to make a lot of money. To get
into this position, the Internet can play an essential part. Companies all over the world
are online.
If you want, it is no problem for you to exchange experiences, you will hear new
things, you will see some facts from another point of view. For this reason you will
find new solutions, new ways to go, so take this chance!
Learning by doing, everybody knows this phrase and its still an essential part
concerning the Internet. Children also use the Internet, most of the time they will
play over the Internet, but they learn to work with the computer.
There is only one way to learn something, you have to do it. Even its the first contact
with the computer, after a few minutes the person will know that the computer-mouse
is no animal running on the monitor. He or she learns to write on the keyboard, to
navigate, to open and close programs, to save data... within hours.
Try to do that on a normal computer course for beginners, you will need more time
and the most important fact, its not as funny as surfing on the Internet and so they
participants are less motivated.
In any case, everybodys private situation is different. For many women their own
children are the main reason for staying at home. Nowadays this wont be a problem
any more, you can do work on your computer at home, called tele-working. Also men
take this opportunity to work at home. What are the consequences, the advantages of
tele-working? Sure, if you have a family, you can spend more time at home, probably
you can spend more time with your children.
Next is, that you can organize every day in the way you want to. Meetings at the
company are reduced to a minimum. Tele-working is also an advantage for the owner
of the company. Official studies substantiate that people who work at home are more
motivated than their colleagues at the office.
You see, the Internet is really a very positive medium. Use the Internet and discover
the advantages of this new, forward-looking medium!
Another advantage of the internet is that you can join a community. You can create
new social contacts all over the world, which you could not do so easy without the
internet.
Such communities can also help people who can not go out to find friends in the real
life because they are disabled. Therefore they can chat with other people via the
internet. Sometimes it is also easier for people, who are afraid to look into the others
face while talking, to chat with a person that they do not know.
There is something between them which makes it easier for them to communicate. It
also does not matter if you have a terrible appearance because you can pretend to be
whatever you want. You can also change your gender and your age to talk about
topics which you do not normally do.
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However, there are no time and place limitations and there are no boundaries, both
geographical and political. You can chat with people in Australia and you have
freedom of your mind in a way.
Moreover the internet is much cheaper than the real life, e.g. phoning a friend in
Australia costs more than to chat with him.
The e-mail has replaced the traditional letter. You do not have to buy stamps anymore
and it is much faster and also for free. You can also add files to your E-mail and thats
why a big data transfer is possible. Therefore you do not have to send disks with
information around the world anymore and you have your information in a digital
way.
Another free service of the internet is sending SMS. You can save a lot of money if
you do not send it with your mobile phone. You also have the opportunity to register
as a user. Then you can use more things, e.g. sending E-postcards, I-messages
(messages between registered users), and lead an address book.
You can also place your digital photos in the internet. With a password and a login
name your friends can look at your photos without sending them to them.
Another important part is online gaming. You can play with people from all over the
world and share your knowledge.
Additionally, another big advantage of the internet is the easy access to information.
Online reference books and dictionaries replace the way to the bookshop or to the
library. It is again cheaper to search for information in the internet than to buy a book
that is old after one year. In the internet a lot of information is renewed and up to date.
You can also find information which is very new and a book does not exist yet.
Moreover you can read the daily newspapers from all over the world, sometimes for
free. You do not have to buy them anymore. In addition, most newspaper sites have an
archive in which you can search for old articles.
However, the internet is also a big advertising company. A lot of enterprises have a
homepage with ads and support opportunities. On some of them you can order
products online. Then you do not have to go to the city anymore. You avoid waiting in
front of the cash because of a long queue.
Moreover, you can get the newest stock exchange courses because the stock exchange
in the Internet is always the most current one. You also have the ability to tell the
computer to buy shares when the course is down.
Besides you can learn with the internet. CBTs (Computer Based Training) already
exist but you can also join an internet course with other members. Furthermore you
can hold video conferences which mean that e.g. your teacher is sitting in his office.
This is very important in the medical sector because doctors from all over the world
can join an operation. So specialists can give tips and help other doctors to complete
the operation successfully. But this is only available because of the internet which is
much faster.
The internet is a database full of information and offers us a lot of services, sometimes
for free. This makes our life easier and sometimes also cheaper.
Clicking on the Internet-Button is getting more and more thrilling nowadays.
Sometimes it is a real adventure not being sure if you have downloaded a virus or if it
is only a hoax. You even cannot be sure to be alone if you are alone.
Is there someone else working on my computer or is it only me? To have more
security you have to install a firewall, buy anti-virus-programmes and update them
regularly. So you have to spend much money only for preventing a virus-caused
breakdown or hacker-attacks. It is annoying not being sure if the money you have
spent will prevent all those things or if there is already a new virus and a new way
hacking into computers.
This is no more an investment into security it is a steady consumption which will not
end. Some people even have to take up a loan to buy a computer. They are forced to
buy one. Otherwise they maybe would not be able to stay in their job. What will the
poor people do? They will be rarely informed about news and the space between rich
and poor will become bigger and bigger.
Having downloaded the latest anti-virus-program it will not prevent meeting bad
people on the internet. If you chat with someone you cannot be sure about the truth of
his/her words. Most people cheat emotions, cheat about their appearance, age, job.
That can be funny but if you want to meet someone talking to each other seriously it
can be hard to do so. Is it a man, is it a woman or is it someone already known? You
never can be sure. Is that something on the other side already hacking into the
computer reading personal information? If you get to a web site of a bank is it a real
bank or only a faked one? There have to be some signs which identify an original
website reliably.
Besides losing our social abilities we are also losing our every-day-abilities. The
computer is a nanny, a dictionary, an information centre, a job, a shopping centre.
Nobody has to know anything about everyday business because the computer does it
for us.
Internet user are becoming younger and younger. For children it is no problem to
work with a computer. They just accept "him" as partner. But what do the older
people do? Some even do not know how to switch the computer on. Some people who
are afraid of the computer.
They think everything they do is wrong and the computer is breaking down on
purpose. For these people the computer is already too complex. There has to be
something like a computer for beginners. Otherwise there will always be some people
who do not want to know how to use the computer because there is too much to know
about it.
There are people who do not read the paper in the morning any more. They are
reading the e-paper. Even in the morning they are sitting in front of the computer and
not talking to each other while drinking a cup of tea. In the future there will be more
and more e-papers and the newspapers will disappear.
Some are beginning to talk to their computer (Come on, lets work!) but they are not
any more able to talk to each other. While chatting in the internet you are frequently
using abbreviations, uncompleted sentences and so on. This leads to speaking
disabilities in everyday life.
One of the most negative aspects of the impact of the internet on our daily life is that
it alters the social behaviour, habits and abilities of people. Especially children are
often badly influenced by the internet.
The world of the world wide web and virtual space is going to become more important
with every year and everybody should be able to use this tool even children. They
should know how to get information, how they can buy something on the web, where
they can meet people online.
They should be able to use the internet because if they are not, they are going to have
great difficulties with getting on in their lives without knowing how to use the internet
later on. Because it is a very powerful media and this is going to be the main media in
the future.
The internet will never replace the real world and therefore it is important that
children see that the internet is a great tool if you know how to handle it but it should
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not be a replacement for real friends, for a real life. Its the parents duty to tell their
children so.
Parents should not just put their children in front of a computer and say Oh well,
thats the internet, go on, have some fun and be quiet. The internet was not made for
children and so it should not be used as a babysitter.
You can never be sure what the child will get to see when it is online without an adult
sitting next to it. There is so much harmful, offending and simply disgusting material
on the internet that it is totally careless when you let your children surf through the net
all by themselves.
It is very difficult to differ between the good and bad aspects of internet. There are
good and bad things about every service of the internet. If you chat you can meet
many interesting people which come from all over the world. Distance is not
important any more. You can meet people which are not able to find friends in reality
because of their appearance.
In cyberspace there is no appearance - the character of a person counts. But you also
can meet people, who cheat on you and fool you. That can be funny, but it is not if
you want to meet real, divine friends. Sometimes, if you meet your online friends it
can be very thrilling. You make your own picture of your chat-partner in your mind.
And what about your friends in reality? There will be less time left for them, if you sit
in front of the PC all the day. But there is also the possibility to make your real friends
your online-friends.
Searching for information you will find a huge amount of it on every topic you are
searching for. This can be very comfortable. You only have to type in a word and you
will find everything about it. But be careful! There is also false information.
Sometimes it is hard to distinguish between true and false information.
Often you have the possibility to listen to music on the internet. You may also
download it for free. That is very cheap because you only have to pay the telephonecosts and the music is for free. What does that mean for the musicians? They will not
get all their money they would normally receive. That is not too dangerous for the
well-known musicians but it can become dangerous to the little ones who cannot
afford to lose a part of their income.
What about communicating with an online-friend? You will send him/her an email. It
is faster than a letter, cheaper than a telephone call and easier to use than a radio set.
But: Is the encryption-code secure enough? Many hackers will try to read the message
you send to your friends. This leads to the next problem of the internet: How can you
provide privacy in a non- private world? Everybody wants to know everything about
everyone. How can you say: This is my private zone, nobody can get into it. A few
minutes later someone will try to get into the privacy-zone. Why? Everyone thinks
there must be something very interesting and secret inside this zone. Nothing is more
interesting than a forbidden place.
There is some special anonymity about the internet. You may tell anything about
yourself and everyone will believe you if nobody checks the information. You also
may swap your gender and nobody will recognise it.
What will happen, if you are ill and cannot leave the house? No problem! You can do
everything on the internet without leaving the house. You can do the shopping, meet
friends and so on. The only problem is the way of paying. It is very easy, you only
have to type in your credit card-number and the goods will be paid. But some
transmission techniques are not very safe and so someone could read your credit cardnumber and use it to buy things himself. You always have to inform yourself about
the transmission-techniques to be sure about security. Otherwise you may pay for
being uninformed later on.
This leads to the costs of the internet. The only good about it is that the surf-cost are
low (depending on the provider). But anything else is very cost-intensive. You have to
buy anti-virus-programmes, software, computer, And that is not enough! Internet is
developing very fast for this you have to update the programmes regularly. You will
also not abandon the option to get a faster computer.
The internet does not care about time or distance. Everyone can be online every time
and communicate with everyone everywhere. Though you have the possibility to meet
many people on the internet frequent use of this will cause loneliness because you
wont have real friends anymore.
It is very difficult to give children access to the internet. There are many things which
are not suitable for children. Either you sit next to them during surfing or you believe
in the internet that it will not show harmful things and in the children that they will not
try to find harmful things.
Check Your Progress 2
Write the full form of the following abbreviations:
1. ICE
..
2. WWW ..
3. CBT
..
8.6 KEYWORDS
World wide web: It is an architectural framework of information system which offers
the exchange of documents via HTTP.
Internet: It means a network infrastructure that is built on certain standards, which are
followed by all participants to connect to each other.
E-mail: A process to send information in a digital way.
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LESSON
9
THE INTERNET AND THE LAW
CONTENTS
9.0
9.1
Introduction
9.2
9.3
Copyright
9.4
Censorship
9.5
Privacy
9.6
Jurisdiction
9.7
9.8
Cyber Crimes
9.9
9.8.1
9.8.2
9.9.2
9.10
Let us Sum up
9.11
9.12
Keywords
9.13
9.14
Suggested Readings
9.1 INTRODUCTION
The technological basis of e-commerce is basically Web client/server middleware, or
what is called three-tier architectures. The client tier is the Web browser involving
some type of form processing. The middle tier is the Web server, often with
transaction processing. The Web server in turn links to the third tier, a database
processing the order information.
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Some of the issues are strictly Internet-related, such as domain names and trademarks,
linking and framing, clickware (and shrinkware), and metatag use. Others are
traditional issues applied to the Internet, such as copyright, contracts, consumer
protection, privacy, taxation, regulated industries and jurisdiction.
E-commerce site development, its advertising, electronic transaction, money
transactions and such involve many legal issues, which need to be taken into account
step by step. Before developing an e-commerce site a registered domain and a
registered trademark should be established.
There must be some copyright protection on the site. The business must ensure that it
displays the terms and condition/policies within its site. Security involving the privacy
of a user's data is always one of the main concerns while doing business online.
Defining rules and regulations for the advertisement of the site by placing banners on
other known sites is another. It is of great value when dealing with such complex
issues to consult an attorney who specializes in the issues of cyberspace.
9.3 COPYRIGHT
Many attempts have been made to address the issues related to copyrights on digital
content. E-Commerce has a tremendous impact on copyright and related issues, and
the scope of copyrights is affecting how e-commerce evolves. It is essential that legal
rules are set and applied appropriately to ensure that digital technology does not
undermine the basic doctrine of copyright and related rights.
From one perspective, the Internet has been described as the world's biggest copy
machine. Older technologies such as photocopying, recording and taping are bound by
rules and regulations regarding quantity, content, quality and time constraints. In
contrast, on the Internet one person can send millions of copies all over the world.
Generally, a trademark can be owned by an individual, a company, or any sort of legal
entity. When someone else tries to use that trademark (e.g., your distinctive name or
logo) without authorisation, it could be considered an illegal dilution of the distinctive
trademark. If someone uses a trademark in such a way as to dilute the distinctive
quality of the mark or trade on the owner's reputation, the trademark owner may seek
damages.
Some Web-based applications have enabled large-scale exploitation of music samples
and audio formats. Software that is available free of cost on the Net allows the transfer
of songs and videos without the authorization of rights holders (e.g. Napster, MP3
Providers). Moreover, CD burners and portable MP3 players allow copyright
violations to occur rather easily.
A number of important recent developments have occurred in the field of copyright
and related issues that have far-reaching implications for the industry, and are being
addressed in legislatures, judiciaries and international forums.
During the last couple of years, new laws have passed in some countries to ensure
effective protection and enforcement of rights in the digital era. At the same time,
copyright industries are also adapting their business methods and uses of technology
to exploit digital opportunities, while guarding against new risks.
A Pew Research Center survey, conducted among roughly 2,500 Americans through
March and May 2003, indicates that 35 million US adults download music files online
and about 26 million share files online. The downloading population has grown by
approximately 5 million users since February of 2001. Ultimately, the music
industry's war on illegal downloading may never be won.
9.4 CENSORSHIP
Censorship is a word of many meanings. In its broadest sense it refers to suppression
of information, ideas, or artistic expression by anyone, whether government officials,
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9.5 PRIVACY
While shopping on the Internet, most people typically do not think about what is
happening in the background. Web shopping is generally very easy. We click on a
related site, go into that site, buy the required merchandise by adding it to our cart,
enter our credit card details and then expect delivery within a couple of days.
This entire process looks very simple but a developer or businessmen knows exactly
how many hurdles need to be jumped to complete the order. Customer information
has to pass through several hands so security and privacy of the information are a
major concern.
The safety and security of a customer's personal information lies within the hands of
the business. Therefore businesses have to give the customer first their guarantee, and
second peace of mind that the information passed over is of no risk to any invading
eyes.
In traditional and online trading environments, consumers are entitled to have their
privacy respected. Websites should provide the customers with choices regarding the
use of their personal information, and incorporate security procedures to limit access
to customer information by unauthorized parties.
Privacy policies and procedures should be clearly explained to customers. Although
respecting consumer privacy rights is a legal requirement, it also represents good
business practice. If customers trust a site and business then they are more likely to
trade with it.
Many people are not willing to disclose their personal information on the Web. It is up
to individuals to decide how much personal information they are willing to disclose
and how it might be used. Interestingly, one survey found that many people who
disclose personal information do so in hope of financial benefit, such as winning a
sweepstakes.
At the moment, most online privacy policies are produced by private businesses for
individual companies. Governments are developing legislation to support and
strengthen the privacy protection measures of many businesses. These initiatives are
aimed at regulating the storage, use and disclosure by businesses of personal
information.
Privacy legislation is designed to protect a person's personal information. The privacy
laws of their host country affect overseas companies. Every organization should be
very careful while applying terms and conditions for the electronic transaction for
Internet users.
Privacy and security policies not only reflect the organizations practice but also the
rules and regulations for doing business with the company. Major issues regarding the
legalization of electronic transactions include the following:
z
Import/export regulations.
9.6 JURISDICTION
Electronic transactions separate e-business from traditional types of businesses. When
a transaction takes place, who has jurisdiction? Who has the authority to apply law
over the transaction?
For example, if you buy a laptop in your local computer store, you know your legal
rights. If the computer does not work when you take it home, and the store refuses to
settle up, then you can probably take the dispute to your local small claims court.
But if you buy the same computer online, from a vendor on the other side of the
world, perhaps through a dealer based in yet a third country, then your rights are a lot
less clear. Which country's protection laws apply: yours, those in the vendor's home
country, or those of the intermediary? Without knowing which particular set of laws
apply, it's impossible to know whom to sue. "Small claims courts don't work in
cyberspace," according to Ron Presser of the American Bar Association.
A little legislation can go a long way toward helping parties to establish better
boundaries to work within. When a transaction that takes place between two different
parties located in two different countries goes wrong then a number of complex
questions arise.
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This is not the first time the question of extra-territorial jurisdiction over Web content
has been raised. In November of last year, Felix Somm, ex-manager of CompuServe
Deutschland, was cleared on appeal of pornography charges brought against him in
Germany after newsgroups carried on parent company CompuServe's US servers were
found to contain pornographic material.
The judge determined that it was technically impossible for Somm to close the illegal
newsgroups in question. Following in the footsteps of the CompuServe's case, Yahoo
is arguing that it would be technically impossible to block only French citizens from
access to its online auctions if should the auctions contain objectionable items.
DO NOT
Do tell your parents or police if someone sends a Do not erase evidence of a crime
child nasty photos (pornography)
Do consider not letting anyone in the family use
chat rooms with strangers
Do limit the time your kids can be on the Internet Do not let your child use the Internet
unsupervised
Do remember that teens and quiet or lonely
children are most at risk
Stealing a laptop computer with proprietary information stored on the hard disk
inside the computer is the same crime as stealing a briefcase that contains papers
with proprietary information.
Using the Internet or online services to solicit sex is similar to other forms of
solicitation of sex, and so is not a new crime.
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During 1950-1975, computer programs and data were generally stored on cardboard
cards with holes punched in them. If a vandal were to break into an office and either
damage or steal the punch cards, the vandal could be adequately punished under
traditional law of breaking and entering, vandalism, or theft.
However, after about 1975, it became common to enter programs and data from
remote terminals (a keyboard and monitor) using a modem and a telephone line. This
same technology allowed banks to retrieve a customer's current balance from the
bank's central computer, and merchants to process credit card billing without sending
paper forms. But this change in technology also meant that a criminal could alter data
and programs from his home, without physical entry into the victim's building. The
traditional laws were no longer adequate to punish criminals who used computer
modems.
Most unauthorized use of a computer is accomplished by a person in his home, who
uses a modem to access a remote computer. In this way, the computer criminal is
acting analogous to a burglar. The classic definition of a burglary is the breaking and
entering of a building with the intent to commit a felony therein.
In traditional burglaries, the felony was typically larceny, an unlawful taking of
another person's property. However, in the unauthorized use of another's computer,
the criminal "enters" the computer via the telephone lines, which is not breaking into
the building. Either the burglary statute needed to be made more general or new
criminal statute(s) needed to be enacted for unauthorized access to a computer.
Legislatures chose to enact totally new statutes.
To successfully use a remote computer, any user (including criminals) must have both
a valid user name and valid password. There are several basic ways to get these data:
z
Call up a legitimate user, pretend to be a system administrator, and ask for the
user name and password. This sounds ridiculous, but many people will give out
such valuable information to anyone who pretends to have a good reason. Not
only should you refuse to provide such information, but please report such
requests to the management of the online service or the local police, so they can
be alert to an active criminal.
Search user's offices for such data, as many people post their user name and
password on the side of their monitor or filing cabinet, where these data can be
conveniently seen.
Write a program that tries different combinations of user names and passwords
until one is accepted.
Use a packet "sniffer" program to find user names and passwords as they travel
through networks.
A disgruntled employee can use his legitimate computer account and password for
unauthorized uses of his employer's computer. This can be particularly damaging
when the disgruntled employee is the computer system administrator, who knows
master password(s) and can enter any user's file area. Such disgruntled employees can
perpetrate an "inside job", working from within the employer's building, instead of
accessing a computer via modem.
The computer voyeurs, like petty criminals who peek in other people's windows,
generally hack into other people's computers for the thrill of it. In the 1970s and early
1980s, many of these computer voyeurs also used technology to make long-distance
telephone calls for free, which technology also concealed their location when they
were hacking into computers. Many of these voyeurs take a special thrill from hacking
into military computers, bank computers, and telephone operating system computers,
because the security is allegedly higher at these computers, so it is a greater technical
challenge to hack into these machines.
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The criminals who change or delete data, or who deliberately gobble large amounts of
computer resources, have a more sinister motive and are capable of doing immense
damage.
Of course, there is always the possibility that a computer voyeur will "accidentally"
bumble around an unfamiliar system and cause appreciable damage to someone else's
files or programs. Traditional criminal law in the USA places a great deal of emphasis
on willful or intentional conduct, so such "accidental" damage would not satisfy the
traditional requirement of mens rea (literally "guilty mind" or criminal intent). My
personal opinion is that someone who deliberately hacks into someone else's computer
should be accountable under criminal law for whatever damage is done by the
unauthorized hacking, even if the damage is "accidental". In this regard, I would make
an analogy to a homicide that occurs "accidentally" during the commission of a
felony: the perpetrators are then charged with "felony murder": the intent to commit
the hacking constitutes the malice or intent to cause the damage.
In the 1970s and early 1980s, a common reaction was that hackers were a minor
nuisance. Then, in August 1983, a group of young hackers in Milwaukee hacked into
a computer at the Sloan-Kettering Cancer Institute in New York City. That computer
stored records of cancer patients' radiation treatment. Altering files on that computer
could have killed patients, which reminded everyone that hacking was a serious
problem. This 1983 incident was cited by the U.S. Congress in the legislative history
of a federal computer crime statute.
Altering websites
In recent years, there have been a large number of attacks on websites by hackers who
are angry with the owner of the website. Victims of such attacks include various U.S.
Government agencies, including the White House and FBI. Attacking the FBI website
is like poking a lion with a stick. <grin>
In a typical attack, the hacker will delete some pages or graphics, then upload new
pages with the same name as the old file, so that the hacker controls the message
conveyed by the site.
This is not the worst kind of computer crime. The proper owner of the site can always
close the website temporarily, restore all of the files from backup media, improve the
security at the site, and then re-open the site. Nonetheless, the perpetrator has
committed a computer crime by making an unauthorized use of someone else's
computer or computer account.
The Internet is a medium for freely sharing information and opinions. However the
criminals who trash other people's websites are acting as self-appointed censors who
deny freedom of speech to those with whom they disagree. These criminals often
make the self-serving excuse for their actions that they only attack sites sponsored by
bad corporations or bad people. However, this excuse makes these criminals into
vigilantes who serve as legislature, judge, jury, and executioner: arrogantly
determining what is in the best interests of society.
One example of punishment for the crime of defacing a website is the case of Dennis
M. Moran. On 9 March 2001, Moran (alias "Coolio"), a high school dropout, was
sentenced in New Hampshire state court to nine months incarceration and ordered to
pay a total of US$ 15000 restitution to his victims for defacing two websites:
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and can generate a lot of daily email traffic - depending upon the mailing list. Some
generate only a few messages per day others generate hundreds. If a person has been
unknowingly subscribed to hundreds of mailing lists, his incoming email traffic will
be too large and his service provider will probably delete his account. The simplest
e-mail bomb is an ordinary email account. All that one has to do is compose a
message, enter the email aaddress of the victim multiple times in the "To" field, and
press the "Send" button many times. Writing the e-mail address 25 times and pressing
the "Send" button just 50 times (it will take less than a minute) will send 1250 e-mail
messages to the victim! If a group of 10 people do this for an hour, the result would be
750,000 e-mails! There are several hacking tools available to automate the process of
e-mail bombing. These tools send multiple emails from many different email servers,
which makes it very difficult, for the victim to protect himself.
Threatening e-mails: E-mail is a useful tool for technology savvy criminals thanks
to the relative anonymity offered by it. It becomes fairly easy for anyone with even a
basic knowledge of computers to become a blackmailer by threatening someone via
e-mail.
In a recent case, Poorva received an e-mail message from someone who called him or
herself 'your friend'. The attachment with the e-mail contained morphed pornographic
photographs of Poorva. The mail message said that if Poorva were not to pay
Rs. 10,000 at a specified place every month, the photographs would be uploaded to
the Net and then a copy sent to her fianc. Scared, Poorva at first complied with the
wishes of the blackmailer and paid the first Rs. 10, 000. Next month, she knew she
would have to approach her parents. Then, trusting the reasonableness of her fianc
she told him the truth. Together they approached the police. Investigation turned up
the culprit - Poorva's supposed friend who wanted that Poorva and her fianc should
break up so that she would get her chance with him.
Defamatory emails: As has been discussed earlier cyber-defamation or even cyberslander as it is called can prove to be very harmful and even fatal to the people who
have been made its victims.
Email Frauds: Email spoofing is very often used to commit financial crimes. It
becomes a simple thing not just to assume someone else's identity but also to hide
one's own. The person committing the crime understands that there is very little
chance of his actually being identified. In a recently reported case, a Pune based
businessman received an email from the Vice President of the Asia Development
Bank (ADB) offering him a lucrative contract in return for Rs. 10 lakh. The
businessman verified the email address of the Vice President from the web site of the
ADB and subsequently transferred the money to the bank account mentioned in the
email. It later turned out that the email was a spoofed one and was actually sent by an
Indian based in Nigeria.
In another famous case, one Mr. Rao sent himself spoofed e-mails, which were
supposedly from the Euro Lottery Company. These mails informed him that he had
won the largest lottery. He also created a website in the name of the Euro Lottery
Company, announced n it that he had won the Euro Lottery and uploaded it on to the
Internet. He then approached the Income Tax authorities in India and procured a
clearance certificate from them for receiving the lottery amount. In order to let people
know about the lottery, he approached many newspapers and magazines.
The media seeing this as a story that would interest a lot of readers hyped it up and
played a vital role in spreading this misinformation. Mr. Rao then went to many banks
and individuals and told them that having won such a large sum of money he was
afraid for his safety. He also wanted to move into a better house. He wheedled money
out of these institutions and people by telling them that since the lottery prize money
would take some time to come to him, he would like to borrow money from them. He
assured them that the loan amount would be returned as soon as the lottery money
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came into his possession. Lulled into believing him (all thanks to the Income Tax
clearance) most of these people loaned large amounts of money to him. It was only
when he did not pay back the loan amounts to the banks that they became suspicious.
A countercheck by the authorities revealed the entire scheme. Mr. Rao was arrested.
Later, it was found that some of the money had been donated for philanthropic causes
and also to political parties!
that IBM had moved to exclude from the lawsuit for lack of specificity, stating many
of SCOs arguments and much of Mr. Rochkinds declaration miss the mark, and
comparing SCO's tactics with those of an officer who accuses a citizen of theft, but
will not disclose what the citizen is accused of stealing. Certainly if an individual
was stopped and accused of shoplifting after walking out of Neiman Marcus, they
would expect to be eventually told what they allegedly stole. It would be absurd for an
officer to tell the accused that you know what you stole I'm not telling. Or, to simply
hand the accused individual a catalog of Neiman Marcus' entire inventory and say it's
in there somewhere, you figure it out.
On August 10, 2007 Judge Kimball, who also presides over the SCO v. Novell case,
ruled that Novell, not the SCO Group, is the rightful owner of the copyrights covering
the Unix operating system. The court also ruled that "SCO is obligated to recognize
Novell's waiver of SCO's claims against IBM and Sequent". After the ruling Novell
announced they have no interest in suing people over Unix and stated "We don't
believe there is Unix in Linux".
SCO's claims
SCO's lawsuit has been consistent only in its claim of breach of contract (since the
abandonment in early 2004 of its claim of misappropriation of trade secrets). SCO's
initial claims were:
z
Unfair competition
On July 22, 2003, SCO amended its complaint. It added two new claims:
z
On February 27, 2004 SCO amended the complaint again. It dropped the trade secrets
claim, but added the following claims:
z
Copyright infringement
SCO's claims in press releases and interviews have changed repeatedly as the affair
has progressed. SCO has also both claimed and denied that the alleged copyright
violations involved the Linux kernel. Computerworld reported Chris Sontag of SCO
as saying:
It's very extensive. It is many different sections of code ranging from five to ten to
fifteen lines of code in multiple places that are of issue, up to large blocks of code that
have been inappropriately copied into Linux in violation of our source-code licensing
contract. That's in the kernel itself, so it is significant. It is not a line or two here or
there. It was quite a surprise for us.
SCO refuses to allow access to the samples of code containing the alleged copyright
violations except under a Non-Disclosure Agreement (NDA). SCO's NDA would not
only require that the signer keep confidential which lines of code SCO contested, but
would also require that they hold confidential any information SCO told them, even if
they already knew that information before being informed of it by SCO; all Linux
kernel developers have considered this to be far too restrictive, so none of them have
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signed it. However, at SCO's annual reseller's convention in August of 2003 they
revealed two short sections of code they alleged were copyright violations, and images
of Darl McBride's presentation of this code were soon after published on German
computer magazine publisher Heinz Heise's website.
On May 30, 2003, SCO Group's CEO Darl McBride was quoted as saying that the
Linux kernel contained "hundreds of lines" of code from SCO's version of UNIX, and
that SCO would reveal the code to other companies under NDA in July. To put this
into context, David Wheeler's SLOCCount estimates the size of the Linux 2.4.2 kernel
as 2,440,919 source lines of code out of over 30 million physical source lines of code
for a typical GNU/Linux distribution. Therefore, as per SCO's own estimate, the
allegedly infringing code would make up about 0.001% of the total code of a typical
GNU/Linux installation. SCO has since upwardly revised this figure to over a million
lines of code, however.
SCO's major claims have now been reported as relating to the following components
of the Linux kernel:
z
These claims flow from the accusation of breach of contract. The contract between
IBM and AT&T (to which SCO claims to be successor in interest) allows IBM to use
the SVR4 code, but the SVR4 code, plus any derivative works made from that code,
must be held confidential by IBM. According to IBM's interpretation of the contract,
and the interpretation published by AT&T in their "$ echo" newsletter in 1985,
"derivative works" means any works containing SVR4 code. But according to SCO's
interpretation, "derivative works" also includes any code built on top of SVR4, even if
that does not contain, or even never contained, any SVR4 code. Thus, according to
SCO, any AIX operating system code that IBM developed must be kept confidential,
even if it contains nothing from SVR4.
On August 10, 2007 a federal district court judge in Utah ruled that Novell, not the
SCO Group, is the rightful owner of the copyrights covering the Unix operating
system.
Novell and Santa Cruz Operation. SCO claimed this amendment supports its claim
that SCO did receive the copyrights to Unix. In response, Novell issued a press release
in which it stated:
To Novell's knowledge, this amendment is not present in Novell's files. The
amendment appears to support SCO's claim that ownership of certain copyrights for
UNIX did transfer to SCO in 1996. The amendment does not address ownership of
patents, however, which clearly remain with Novell.
While SCO publicly claimed victory, behind the scenes a series of heated letters were
sent back and forth. These letters reveal that Novell continued to believe that it was
still the legal owner of the Unix copyrights. On October 14, 2003, Novell registered
several key Unix copyrights. After their registration became public knowledge Novell
issued a press release on December 22, 2003, stating:
Novell believes it owns the copyrights in UNIX, and has applied for and received
copyright registrations pertaining to UNIX consistent with that position. Novell
detailed the basis for its ownership position in correspondence with SCO.
On January 13, 2004, Novell launched its Linux indemnification program and publicly
released the letters that were sent between SCO and Novell in the previous months.
SCO responded the same day with a press release that reiterated its earlier claim and
announced that it was preparing to file a lawsuit against Novell.
On January 20, 2004, SCO filed a Slander of Title lawsuit against Novell. This
lawsuit, filed in Utah State court, requested a preliminary and permanent injunction.
The injunction would require Novell to assign to SCO all copyrights that Novell
registered and that Novell would retract all claims they previously made.
Novell successfully "removed" the lawsuit, transferring it to the Federal court system.
Four days later, on February 10, 2004 Novell filed a motion to dismiss the case.
Novell requested dismissal for failure to state a claim upon which relief can be
granted. In support of its motion Novell argued that:
z
SCO did not show a valid transfer of copyright ownership, because the Asset
Purchase Agreement is merely a promise to assign and that the Agreement is - by
law - not sufficient to transfer the copyrights to SCO.
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which Novell would pay SCO its 5% administration fee). They also mention at the
beginning of the counterclaim that SCO asked Novell to go in together with them on
the Linux IP Infringement Licensing Plan. When Novell refused, SCO asked Novell
to turn the copyrights over to SCO, a request Novell also refused.
On January 3, 2006, SCO filed a proposed amended complaint containing the original
slander of title claim, as well as several new claims, including unfair competition,
copyright infringement and breaching a purported no-compete agreement.
On April 10, 2006, SuSE (part of Novell) filed a Request for Arbitration with the
Secretariat of the ICC International Court of Arbitration in Paris, France. Years earlier
SCO (then named Caldera) had signed contracts with SuSE (now owned by Novell)
involving UnitedLinux. In this contract the UnitedLinux members agreed that each
member would have broad licenses to exploit and distribute Linux products that
include UnitedLinux technology, and they agreed to arbitration of disagreements. This
request by SuSE was in response to SCO's amended complaint against Novell alleging
copyright infringement. The arbitration process has relatively strict timelines, unlike
the U.S. courts' procedures. Novell filed a "Motion to Stay Claims Raising Issues
Subject to Arbitration" in the U.S. courts, saying that four of five SCO claims
(including copyright infringement) have been brought to arbitration, and thus can be
stayed in the U.S. court until the Arbitration Tribunal renders its decision. Novell also
filed an "Answer to SCO's 2d Amended Complaint and Counterclaims", claiming a
large number of affirmative defenses, one of which accuses SCO of conducting fraud
on the U.S. copyright office.
On September 22, 2006, Novell sought leave to file amended counterclaims. Through
discovery, Novell had obtained copies of Unix licensing agreements between SCO
and Microsoft and Sun, and alleged that upon review of the agreements, it was
determined that they breached the APA. The added claims were conversion and
breach of fiduciary duty. Judge Dale Kimball granted Novell's motion, as it was
stipulated to by SCO.
On September 29, 2006, Novell filed a Motion for Summary Judgment, or if that was
rejected, then for a Preliminary Injunction. Novell has alleged that SCO, through their
agreements with Sun and Microsoft, licensed them Novell's property without paying
Novell the owed royalties. Novell has asked for SCO to be forced to turn the royalties
over to Novell, or, in the alternative, be forced to put the money into a Collective
Trust.
On August 10, 2007, Judge Dale Kimball, hearing the SCO v. Novell case, ruled that
"...the court concludes that Novell is the owner of the UNIX and UnixWare
Copyrights". Novell were awarded summary judgments on a number of claims, and a
number of SCO claims were denied. SCO was instructed to account for and pass to
Novell an appropriate portion of income relating to SCOSource licences to Sun
Microsystems and Microsoft. A number of matters are not disposed of by Judge
Kimball's ruling, and the outcome of these are still pending.
On September 17, 2007, a trial in SCO v. Novell was expected to begin in order to
determine how much money SCO owed Novell. However, on September 14, 2007
SCO Group filed a voluntary petition for reorganization under Chapter 11 of the
United States Bankruptcy Code. As a result of the petition for bankruptcy, all pending
litigation was automatically stayed as per U.S.C. 362.
On November 27, 2007 Judge Gross (bankruptcy judge) lifted the stay so as to allow
determination of any money owed, but retained jurisdiction over any constructive trust
which might be appropriate.
9.12 KEYWORDS
Ethics: It is a guidance which makes specific judgment about what is right or wrong.
Censorship: It refers to suppression of information, ideas, or artistic expression by
anyone, whether government officials, church authorities, private pressure groups, or
speakers, writers, and artists themselves.
Client tier: It is the web browser involving some type of form processing.
Middle tier: It is the web server which is related to transaction processing.
Web server: It links to the third tier, a database processing the order information.
Computer Crime: It refers to criminal activity where a computer or network is the
source, tool, target, or place of a crime.
Hacking: It is any criminal act dealing with computers and networks.
Computer Voyeur: It is a cyber crime where the criminal reads (or copies)
confidential or proprietary information, but data is neither deleted nor changed.
Logic Bomb: It is a programme, which is activated on the occurrence of a particular
predefined event.
Time Bomb: It is a type of logic bomb, in which the program detonates when the
computer's clock reaches some target date.
Malware: It is software designed to infiltrate or damage a computer system without
the owner's informed consent.
Virus: It is a program that "infects" an executable file.
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CYP 2
1. False
2. False
3. True
4. True
Thomas, J Kuegler, Web Advertising and Marketing, Jr. 3rd Edition-Prentice-Hall of India,
New Delhi.
Dr. Ravi Kalakota, E-Business Roadmap for Success, Pearson Education.
Ravi Kalakota, Andrew B. Whinston, "Frontiers of Electronic Commerce", Addition-Wesley
2000.
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Web Marketing Strategies
UNIT IV
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LESSON
119
Web Marketing Strategies
10
WEB MARKETING STRATEGIES
CONTENTS
10.0
10.1
Introduction
10.2
Marketing Strategies
10.3
10.2.1
Brand Strategy
10.2.2
Customer Segmentation
10.2.3
10.2.4
Market Research
10.2.5
Pricing
10.2.6
10.2.7
Value Proposition
10.3.2
10.3.3
10.4
10.5
10.6
Target Marketing
10.7
Attracting Customers
10.8
Let us Sum up
10.9
10.10 Keywords
10.11 Questions for Discussion
10.12 Suggested Readings
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10.1 INTRODUCTION
The Internet has become a powerful tool for reaching consumers. Major companies
have turned to the World Wide Web not only for selling their products, but providing
information and support to their customers.
It has become almost a requirement for any modern business to have a web presence.
Even having simple informational website increases exposure and provides potential
customers with an opportunity to learn about that business.
Yet simply having a website is not enough. The website must appeal to the
appropriate audience, provide them with the information they seek, and build their
trust. And above all, it must stand out from a host of competitors. Only then can a
business website be considered a success.
Markets in high technology contexts are highly dynamic in ways more than just the
evolution of the underlying technologies. Business managers in such situations need
to understand the various drivers of such changes and their manifest impact on the
profit potential of current and alternative strategies.
This lesson will provide with useful overview of the dynamics in the markets.
actual profitability and uses this information to strategically manage brands and brand
portfolios.
Strategic imperatives may call for maintaining strong brand equity while investing in
innovation, instituting aggressive cost and price controls and reinvesting savings to
build brand equity or perhaps targeting niche segments. Properly managed within a
category, a powerful brand name can be used to drive higher sales as well as increase
price premiums versus the competition.
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Who might want to buy your products - (you may have defined the wrong type of
person)
What age, sex, income occupation etc. are the people I want to sell to
If there are changes taking place and how this might affect what you sell - (there
might be an up an coming decline in the demand for what you are about to sell)
How well your products or services might sell - (It could be better or worst than
what you predicted)
How much demand there is for what you hope to sell - (you may need to increase
or decrease your production depending on the results)
Who wont buy what you hope to sell - (this will help your promotional plan as it
enables you to target the right people)
What price would people be prepared to pay - (this will help when you set out
your pricing policy)
10.2.5 Pricing
In general terms price is a component of an exchange or transaction that takes place
between two parties and refers to what must be given up by one party (i.e., buyer) in
order to obtain something offered by another party (i.e., seller). Yet this view of price
provides a somewhat limited explanation of what price means to participants in the
transaction.
Price is commonly confused with the notion of cost as in I paid a high cost for
buying my new plasma television. Technically, though, these are different concepts.
Price is what a buyer pays to acquire products from a seller. Cost concerns the sellers
investment (e.g., manufacturing expense) in the product being exchanged with a
buyer. For marketing organizations seeking to make a profit the hope is that price will
exceed cost so the organization can see financial gain from the transaction.
Finally, while product pricing is a main topic for discussion when a company is
examining its overall profitability, pricing decisions are not limited to for-profit
companies. Not-for-profit organizations, such as charities, educational institutions and
industry trade groups, also set prices, though it is often not as apparent.
For instance, charities seeking to raise money may set different target levels for
donations that reward donors with increases in status (e.g., name in newsletter), gifts
or other benefits. While a charitable organization may not call it a price in their
promotional material, in reality these donations are equivalent to price setting since
donors are required to give a contribution in order to obtain something of value.
Market research
Marketing goals
Marketing strategies
Focus on your customers' wants and needs, not on what you think you have to
offer.
Find a niche - small businesses tend to succeed by offering something that's a bit
different.
Don't:
z
Waste money on promotional opportunities that don't fit with your strategies.
Neglect building networks to help you promote your business and build your
reputation.
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Product differentiation
Operational efficiency
Target situation
A great product
Each step plays an important role in your overall strategy and must be developed to its
fullest potential. If even one step fails, your chances of success will be minimal.
Software
Information
Private sites
Internet services
Before you develop your product, do some research - find out exactly what people
want and develop your product accordingly.
The most important consideration when developing your product is quality. Your
product should not only deliver what you promise, but should go above and beyond
the expected and over-deliver. Your customers satisfaction is of the utmost
importance.
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Short-term marketing strategies are those that bring you a temporary boost in traffic.
Although these techniques are very important to your over-all plan, they are only a
temporary traffic source and must not be solely relied upon.
Short-term marketing strategies include:
z
Purchasing advertising
Bulletin Boards
Search Engines
Long-term marketing strategies are those that bring you a steady stream of targeted
traffic over time. These strategies will continue to produce results even years down
the road.
Long-term marketing strategies include:
z
Opt-in Lists
Freebies
Content
Planning marketing programs, which entails choosing the Marketing Mix (the
four Ps of Product, Price, Place and Promotion)
Organizing
The 4 Ps are essential part of any web marketing, and here they are focused on a
particular target market or customer.
Elements
Characteristics
Attributes
Product
Promotion
Price
Setting a price that serves the Price flexibility, level pricing introductory
customer well and maximizes pricing, discounts, allowances, geographic
profits to the company
terms
The 4 Ps is a different part of the web marketing Plan and one may look at this is
uncontrollable factors vs. controllable factors.
Uncontrollable: The current economic environment includes elements such as
consumer confidence, degree of unemployment, new technologies that threaten to
displace your own, competitors that suddenly appear on the horizon, government
regulations thought up by the favorite legislator, and changing consumer preferences.
One cant control these.
Controllable: The 4 Ps represent elements of ones marketing strategy that ones can
control. They depend upon such given as ones budget, personnel, creativity, etc.,
but one can do a lot to influence them.
As one write the Marketing Program section of ones web marketing Plan one will
need to include a section for each of the 4 Ps that define ones current marketing
program. These are the four major ingredients of a traditional marketing mix directed
at the customer or target market.
But are the 4 Ps really applicable to web Marketing? The short answer is yes, with a
few modifications. The long answer is an attempt to apply them to the typical
situations faced by web marketers today. Businesses vary so much that one cant be
exhaustive as we examine each, but only suggestive.
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companies, but the ultimate users of these products are the bench engineers who
develop new products and test current ones.
Even companies largely thought of as consumer marketing firms usually sell their
products, in actuality, to retail chains, while running tens of millions of dollars in
advertising to pull consumers into these stores to buy their products.
Regardless of how the customer is actually defined, one reason so many firms are
beginning to focus on is that this kind of marketing can create intense customer
loyalty and, as a part of the process, help a firm protect its unit margins. These
benefits appeal to firms allover the world, in every industry, because everyone's
business today is threatened to some extent by declining customer loyalty and by a
kind of "creeping commoditization" that steadily erodes margins.
There are four key implementation tasks that can be used as a guide for good
marketing strategy. These four principles overlap considerably:
z
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A great product
Sound web design is the cornerstone of effective on-line commerce, and neglecting
the key details and nuances of storefront development can mean disaster for your
e-enterprise.
Perhaps the most important principle of storefront design is to build a site that
conforms to the expectations, questions, and demands of your customers.
Almost anything can be sold to anyone at any given time. This means that most of the
texts and images used in advertising should appeal to just about anyone who uses the
web. This may sound easy, but in truth this is quite difficult.
10.10 KEYWORDS
Marketing Strategy: It is the art and science of understanding markets, competitor
landscapes and the strategic context in which business and policy decisions are made.
Brand strategy: It is the blue print to establish a brand.
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Web Advertising
LESSON
11
WEB ADVERTISING
CONTENTS
11.0
11.1
Introduction
11.2
Web Advertising
11.3
11.2.1
Sellers
11.2.2
Buyers
E-mail Marketing
11.3.1
Direct e-mail
11.3.2
Retention e-mail
11.3.3
11.4
11.5
Let us Sum up
11.6
11.7
Keyword
11.8
11.9
Suggested Readings
The conceptual difference between the traditional approach and modern approach
11.1 INTRODUCTION
Internet marketing does not simply entail building or promoting a website, nor does it
mean placing a banner ad on another website. Effective Internet marketing requires a
comprehensive strategy that synergizes a given company's business model and sales
goals with its website function and appearance, focusing on its target market through
proper choice of advertising type, media, and design. Internet advertising can be
defined as convergence of branding, information dissemination and sales transaction
all in one place. It is the convergence of traditional and direct response marketing. In
this lesson well discuss about the internet advertising.
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Tracking: Marketers can track how users interact with their brands and learn what
is of interest to their current and prospective customers. Advertisers can also
measure the response to an advertisement, which is difficult for traditional
advertisers.
Interactivity: The consumers can interact with product test the product, and if
they choose they can buy the product. No other medium moves the consumer
from information seeker to purchase friction free.
The players in the advertising industry are the sellers and the buyers and the
advertising infrastructure. The companies that make Internet advertising possible by
developing tools to deliver the ads, measure the ads, audit ad campaign, and complete
the other tasks that makes advertising on the Internet. The division between the buyers
and sellers is very thin. Many publishers buy ads to promote their web site and
advertisers develop web sites to promote their products.
11.2.1 Sellers
The sellers are web site publishers and their sales channels. The web site publishers
like AOL has signed up more those 400 advertisers hoping to sell advertising that
targets a number of demographics.
The sales channels like ad networks; representation firms and auctions are the sales
channels, which as facilitators gains by selling the advertising.
The ad networks: IT assists in generating revenues form advertising; ad networks have
formed to sell advertising. The networks make it possible for advertisers to extend
their reach into a variety of sites with one media buy. The advertising agencies gains
from meeting to an ad network rather than meeting individual web site publishers.
Representation firms: Sites with advertising to sell can hire a firm sell to sell the ad
space on their behalf.
Auctions: Publisher can offer soon to expire ad space on the auction block for quick
sale. There are also ad networks that allow publishers to sell their sell their excess ad
inventory in real time.
11.2.2 Buyers
The buyers consist of the advertisers who have products, services or web sites to
promote. They are often represented by interactive or traditional agencies that designs
online advertising campaigns and media buyers who actually purchase the ad space.
Advertisers: The first advertisers were the Internet publishers themselves.
Interactive agencies: The interactive agencies are the link between the advertisers and
publishers. These agencies were basically the web site developers, which on strong
technological background later turn on to marketing or sites through direct marketing
and advertising. The ad agencies also have come toward into interactive businesses
now.
Check Your Progress 1
1. Who are the sellers in internet advertising?
...
...
2. Who are the buyers in internet advertising?
...
...
Sending direct promotional emails to try and acquire new customers or persuade
existing customers to buy again
Sending emails designed to encourage customer loyalty and enhance the customer
relationship
You can think of these three main forms of email marketing as the electronic
equivalent of:
z
Direct mail
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customer or prospect postal addresses to send your promotions too, so you can collect
a list of customer or prospect email addresses.
You can also rent lists of email addresses from service companies. They'll let you
send your message to their own address lists. These services can usually let you target
your message according to, for example, the interests or geographical location of the
owners of the email address.
email lets you deliver your message to the people (unlike a website, where the
people have to come to your message)
email marketing has proven very successful for those who do it right
This all sounds great of course. Imagine how much cheaper it is to send a message to
thousands of email addresses, rather than thousands of postal addresses!
It's not that simple, unfortunately. Quite apart from the complexities of designing and
delivering email messages to the right people, getting them to actually read and
respond to your message, and measuring and analysing the results, there is the issue of
permission.
Responsible email marketing is based on the idea of permission. This is a complex
issue and the subject of intense debate in the marketing community.
Essentially, you need an email address owner's permission before you can send them a
commercial email. If you don't have this permission, then the recipients of your mail
may well regard your message as spam; unsolicited commercial (bulk) email.
You do not want to send spam!
If you are accused of sending spam, then you may find your email accounts closed
down, your website shut off, and your reputation in tatters. In some parts of the world,
you may even be breaking the law.
Quite apart from these practical considerations, there is also a strong argument which
says that long-term successful email marketing relationships with customers and
others can only work anyway if they're permission based.
The big question, of course, is what constitutes permission...and that is the main
subject of debate. It's important to remember that it's not your views, or even the
views of the majority, that count, but the views of those receiving your emails and
those responsible for administering the infrastructure of the Internet.
An example of permission is when your customer buys something from your online
store and also ticks a box marked "please send me news about product updates via
email". You now have "permission" to send that person product updates by email,
provided you also give them the opportunity to rescind that permission at any time.
It's important to stress that anyone considering email marketing must read up on the
subject of permission and spam. If you don't understand the importance of permission
and the risks of ignoring it, then you could be heading for commercial disaster.
Don't panic, though. It's actually relatively easy to ensure that the address lists you use
or build yourself are permission-based.
11.7 KEYWORD
Internet advertising: It can be defined as convergence of branding, information
dissemination and sales transaction all in one place.
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Securities Issues
LESSON
12
SECURITIES ISSUES
CONTENTS
12.0
12.1
Introduction
12.2
12.2.2
Firewall
12.2.3
Application Gateway
12.2.4
Anti-virus Software
12.2.5
Regular Backups
12.2.6
Virus
12.2.7
12.3
Let us Sum up
12.4
12.5
Keywords
12.6
12.7
Suggested Readings
12.1 INTRODUCTION
The incredible growth of the Internet has excited businesses and consumers alike with
its promise of changing the way we live and work. But a major concern has been just
how secure the Internet is, especially when youre sending sensitive information
through it.
It seems that everything relies on computers and the Internet now communication
(email, cellphones), entertainment (digital cable, mp3s), transportation (car engine
systems, airplane navigation), shopping (online stores, credit cards), medicine
(equipment, medical records), and the list goes on. How much of your daily life relies
on computers? How much of your personal information is stored either on your own
computer or on someone else's system?
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Secret-key cryptography.
Public-key cryptography.
12.2.2 Firewall
If you have been using the Internet for any length of time, and especially if you work
at a larger company and browse the Web while you are at work, you have probably
heard the term firewall used. For example, you often hear people in companies say
things like, I cant use that site because they wont let it through the firewall.
If you have a fast Internet connection into your home (either a DSL connection or a
cable modem), you may have found yourself hearing about firewalls for your home
network as well. It turns out that a small home network has many of the same security
issues that a large corporate network does. You can use a firewall to protect your
home network and family from offensive Web sites and potential hackers.
Basically, a firewall is a barrier to keep destructive forces away from your property. In
fact, thats why its called a firewall. Its job is similar to a physical firewall that keeps a
fire from spreading from one area to the next. As you read through this article, you
will learn more about firewalls, how they work and what kinds of threats they can
protect you from.
A firewall is simply a program or hardware device that filters the information coming
through the Internet connection into your private network or computer system. If an
incoming packet of information is flagged by the filters, it is not allowed through.
Lets say that you work at a company with 500 employees. The company will
therefore have hundreds of computers that all have network cards connecting them
together.
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In addition, the company will have one or more connections to the Internet through
something like T1 or T3 lines. Without a firewall in place, all of those hundreds of
computers are directly accessible to anyone on the Internet. A person who knows what
he or she is doing can probe those computers, try to make FTP connections to them,
try to make telnet connections to them and so on. If one employee makes a mistake
and leaves a security hole, hackers can get to the machine and exploit the hole.
With a firewall in place, the landscape is much different. A company will place a
firewall at every connection to the Internet (for example, at every T1 line coming into
the company). The firewall can implement security rules. For example, one of the
security rules inside the company might be:
Out of the 500 computers inside this company, only one of them is permitted to
receive public FTP traffic. Allow FTP connections only to that one computer and
prevent them on all others.
A company can set up rules like this for FTP servers, Web servers, Telnet servers and
so on. In addition, the company can control how employees connect to Web sites,
whether files are allowed to leave the company over the network and so on. A firewall
gives a company tremendous control over how people use the network.
Firewalls use one or more of three methods to control traffic flowing in and out of the
network:
z
Packet filtering: Packets (small chunks of data) are analyzed against a set of
filters. Packets that make it through the filters are sent to the requesting system
and all others are discarded.
Proxy service: Information from the Internet is retrieved by the firewall and then
sent to the requesting system and vice versa.
Stateful inspection: A newer method that doesnt examine the contents of each
packet but instead compares certain key parts of the packet to a database of trusted
information.
Information traveling from inside the firewall to the outside is monitored for specific
defining characteristics, then incoming information is compared to these
characteristics. If the comparison yields a reasonable match, the information is
allowed through.
Otherwise it is discarded What It Protects You From There are many creative ways
that unscrupulous people use to access or abuse unprotected computers:
z
Remote login: When someone is able to connect to your computer and control it
in some form. This can range from being able to view or access your files to
actually running programs on your computer.
Application backdoors: Some programs have special features that allow for
remote access. Others contain bugs that provide a backdoor, or hidden access, that
provides some level of control of the program.
SMTP session hijacking: SMTP is the most common method of sending e-mail
over the Internet. By gaining access to a list of e-mail addresses, a person can
send unsolicited junk e-mail (spam) to thousands of users. This is done quite often
by redirecting the e-mail through the SMTP server of an unsuspecting host,
making the actual sender of the spam difficult to trace.
Denial of service: You have probably heard this phrase used in news reports on
the attacks on major Web sites. This type of attack is nearly impossible to counter.
What happens is that the hacker sends a request to the server to connect to it.
When the server responds with an acknowledgement and tries to establish a
session, it cannot find the system that made the request. By inundating a server
with these unanswerable session requests, a hacker causes the server to slow to a
crawl or eventually crash.
z
E-mail bombs: An e-mail bomb is usually a personal attack. Someone sends you
the same e-mail hundreds or thousands of times until your e-mail system cannot
accept any more messages.
Spam: Typically harmless but always annoying, spam is the electronic equivalent
of junk mail. Spam can be dangerous though. Quite often it contains links to Web
sites. Be careful of clicking on these because you may accidentally accept a
cookie that provides a backdoor to your computer.
Redirect bombs: Hackers can use ICMP to change (redirect) the path information
takes by sending it to a different router. This is one of the ways that a denial of
service attack is set up.
Source routing: In most cases, the path a packet travels over the Internet (or any
other network) is determined by the routers along that path. But the source
providing the packet can arbitrarily specify the route that the packet should travel.
Hackers sometimes take advantage of this to make information appear to come
from a trusted source or even from inside the network! Most firewall products
disable source routing by default.
Some of the items in the list above are hard, if not impossible, to filter using a
firewall. While some firewalls offer virus protection, it is worth the investment to
install anti-virus software on each computer. And, even though it is annoying, some
spam is going to get through your firewall as long as you accept e-mail.
The level of security you establish will determine how many of these threats can be
stopped by your firewall. The highest level of security would be to simply block
everything. Obviously that defeats the purpose of having an Internet connection. But a
common rule of thumb is to block everything, then begin to select what types of
traffic you will allow.
You can also restrict traffic that travels through the firewall so that only certain types
of information, such as e-mail, can get through. This is a good rule for businesses that
have an experienced network administrator that understands what the needs are and
knows exactly what traffic to allow through.
For most of us, it is probably better to work with the defaults provided by the firewall
developer unless there is a specific reason to change it. One of the best things about a
firewall from a security standpoint is that it stops anyone on the outside from logging
onto a computer in your private network.
While this is a big deal for businesses, most home networks will probably not be
threatened in this manner. Still, putting a firewall in place provides some peace of
mind.
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Identifying suspicious behavior from any computer program which might indicate
infection. This technique is called heuristic analysis. Such analysis may include
data captures, port monitoring and other methods.
Most commercial antivirus software uses both of these approaches, with an emphasis
on the virus dictionary approach.
of time and effort. At the same time, all computer files are potentially easy to change
or erase, either intentionally or by accident. If you take a careful and methodical
approach to backing up your file systems, you should always be able to restore recent
versions of files or file systems with little difficulty.
When a hard disk crashes, the information contained on that disk is destroyed. The
only way to recover the destroyed data is to retrieve the information from your backup
copy.
There are several different methods of backing up. The most frequently used method
is a regular backup, which is a copy of a file system, directory, or file that is kept for
file transfer or in case the original data is unintentionally changed or destroyed.
Another form of backing up is the archive backup; this method is used for a copy of
one or more files, or an entire database that is saved for future reference, historical
purposes, or for recovery if the original data is damaged or lost. Usually an archive is
used when that specific data is removed from the system.
12.2.6 Virus
A computer virus is a self-replicating program that explicitly copies itself and that can
infect other programs by modifying them or their environment such that a call to an
infected program implies a call to a possibly evolved copy of the virus. Note that
'program' takes a fairly liberal interpretation here, involving much more than the
'obvious' application programs (executables) in a typical computer system.
Almost any code that is executed or interpreted may be 'virusable' so long as, when
running in its normal execution context, that code has write access to some other
executable object (note this need not be the same kind of executable object!).
Some obvious targets for viruses include the boot code in the system boot sectors and
MBRs of PC disks and hard drives. These are clearly programs, but are often
overlooked because they do not reside in files and thus are not readily accessible to
the user, or even 'visible'.
Other less than obvious programs include scripting facilities built into applications,
either in the form of sophisticated macro languages such as Visual Basic for
Applications (VBA), or the simpler procedural languages for automating many
applications such as the scripting feature of popular Windows IRC clients like mIRC
and Pirch.
Another important feature of viruses is that, unlike their biological namesakes, they
need not be parasitic. Various companion infection methods exist and mechanisms
that involve altering the behavior of the host program's environment, rather than
altering the program itself, can be sufficient to classify a program as viral (so long as
it is also self-replicating).
When discussing viruses, it is common to hear talk about obvious symptoms and
damaging payloads. Some viruses display symptoms, and some cause damage to files
in a system they have infected, but neither symptoms nor damage are essential in the
definition of a virus. A non-damaging virus is still a virus, not a prank.
There are no 'good' viruses. Viruses are seldom intentionally installed. Users (and,
more importantly in corporate settings, system administrators) must be able to control
their computers. This requires that they have the power to install and remove software,
and that no software is installed, modified, or removed without their knowledge or
permission.
As viruses are usually surreptitiously self-installed and modify other software in the
system without user or administrator awareness, they break these requirements of
system administration. Further, their removal can be difficult and costly and viruses
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will occupy drive space and space on backup media and use CPU cycles and RAM
that has not been budgeted for.
Many viruses cause intentional damage. But many more cause damage that may not
have been intended by the virus' writer. For instance, when a virus finds itself in a
very different environment from that for which it was written, a non-destructive virus
can suddenly become very destructive.
A good case in point are many common (or formerly common) boot viruses: while a
particular boot virus might not contain any code to damage computers running
Windows NT, booting an NT machine with such a virus is likely to result in system
repairs the user or system administrator may not have been prepared for.
Even if a virus causes no direct damage to a computer, the user's or administrator's
inexperience with viruses can mean that damage occurs during the 'clean up' process.
Many organizations have shredded floppies, deleted files, and done low-level formats
of hard disks in their efforts to remove viruses.
Even when removal is done perfectly, with no damage to the infected system or files,
it is not normally done when the machine is first infected, and the virus in that
machine has had a few weeks to spread. The social costs of infection include a loss of
reputation and good will which in a business setting can be significant.
Types of PC Viruses
Generally, there are two main classes of viruses. The first class consists of the file
infectors, which attach themselves to ordinary program files. These usually infect
arbitrary .COM and/or .EXE programs, though some can infect any program for
which execution is requested, such as .SYS, .OVL, .PRG, & .MNU files. File
infectors can be either direct action or resident.
A direct-action virus selects one or more other programs to infect each time the
program that contains it is executed. A resident virus hides itself somewhere in
memory the first time an infected program is executed, and thereafter infects other
programs when they are executed (as in the case of the Jerusalem 185 virus) or when
certain other conditions are fulfilled. The Vienna virus is an example of a direct-action
virus. Most other viruses are resident.
The second category is system or boot-record infectors: those viruses that infect
executable code found in certain system areas on a disk, which are not ordinary files.
On DOS systems, there are ordinary boot-sector viruses, which infect only the DOS
boot sector, and MBR viruses which infect the Master Boot Record on fixed disks and
the DOS boot sector on diskettes. Examples include Brain, Stoned, Empire, Azusa,
and Michelangelo. Such viruses are always resident viruses. Finally, a few viruses are
able to infect both (the Tequila virus is one example). These are often called "multipartite" viruses, though there has been criticism of this name; another name is "bootand-file" virus.
File system or cluster viruses (e.g. Dir-II) are those that modify directory table entries
so that the virus is loaded and executed before the desired program is. Note that the
program itself is not physically altered; only the directory entry is. Some consider
these infectors to be a third category of viruses, while others consider them to be a
sub-category of the file infectors.
Stealth Virus
A stealth virus is one that hides the modifications it has made in the file or boot
record, usually by monitoring the system functions used by programs to read files or
physical blocks from storage media, and forging the results of such system functions
so that programs which try to read these areas see the original uninfected form of the
file instead of the actual infected form. Thus the viral modifications go undetected by
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Thus, once your global macro template is infected, any file you open after that
becomes infected and the virus spreads.
Virus Hoax
A virus hoax generally appears as an email message that describes a particular virus
that does not exist. These emails almost always carry the same basic story: that if you
download an email with a particular subject line, your hard drive will be erased (an
impossibility because the text of an email cannot harbor a virus).
Such messages are designed to panic computer users. The writer or writers email the
warning and include a plea for the reader to forward it to others. The message then
acts much like a chain letter, propagating throughout the Internet as individuals
receive it and then innocently forward it. An example of a virus hoax is the "Good
Times" virus which was written in 1994 and since then has circled the globe many
times over. The best thing to do on receipt of such an email is to ignore and delete it.
World Famous Virus
Chernobyl: The Chernobyl, or PE CIH, virus activates itself every year on the 26th of
April - on the anniversary of the Chernobyl, Ukraine nuclear power plant tragedy. It
was allegedly written by a Taiwanese citizen in 1998.
The virus wipes the first megabyte of data from the hard disk of a personal computer
thus making the rest of the files of no use. In addition to this it also deletes the data on
the computer's Basic Input-Output System (BIOS) chip so that the computer cannot
function till a new chip is fitted or the data on the old one is restored. Fortunately only
those BIOSes, which can be changed or updated, face a threat from this virus.
This virus affects only executable files. Since these are distributed less often than
documents, the spread of Chernobyl is more confined than that of most macro viruses.
VBS_Loveletter
The VBS_LOVELETTER virus (better known as the Love Bug or the ILOVEYOU
virus) was reportedly written by a Filipino undergraduate.
In May 2000, this deadly virus beat the Melissa virus hollow - it became the world's
most prevalent virus. It struck one in every five personal computers in the world.
When the virus was brought under check the true magnitude of the losses was
incomprehensible. Losses incurred during this virus attack were pegged at US $ 10
billion.
The original VBS_LOVELETTER utilized the addresses in Microsoft Outlook and
emailed itself to those addresses. The e-mail, which was sent out, had "ILOVEYOU"
in its subject line. The attachment file was named "LOVE-LETTER-FORYOU.
TXT.vbs". The subject line and those who had some knowledge of viruses, did not
notice the tiny .vbs extension and believed the file to be a text file conquered people
wary of opening e-mail attachments. The message in the e-mail was "kindly check the
attached LOVELETTER coming from me".
Since the initial outbreak over thirty variants of the virus have been developed many
of them following the original by just a few weeks. In addition, the Love Bug also
uses the Internet Relay Chat (IRC) for its propagation. It e-mails itself to users in the
same channel as the infected user. Unlike the Melissa virus this virus does have a
destructive effect. Whereas the Melissa, once installed, merely inserts some text into
the affected documents at a particular instant during the day, VBS_LOVELETTER
first selects certain files and then inserts its own code in lieu of the original data
contained in the file.
This way it creates ever-increasing versions of itself. Probably the world's most
famous worm was the Internet worm let loose on the Internet by Robert Morris
sometime in 1988. The Internet was, then, still in its developing years and this worm,
which affected thousands of computers, almost brought its development to a complete
halt. It took a team of experts almost three days to get rid of the worm and in the
meantime many of the computers had to be disconnected from the network.
Pakistani Brain
The Brain, the first virus known to have spread all over the world, was a boot sector
virus. This implies that it would take the system commands, those that help in starting
the computer, from their designated space (sector) on the hard disk and put them in
the next unused space (sector). Then, it would mark the space where the system
commands now reside as bad sectors. This way, it would become impossible to boot
(start) the computer. Moreover, it would continue to take up all the unused space in
the computer's disk and mark it as corrupted sectors.
All the strains of the Brain virus carried the name of the program, the author and often
their address in the boot sector of the virus-infected disk. The other known versions of
this virus include Ashar or Ashar-Shoe viruses, which are very common in Malaysia.
Stoned-Marijuana
Originally reported to have been written in New Zealand, this was another boot sector
virus with a difference. It would infect the boot sector of floppy disks. The File
Allocation Table (FAT) on the hard disk drive - the system used by DOS to identify
and locate files on a disk - would also be affected. The virus would most often
regularly display a message, which said, "Your PC is stoned. Legalize Marijuana."
Moreover, it would damage the File Allocation Table on hard disk drives with more
than one partition. The FAT on floppy disks, which had been formatted as high
density, would also be harmed so that access to files on both the hard disk and the
floppy disk would become nearly impossible to achieve.
Jerusalem
The Jerusalem virus a.k.a. "Israeli" and "Friday the 13th" has several versions
including the Jerusalem-B virus. It starts by infecting the .COM and .EXE files in a
computer. After existing or being resident in a computer for half an hour, it slows
down the system processes by a factor of ten. On a pre-set date, Friday the 13th, the
Jerusalem virus deletes all the infected files from the user's computer. Apart from the
damage that it does, the other strain of the Jerusalem virus, Jerusalem-B, also shows a
"black window" in the center of the screen at regular intervals.
Cascade
The Cascade virus originally appeared between September and December during the
years 1980 and 1988. Its basic target were machines with colour monitors. This virus
is also called "Falling Letters" or "1701". It initially appeared as a Trojan horse in the
form of a program designed to turn off the Num-Lock light on the user's keyboard. In
fact, what it actually did was to make the characters on the screen drop in a heap to the
bottom of the screen. What is special about this virus is that it utilizes an encryption
algorithm to evade detection. Now, variants of this virus occur as a memory resident
.COM virus.
Michelangelo
The Michelangelo virus also referred to by some virus watchers as Stoned.
Michelangelo, first spread in the early 1990's. Since then, a number of strains have
been introduced, and it is now also known by a variety of other names. This virus was
also responsible for the founder of Trend Micro entering the anti-virus business.
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This virus was entitled after the very famous Italian Renaissance artist Michelangelo
Buonarroti. It gets activated every year on the artist's birthday - 6th March. The person
responsible for giving the name was the researcher not the writer of the virus.
The Michelangelo is a boot record virus and on the date that it gets triggered it
destroys files by overwriting certain critical areas of the hard disk or floppy disk.
These areas are overwritten with garbage, making the disk or floppy completely
useless. If this virus infects a bootable floppy (a floppy that can be used to boot a
computer), the floppy no longer remains a bootable floppy.
An infection with this virus is caused by using infected disks for a system boot-up.
After being installed in the memory of the computer, Michelangelo then goes on to
infect all non-write protected disks that are used in the computer.
Virus Creation Tool
A program designed to generate viruses. Even early virus creation tools were able to
generate hundreds or thousands of different, functioning viruses, which were initially
undetectable by current scanners.
Virus Source
Source code is written by a programmer in a high-level language and readable by
people but not computers. Source code must be converted to object code or machine
language before a computer can read or execute the program. Virus Source can be
compiled to create working viruses, or modified and compiled by programmers to
make new working viruses.
Check Your Progress 2
Fill in the blanks:
1. An application gateway is an application program that runs on a
system between two networks.
2. Viruses are intentionally installed.
3. A virus selects one or more other programs to infect each
time the program that contains it is executed.
Any number of events can impact your business and IT operations from simple enduser mistakes to a failed device to the loss of an entire data center due to a disaster.
Data Protection and Recovery has become more critical than ever. Recent news
reports have highlighted the problems universities, financial institutions and others
have faced with the loss of important customer and employee data. Regulatory
requirements have increased the emphasis on having a solid data protection and
recovery plan in place.
Recovery management goes beyond the backup-and-restore paradigm to offer an
efficient way to protect data and help ensure its continual availability. Using
replication and snapshot technology to create a recovery tier within the storage
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User
Recovery Agent
Recovery Agent
User
has their responsibility to make regular backups to protect their computer data. Once
your system is in use, your next consideration should be to back up the file systems,
directories, and files. A non-damaging virus is still a virus, not a prank. Data recovery
does not necessarily imply that private key recovery has occurred, however, key
recovery may be one method to achieve data recovery. Data recovery can be achieved
without private key recovery in the Windows XP operating system that is based on
symmetrically encrypted data blocks.
12.5 KEYWORDS
Computer Security: It is a technological and managerial procedures applied to
computer systems to ensure the availability, integrity and confidentiality of
information managed by the computer system.
Confidentiality: It means that information cannot be access by unauthorized parties.
Authentication: It means that users are who they claim to be.
Availability: It means that resources are accessible by authorized parties. Integrity
means that information is protected against unauthorized changes that are not
detectable to authorized users.
Encryption: It is a process of coding information which could either be a file or mail
message in into cipher text a form unreadable without a decoding key in order to
prevent anyone except the intended recipient from reading that data.
Firewall: It is a dedicated appliance, or software running on another computer, which
inspects network traffic passing through it, and denies or permits passage based on a
set of rules.
Application Gateway: It is an application program that runs on a firewall system
between two networks.
Virus: A computer virus is a self-replicating program that explicitly copies itself and
that can infect other programs by modifying them or their environment.
Antivirus Software: It is a computer program that attempts to identify, neutralize or
eliminate malicious software.
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Enterprise Resource Planning
UNIT V
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LESSON
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Enterprise Resource Planning
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ENTERPRISE RESOURCE PLANNING
CONTENTS
13.0
13.1
Introduction
13.2
13.3
13.4
13.2.1
Meaning of ERP
13.2.2
Characteristics of ERP
13.2.3
Components of ERP
13.2.4
Objectives of ERP
13.2.5
Benefits of ERP
13.3.2
13.3.3
13.3.4
13.3.5
Middleware Services
Ramco Marshal
13.4.2
Oracle Applications
13.4.3
Baan IV
13.4.4
SAP
13.5
Let us Sum up
13.6
13.7
Keywords
13.8
13.9
Suggested Readings
What is ERP
Characteristics of ERP
Components of ERP
Objectives of ERP
Benefits of ERP
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Backbone of ERP
Meaning of ERP
13.1 INTRODUCTION
The Information technology industry is galloping into globalization at a very rapid
rate. It was evolved from mainframe based computing through the client server era
and internet era to where we are now heading - the convergence era.
These distinct phases are marked by parallel development in hardware technologies.
Client server era began when computing power delivered at desktop machines
increased manifold and matched mainframe computing power.
These technologies limited the availability of information services to users within an
organization. The Internet era has brought in the ability to deliver information around
the globe. This convergence era integrates business and technology together. This is
made possible with advancements in communication infrastructure.
The business landscape is constantly changing and enterprises are seeking to gain
competitive advantage through mergers and acquisitions as well as increased
proximity to customers and suppliers. This consolidation, along with the more macro
trend toward globalization, means that many enterprises now operate from several
different geographical sites, between which large volumes of time-sensitive, mission
critical data is transferred.
Now the business organizations are demanding such technologies which can deliver
complete (best business practices), usable (high productivity) and adaptable (easy
installation and post implementation maintenance) business systems.
With this ever-changing business environment, enterprises are adopting ERP systems
is to set up and integrate information resources across geographically spread business
units, to enable optimization across the organization.
Take a customer order, for example. Typically, when a customer places an order, that
order begins a mostly paper-based journey from in-basket to in-basket around the
company, often being keyed and re-keyed into different departments computer
systems along the way.
All that lounging around in in-baskets causes delays and lost orders, and all the keying
into different computer systems invites errors. Meanwhile, no one in the company
truly knows what the status of the order is at any given point because there is no way
for the finance department, for example, to get into the warehouses computer system
to see whether the item has been shipped. "Youll have to call the warehouse" is the
familiar refrain heard by frustrated customers.
ERP vanquishes the old standalone computer systems in finance, HR, manufacturing
and the warehouse, and replaces them with a single unified software program divided
into software modules that roughly approximate the old standalone systems. Finance,
manufacturing and the warehouse all still get their own software, except now the
software is linked together so that someone in finance can look into the warehouse
software to see if an order has been shipped.
Most vendors ERP software is flexible enough that you can install some modules
without buying the whole package. Many companies, for example, will just install an
ERP finance or HR module and leave the rest of the functions for another day.
It provides for complete integration of Systems not only across the departments in
a company but also across the companies under the same management.
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ERP performs core corporate activities and increases customer service and
thereby augmenting the corporate image.
ERP eliminates the most of the business problems like Material shortages,
Productivity enhancements, Customer service, Cash Management, Inventory
problems, Quality problems, Prompt delivery etc.,
It should run across various data base back ends through Open Data Base
Connectivity (ODBC).
ERP system should have open system architecture. This means that any module
can be interfaced or detached whenever required without affecting the other
modules.
ERP provides business intelligence tools like Decision Support Systems (DSS),
Executive Information System (EIS), Reporting, Data Mining and Early Warning
Systems (Robots) for enabling people to make better decisions and thus improve
their business processes
Last but not the least, it must simulate the reality of business processes on the
computers. In no way it should have the control beyond the business processes
and it must be able to assign accountabilities to the users controlling the system.
Empower the customer to modify the implemented business processes to suit their
needs.
Reduce paper documents by providing on-line formats for quickly entering and
retrieving information.
Company can track the orders and get detailed information on their customers.
Accounting application can integrate the cost, profit, and revenue information of
sales that are made, and it can be presented in a granular way.
It helps in tracking the 3-way match between Purchase orders (what was ordered),
Inventory receipts (what arrived), and costing (what the vendor invoiced)
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submitting requests for proposals, and receiving proposals. Examine this scenario. The
current accounts payable process occurs through the exchange of paper documents.
Each year the trading partners exchange millions of invoices, checks, purchase orders,
financial reports, and other transactions. Most of the documents are in electronic form
at their point of origin but are printed and key-entered at the point of receipt. The
current manual process of printing, mailing is costly, time consuming, and errorprone. Given this situation and faced with the need to reduce costs, small businesses
are looking toward electronic commerce as a possible savior.
Intra-organizational Transactions
We call this category market-driven transaction. A company becomes market driven
by dispersing throughout the firm information about its customers and competitors; by
spreading strategic and tactical decision making so that all units can participate; and
by continuously monitoring their customer commitment by making improved
customer satisfaction an ongoing objective.
To maintain the relationships that are critical to delivering superior customer value,
management must pay close attention to service, both before and after sales. In
essence, a market-driven business develops a comprehensive understanding of its
customers business and how customers in the immediate and downstream markets
perceive value.
Three major components of market-driven transactions are:
z
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a third party) with the search program (could be another vendor) that finds the
currency rates from the cheapest on-line service to automatically send trades to the
bank or financial services company. In effect, a personalized automated trading
system can be created without having to go to any financial institution. This is just one
example of how information brokerages can add value.
Another aspect of the brokerage function is the support for data management and
traditional transaction services. Brokerages may provide tools to accomplish more
sophisticated, time-delayed updates or future compensating transactions. These tools
include software agents, distributed query generator, the distributed transaction
generator, and the declarative resource constraint base which describes a businesss
rules and-environment information. At the heart of this layer lies the work-flow
scripting environment built on a software agent model that coordinates work and data
flow among support services.
As pointed out earlier, software agents are used to implement information brokerages.
Software agents are mobile programs that have been called healthy viruses, digital
butlers and intelligent agents. Agents are encapsulations of users instruction that
perform all kinds of tasks in electronic marketplaces spread across networks.
Information brokerages dispatch agents capable of information resource gathering,
negotiating deals, and performing transactions. The agents are intelligent because they
have contingency plans of action. They examine themselves and their environment
and if necessary change from their original course of action to an alternative plan.
For example, suppose you send an agent to an on-line store with a request to order a
bouquet of roses for $25 or less. If the shop offers roses starting at $30, your agent can
either choose a different bouquet or find a different store by consulting an on-line
Yellow Pages directory, depending on prior instructions.
Although the notion of software agents sounds very seductive, it will take a while to
solve the problems of interregna communication, interoperable agents, and other
headaches that come with distributed computing and net-working. To some critics, the
prospect of a single-agent language like Telescript as a world standard is disturbing.
They worry that agents sound a bit too much like computer viruses, which instead of
running errands may run amok. Vendors such as General Magic go to great lengths to
explain the precautions it has taken to make this impossible: the limits placed on the
power of agents, the self destruct mechanism built into their codes. Yet until
electronic commerce services are up and running on a large scale, it is impossible to
know how well software agents will work.
minimized. This search would require several queries to various on-line directories tofind empty seats on various airlines and then the availability of seats would; be
coordinated with the amount of time spent in the airport terminals.
The primary difference between the two is that unlike interactive catalogs, which deal
with people, directory support services interact directly with software applications.
For this reason, they need not have the multimedia glitter and jazz generally
associated with interactive catalogs.
From a computing perspective, we can expect that there will be no one common user
interface that will glaze the surface of all electronic commerce applications, but
graphics and object manipulation will definitely predominated. Tool developers and
designers might incorporate common tools for interface building, but the shape of
catalogs or directories will depend on the users desires and functional requirements.
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work groups is a challenge. Today, with the messaging tools, people can communicate
and work together more effectively-no matter where they are located.
When an employee sends an electronic mail form, the information travels along with
the form. So one person can start the form, mail it to the next person, fill it in, sign it,
mail it to the next, and so on. This is known as message-enabled workflow solutions.
The main disadvantages of messaging are the new types of applications it enableswhich appear to be more complex, especially to traditional programmers and the
jungle of standards it involves. Because of the lack of standards, there is often no
interoperability between different messaging vendors leading to islands of messaging.
Also, security, privacy, and confidentiality through data encryption and authentication
techniques are important issues that need to be resolved for ensuring the legality of the
message-based transactions themselves.
The goal is for the applications to send a request to the middleware layer, which then
satisfies the request any way it can, using remote information.
Transaction Security and Management
Support for Transaction Processing (TP) is fundamental to success in the electronic
commerce market. Security and management are essential to all layers in the
electronic commerce model. At the transaction security level, two broad general
categories of security services exist: authentication and authorization.
Transaction integrity must be a given for businesses that cannot afford any loss or
inconsistency in data. Some commercial sites have had gigantic centralized TP
systems running for years. For electronic commerce, middleware provides the
qualities expected in a standard TP sys-tem: the so-called ACID properties (atomicity,
consistency, isolation, and durability).
Distributed Object Management and Services
Object orientation is proving fundamental to the proliferation of network-based
applications for the following reasons: It is too hard to write a network-based
application without either extensive developer retraining or a technology that
camouflages the intricacies of the network. Objects are defined as the combination of
data and instructions acting on the data. Objects are an evolution of the more
traditional programming concept of functions and procedures.
A natural instance of an object in electronic commerce is a document. A document
carries data and often carries instructions about the actions to be performed on the
data. Today, the term object is being used interchangeably with document resulting in
a new form of computing called document oriented computing. Here, the trend is to
move away from single data-type documents such as text, pictures, or video toward
integrated documents known as compound document architectures.
The best example of this approach is an active document. If you create a new
document that is an integration of the spreadsheet, word processor, and presentation
package, what youll see in the next generation of operating systems is that as you
scroll through your document, the tool bar will automatically change from a
spreadsheet too bar, to a word processing tool bar, to a presentation package tool bar.
These applications will also be able to access and retrieve data from any file in the
computing network.
The implications are clear: Were going to see a gradual movement toward active
documents that will be designed out of linked applications.
Check Your Progress 2
Fill in the blanks:
1. is the ultimate mediator between diverse software programs that enables them talk to one another.
2. A natural instance of an object in electronic commerce is a
.
3. Transparency implies that users should be unaware that they are accessing
systems.
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and Commercial ERP software. Two well known Commercial ERP softwares are
described below:
Wedded to Microsoft
DCOM Based
Strengths
z
Weakness
z
Opportunities
z
Single product
Swadeshi spirit
Threats
z
Strengths
z
Great GUI
Outstanding courseware
Weakness
z
Opportunities
z
Manufacturing industry
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Threats
z
Dominance of SAP
Consultants indifference
13.4.3 Baan IV
The Baan Company is a worldwide leader in enterprise wide business software
applications and consulting services for companies in the hybrid manufacturing,
automotive, electronics, process and heavy equipment and project services industries.
Its corporate mission is to provide companies with innovative business software
solutions which are aligned with a companys organisational structure, business
practices and operational procedures.
The Baan Company is a leading provider of enterprise and inter-enterprise business
software solutions. The companys family of products is designed to help corporations
maintain a competitive advantage in the management of critical business processes by
means of a product architecture that lends itself to fast implementations and ease of
change.
Baan IV is an integrated family of manufacturing, distribution, finance and
transportation, service, project and orgware modules. The solutions offer a new
concept in business management software that incorporates and goes beyond ERP.
Using the principle of Dynamic Enterprise Modelling (DEM) implemented via its
Orgware capabilities, Baan IV enables a company to match its specific business
processes and organisational model with the extensive functionality of the Baan
applications.
Baan IV is specially designed to meet the needs of key vertical markets. Furthermore,
Baan also extends supply chain support beyond the boundaries of an organisation to
support trading partner management as well. Some of the key features of Baan IV are
described below:
Architecture
z
Strengths
z
Weaknesses
z
Courseware availability
Training infrastructure
Opportunities
z
SME Sector
Threats
z
13.4.4 SAP
SAP was founded in 1972 and has grown to become the worlds leading software
company. SAP is a German company but operates all over the world, with
28 subsidiaries and affiliates and six partner companies maintaining offices in
40 countries.
SAP is both the name of the company and the ERP package. The SAP system
comprises a number of fully integrated modules which cover every aspect of business
management. The system has been developed to meet the increasing needs of
commercial and other organisations that are striving for greater efficiency and
effectiveness.
While many software companies have looked at areas of business and developed
systems to support those areas, SAP has looked toward the whole business. They offer
a unique system that supports nearly all areas of business on a global scale.
SAP provides the opportunity to replace large numbers of independent systems that
have been developed and implemented in established organisations with one single
modular system. Each module performs a different function but is designed to work
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with other modules. It is fully integrated, offering true compatibility across business
functions. Some of the key features of SAP R/3 are described below:
Architecture
z
Strengths
z
Weakness
z
Opportunities
z
Threats
z
New players like People Soft edging out with better practices
13.7 KEYWORDS
ERP: ERP stands for Enterprise Resource Planning; it is a system which provides an
integrated information system for all departments and functions across a company that
can serve all those different departments particular needs.
e-commerce Application Service Layer: It is a layer of e-commerce architecture
which comprised of existing and future applications built on the innate architecture.
Information Brokerage and Management Layer: It is a layer of e-commerce
architecture which provides service integration through the notion of information
brokerages, the development of which is necessitated by the increasing information
resource fragmentation.
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middleware
document
multiple
CYP 3
1. Open Source ERP software and Commercial ERP software
2. Remco Marshal
3. Companies like SAP AG, Baan, Oracle markets ERP software.
Thomas, J Kuegler, Web Advertising and Marketing, Jr. 3rd Edition-Prentice-Hall of India,
New Delhi.
Dr. Ravi Kalakota, E-Business Roadmap for Success, Pearson Education.
Ravi Kalakota, Andrew B. Whinston, "Frontiers of Electronic Commerce", Addition-Wesley
2000.
Vinod Kumar Garg and N.K.Venkita Krishnan, "Enterprise Resource Planning Concepts
and Practice", PHI, 1998.
Jose Antonio Fernandz, the SAP R/3 Handbook, TMH, 1998.
Lau, Enterprise Resource Management, McGraw Hill.
Daniel E OLeary, Enterprise Resource System: Systems, Lifecycle, Electronic Commerce,
Risk.
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LESSON
14
ERP PLANNING AND IMPLEMENTATION
CONTENTS
14.0
14.1
Introduction
14.2
ERP Decision
14.3
14.2.1
Business Realisation
14.2.2
14.2.3
Approach Selection
14.2.4
Communication
14.2.5
14.2.6
Change Management
14.4
Multi-tier Architecture
ERP Implementation
14.4.1
14.4.2
14.4.3
14.4.4
14.4.5
14.5
Let us Sum up
14.6
14.7
Keywords
14.8
14.9
Suggested Readings
14.1 INTRODUCTION
It is very well recognized that technological advances of any nature bring change.
Enterprise Resource Planning is no different. The introduction of ERP systems has
created a mini revolution in the functioning of industries. Like problems faced with
any new technology, ERP implementation and usage has its own set of unknowns to
be tackled. These have to be proactively handled to derive maximum benefits.
Needless to add, there are mechanisms for putting in place a continuous improvement
programme.
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Apart from the hard benefits that he is likely to earn and a case for ROI, the top
management should also look at the security of the investments and the rate of
obsolescence. One cannot expect to be technology proof in the current state of
technological boom, but, all the same one should ensure that it does not become a
losing proposition either. One way to do it is by ensuring that the product in a few
years will be supported by evolving standards, the technology upgradation and change
management.
A case in point is the argument on proprietary versus open systems. Selection of the
IT framework, though highly technical and subjective must be delved into by the top
management for a comfort on future investments (in the long-term). The CIO of the
organisation should provide a clear IT strategy for the organisation to the top
management.
14.2.4 Communication
Deployment of the ERP is a tricky job as it involves a whole variety of people with
different attitudes, all interacting or rather trying to communicate at the same time. A
whole lot of personal goals surface during this periodfor instance, operational and
tactical staff, whose interests were earlier trampled by the IT staff, try to settle scores.
Hence, it becomes imperative that the key stakeholders in the initiative agree upon the
project plan at the beginning of the project.
The project plan should also clearly mention dates for steering committee meetings,
etc. and these meetings must be used by the top management as a platform to
communicate the original vision, the mission, the strategies and objectives of the
project. Continuously re-emphasising the message helps in reducing the chances of
straying off from the target objectives, as well as the target dates.
The success of the ERP initiative, on the softer side, can be attributed to two things.
First, in all communications about the project, there is need of a practice of tying
central messages and specific department objectives and needs back to the overall
organisation.
Second, a regular mix of efforts to include everything from conducting workshops,
publishing newsletters and holding focus groups to organising lunch time discussions
and traveling road shows; each designed to suit different stages across the
implementation life cycle.
We should explicitly, candidly and constantly communicate the business case and
realities, including goals, timetable and expectations. An organisation which
implements ERP should have a well-laid out communications plan, even when the
initial project charter is being discussed. The communications plan should mention the
message that needs to be transpired in a one-to-many matrix.
A message can have more than one audience to be impacted. An audience could reap
a set of benefits and a benefit could involve multiple risks. The time frame of the
message to transpire should also be established in the matrix. This includes top down
as well as bottom up information flow and communication channels.
Steering committee meetings are usually the starting point for the top down approach
whereas brain storming sessions are of the bottom up approach. The execution and the
timing of the communications plan is extremely important.
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anticipated, they are engulfed by a second wave of implications that they had not
anticipated.
Unless the organisation is prepared to come to a dead stop while putting the new
system in place, people must maintain performance levels while preparing to shift to
the new system. The level of effort required continues to escalate throughout the
process and typically does not diminish for a substantial period after the conversion.
When these demands are placed on top of an already-high workload, the resulting
strain leads to decreased output, increased turnover, delays in work in process and
negative attitudes towards the organisation. If issues related to increased workload are
not managed effectively and resistance is driven underground, the resulting problems
can be very costly to the organisation in terms of quality and productivity.
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Data Tier
Since this has been deemed the Age of Information, and since all information needs to
be stored, the Data Tier described above is usually an essential part. Developing a
system without a data tier is possible, but I think for most applications the data tier
should exist. So what is this layer?
Basically, it is your Database Management System (DBMS) - SQL Server, Access,
Oracle, MySql, plain text (or binary) files, whatever you like. This tier can be as
complex and comprehensive as high-end products such as SQL Server and Oracle,
which do include the things like query optimization, indexing, etc., all the way down
to the simplistic plain text files (and the engine to read and search these files).
Some more well-known formats of structured, plain text files include CSV, XML, etc.
Notice how this layer is only intended to deal with the storage and retrieval of
information. It doesn't care about how you plan on manipulating or delivering this
data. This also should include your stored procedures. Do not place business logic in
here, no matter how tempting.
Presentation Logic Tier
Let's jump to the Presentation Logic Layer in Figure 14.1. You probably are familiar
with this layer; it consists of our standard ASP documents, Windows forms, etc. This
is the layer that provides an interface for the end user into your application.
That is, it works with the results/output of the Business Tier to handle the
transformation into something usable and readable by the end user. It has come to my
attention that most applications have been developed for the Web with this layer
talking directly to the Data Access Layer and not even implementing the Business
Tier.
Sometimes the Business Layer is not kept separated from the other two layers. Some
applications are not consistent with the separation of these layers, and it's important
that they are kept separate. A lot of developers will simply throw some SQL in their
ASP (using ADO), connect to their database, get the recordset, and loop in their ASP
to output the result. This is usually a very bad idea.
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We can plug this Product object into another object, a "Cart" object. This cart can
contain and handle many Product objects. It also has getters and setters, but obviously
on a more global scale. You can do something like "for each product in myCart", and
enumerate (loop through) each product within.
Now, when you call "getPrice" for the Cart object, it knows that it must enumerate
each product that it has, add up the price for each, and return that single total. When
we fire the "saveCart" method, it will loop for each "product" and call its
"saveProduct" method, which will then hit the Data Access Tier objects and methods
to persist itself over to the Data Tier.
We could also take our simple Product object, and plug it into our "Sale" object. This
Sale object contains all of the items that are available for a particular sale. And the
Sale object can be used for things like representing all the items on sale at a given
outlet or the like. I'm sure you are beginning to understand the advantage of using an
OOP environment.
Data Access Tier
This layer is where you will write some generic methods to interface with your data.
For example, we will write a method for creating and opening a Connection object
(internal), and another for creating and using a Command object, along with a stored
procedure (with or without a return value), etc.
It will also have some specific methods, such as "saveProduct," so that when the
Product object calls it with the appropriate data, it can persist it to the Data Tier. This
Data Layer, obviously, contains no data business rules or data manipulation/
transformation logic. It is merely a reusable interface to the database.
Are they interested in Local implementations or are local projects training ground
for them?
Will the implementing agency let a third party do a quality check on the
implementation work?
Busi
Model
Business
Vision/Needs
New
Processes
to be
Packaged
Solutions
Select
Components
System
Design
Modify
Custom Build/
Configure
IT
Solution
Pure BPR
With pure BPR, business processes are reengineered into an ideal form. While
standard packages are usually still chosen to support these new processors, inevitably
they require modifications and some custom development to achieve the best fit.
Each modification of a package detracts from its value. Moreover, modifications cost
time and money and are not usually supported by the package vendor. Even worse,
upgrades to the basic package are then often impossible to apply. As more upgrades
become available, support for the original package eventually stops. The traditional
approach to BPR is still valid as is the choice of packaged software, even if it is being
used as a starting point for large scale customisation. Pure BPR can produce excellent
results.
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Channeled BPR
Channeled BPR, in contrast, begins with a strategic choice of software package based
on a high level requirement and selection exercise, for example, a conference room
pilot. Business processes are then designed around the known capabilities of the
package.
While businesses are inclined to believe that they have a greater understanding of their
needs than any software vendor, todays modern packages are the result of intensive
research and development, drawing on experience of best business solutions in a wide
range of industries. If carefully chosen, they cannot only fulfill most business
requirements but also provide a broader view of what is possible.
The choice of package to support business processes, which by their nature run across
different functions, in different departments, is relatively small. It is limited to those
which are fully integrated. Even so, no two packages are identical in their capabilities.
Some initial work is necessary to choose the best package based on a companys
vision and business needs. The BPR team can then use process models contained in
the package as a tool to design business processes that exploit the strengths of the
software and meet business needs.
Packaged
Solution
Business
Vision./
Needs
Starting
Point
(As-IS)
Strategic
Choice
of Package
Integrated
Package
Solution
Model
System
Design
(to be)
Configure
IT
Solution
Leading software packages, for example, from SAP, Baan or SSA, already have welldeveloped business process options that are documented and modeled. For instance,
they might support a centralised purchasing function as well as one with devolved
responsibilities.
The advantages of channeled BPR are two-fold. First, it saves time and effort in
modeling the new processes since they are already detailed and documented by the
package supplier. This helps to maintain the momentum of a BPR exercise which is
crucial.
Too often traditional BPR projects flounder in the early stages because the ideal
processes developed on-high cannot be accommodated by the software. Then
processes have to be reworked till a technical solution is at least feasible.
Second, channelled BPR results in the implementation of standard facilities within the
software package. Even if the fit is not perfect, relatively few modifications or custom
developments are needed. The benefits in terms of maintaining the software are
obvious.
Pure ERP
Pure ERP approach implies mapping the organisations current processes onto the
package. The emphasis is not on arriving at a to-be process model as a result of the
business vision and strategy. The process selection exercise boils down to finding out
the closest match to what the organisation is doing at that point in time.
The willingness to change the processes is quite low. However, the sheet integration
of work across the organisation that the package brings in can deliver certain benefits,
although not substantial, to the organisation. The very fact that the enterprise wide
data is available opens the possibility of better decision-making.
Change management
Project management
These five tracks would incorporate activities spread typically across four broad
sections or stages which are a part of any software implementation: analysis, design,
construction and implementation.
Analysis encompasses activities such as project charter development, as-is analysis
of business processes and target envisioning or the to-be model.
Design mainly consists of configuring the ERP package as per the analysis
specifications and developing design specification for custom code objects. Custom
objects are programmes that are written to augment standard functionality that the
ERP package provides.
Construction deals mainly with development of custom code objects such as reports,
forms, interfaces with legacy applications and data migration routines. This stage also
involves end-user training and integration testing.
Implementation deals with setting up the production environment and making sure
that hardware/software/networking infrastructure is in place.
Once everything is ready, the ERP implementation goes live. Typically, a period of
hand-holding is required after go-live and this is achieved by forming a help desk
which is on-call to assist end-users.
Analysis
Analysis should start off with strategy alignment which should align the project with
the strategic goals of the enterprise. The aim of this exercise should be to arrive at a
set of critical success factors that should henceforth be success-or-failure criteria for
the implementation effort. This phase should also see the determination of the
implementation strategy, the sequence in which the ERP package will be implemented
and rolled out to various business units. Some of the choices that the enterprise has
are:
z
Big Bang, where all modules of the ERP package are implemented at one go
across all business units of the organisation.
Pilot Approach, where all modules are implemented across some key business
units and then rolled out to other offices.
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A recent trend in this area has been the business model approach, which is a
combination of the Big Bang and Pilot approaches. In this scheme, a global prototype
is developed followed by a geographical roll-out across all business units.
As-is analysis would typically follow strategy alignment. Here, the existing business
processes of the organisation are studied and documented. Simultaneously, an
evaluation of the existing technical setup of the organisation should be carried out.
While the functional teams (the finance or the logistics team, for example) conduct asis analysis, the project management should look at finalising a detailed project plan
and a quality plan for the project. This can be referred to as the project work plan
development phase.
This is followed by to-be analysis by the functional team. This phase is critical as
the exercise involved is quite tricky and needs the involvement of experienced
resources. The team needs to carefully marry the existing processes with the package
functionality and industry best practicesthe goal is to devise an optimal process that
can be supported by the package.
During this phase, the functional teams should also map the envisioned processes to
the package features and come out with gaps, special reports, forms or interfaces with
existing system that will continue to function in parallel with the ERP package.
It is very important to appreciate that an ERP package comes with standardised
functionality. You are expected to configure the package to follow your to-be
business processes by setting parameter values in tables.
However, the inherent assumption in implementing an ERP is that you will not change
the basic way in which the package is structured, i.e., you will not change the sourcecode of the package.
Customisation or code change is a dreaded word in the world of ERP implementation
and should always be desisted from, however strong the temptation is to make the
package work exactly the way your legacy system used to. Indiscriminate
customisation can lead to a system that is impossible to upgrade; most ERP vendors
such as SAP often withdraw their product warranty if their source code is customised.
Design
The design stage will start off with the functional teams developing the organisation
structure to support the target processes they have designed. During this phase, called
the key data structures, the organisation with business units like company code,
factories, sales offices, branches, warehouses, etc., is developed.
In some cases, the organisation structure is treated as a part of the to-be phase.
However, it is often advisable to first nail down the target processes and then design a
hierarchy to support them, rather than the other way round.
Then comes the prototyping. The prototyping phase will see the ERP package being
configured through parameter settings to reflect the organisation structure and the tobe processes designed earlier. This phase is really the heart of the project.
While the functional teams configure the system, the custom development team will
study the gaps identified during the to-be phase and develop specifications in
consultation with the functional teams. Once the gap analysis is complete, the
development team will start designing the modules that will augment the standard
functionality provided by the package.
During implementation, the number of gaps that you decide to approve for
development should be minimised. This is where most projects slip too many gaps
identified too late in the day prove to be their undoing. Custom code design will
primarily focus on the following objects:
z
Interfaces to existing legacy applications which need to exchange data with the
ERP system
Construction
The construction stage primarily involves custom code construction and unit testing
by the programming team. It is imperative for the functional team to start conducting
end user training after prototyping. It is better for this training to be process driven
with people trained only on that part of the package which figures in his or her daily
task list.
Subsequent to this, the system should be put through a thorough test on a simulated
environment, resembling the production environment. This shows the integration of
the prototyped system and the custom developed objects.
Implementation
The implementation stage performs the last few critical activities necessary for system
live-processing. These mainly involve setting up the ERP front-end on individual
workstations, configuring printers, testing the connectivity and promoting the tested
system to production.
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An approach which brings about the proper integration of people, process and
technology through effective management of change.
In this guide, we would focus on the project organisation structure and present a
generic ERP project organisation structure, which most of the organisations have
followed during their successful ERP implementation.
Defining a Project Organisation Structure (POS) forms the first step in an ERP
implementation project. The POS is the human framework within which, all project
objectives must be achieved. Development of the organisation structure takes into
account project objectives and deliverables and also factors related to project control,
risk and quality.
14.7 KEYWORDS
Interfaced package: It is a bundle of package interfaced together to transfer data from
one to the other.
Customization: It is an integral part of ERP solutions, in which crucial decision needs
to be taken by the organization as it is detrimental in ERP's success.
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Analysis Phase: This is the first phase of ERP implementation life cycle in which the
determinations of the implementation strategy, the sequence in which the ERP
package will be implemented and rolled out to various business units are involved.
Construction phase: This is a phase of ERP implementation life cycle; during this
phase, called the key data structures, the organisation with business units like
company code, factories, sales offices, branches, warehouses, etc., is developed.
Construction phase: This is a phase of ERP implementation life cycle in which
custom code construction and unit testing by the programming team is primarily
involved.
Implementation phase: This is the last phase of ERP implementation life cycle in
which setting up the ERP front-end on individual workstations, configuring printers,
testing the connectivity and promoting the tested system to production are involved.
Tier: It can be defined as one of two or more rows, levels, or ranks arranged one
above another.
Data Tier: This is the layer where the database resides.
Presentation Logic Tier: This is the layer that provides an interface for the end user
into your application.
Proxy Layer: It is a layer which acts on behalf of the Distributed Logic layer (or enduser's requests) to provide access to the next tier, the Business Tier.
The Client Interface: This is a layer where the end-user presentation (Windows
forms, etc.) is connected directly to the Business Tier.
The Business Tier: This is basically where the brains of your application reside; it
contains things like the business rules, data manipulation, etc.
Data Access Tier: This layer is where you will write some generic methods to
interface with your data.
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LESSON
15
FUTURE OF ERP APPLICATIONS
CONTENTS
15.0
15.1
Introduction
15.2
15.3
Procurement
15.3.1
E-Marketplace
15.3.2
15.4
15.5
ERP Cases
15.5.1
15.5.2
15.5.3
15.5.4
15.5.5
15.5.6
15.6
Let us Sum up
15.7
15.8
Keywords
15.9
Concept of e-market
Knowledge of e-procurement
15.1 INTRODUCTION
The dream of enterprise resource planning systems is that a single application can
track and monitor all of a businesss functions. In a perfect world, a manager opens a
single ERP app to find data about any aspect of the business, from financials to HR to
distribution schedules. Moreover, there are still a lot of gaps in ERP systems,
particularly in industries where ERP functionality has grown up from its historic
origins in manufacturing. There are even gaps in core ERP areas.
But despite the challenges, the movement toward a global ERP system is a key factor
shaping the future of enterprise resource planning.
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15.3 PROCUREMENT
Depending on the amount involved in the procurement of new goods, products, or
services, you may choose the option best matching your needs.
Internet-based electronic procurement of goods and services between companies is
called e-procurement. In the same way that B2C e-commerce is often referred to now
as e-tailing, labeling B2B e-commerce as e-procurement better shows how B2B
affects a companys traditional supply chain.
15.3.1 E-Marketplace
Electronic marketplaces, also known as B2B exchanges, serve as electronic hubs
bringing together suppliers and purchasers in common virtual environments.
E-marketplaces are either many-to-many, bringing together many buyers and sellers
in a particular vertical market, or one-to-many where one major supplier or
consumer will attract many of its trading partners to its e-marketplace. Over the past
couple of years, it has been these private, one-to-many e-marketplaces that have
proven to be the most successful.
"E-" or "electronic" marketplace in a business-to-business context is primarily a large
online platform (B2B portal) or website that facilitates interaction and/or transactions
between buyers and suppliers at organizational or institutional rather than individual
levels. Since the builders of such marketplaces primarily aim at facilitating buyerseller interaction (in most cases without being a buyer or seller themselves), these are
also referred to as "third-party" B2B marketplaces.
These marketplaces can do one or more of the following:
z
Help reduce the time and cost of interaction for B2B transactions
to eliminate the costly VAN altogether. EDI over the Internet (EDI-INT) uses a new
standard called AS2, a communication protocol that attempts to make EDI
communications over the Internet both secure and reliable.
By mandating their suppliers to use AS2, Wal-Mart leads the way in creating a
demand for a new generation of EDI, and in turn drives the whole world of e-business
forward.
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There are a lot of people that are interested in launching a successful Internet
marketing business. Some people even get to the point where they try but,
unfortunately, many of them fail in their efforts. This isn't necessarily because the idea
that they had was inferior, it is more than likely a matter of not knowing exactly how
to take care of every aspect of their online business.
For this reason, it is often necessary to go with a turnkey package, one that will help
you to develop your entire Internet business in a smooth fashion. Not only will this
help you to be successful, it will teach you the different steps that are necessary to
make any online business a success.
One of the first things that you're going to need to do is decide on which system you're
going to go with. It is better to go for a turnkey system. This system will provide you
with everything necessary to make you a success right out of the starting gate. It is
truly a hands-off experience for you, if that's what you need it to be.
This will allow you to watch people that come into your sales funnel and follow them
the whole way through until they are customers on the other end. It gives you the
experience that is necessary without having to worry about going through a series of
hard knocks that are typically found in the learning process.
Another thing that you're going to have to find is an ongoing stream of interested
prospects to what you are offering. With a system, you will have the ability to have
people who already have the marketing contacts promote your business for you. This
can provide you with an almost unlimited amount of business prospects coming to you
on a regular basis. What are you going to do once these prospects hit your front door?
Any business lives and dies by its marketing efforts. You could have thousands of
people coming to on a daily basis but if you do not have the marketing in place to turn
those people in the customers all of your efforts will be in vain. The entire process of
the marketing should be automated, that will pull your prospects into your system and
make them paying customers. Once they realize the benefits that come from being a
part of a turnkey business, you will reap the rewards of ongoing commissions.
So you really have two choices. You can either launch your Internet business by your
own through a series of steps or you can go with a turnkey system and launch a
successful business
If you want to launch the Internet business without help of a turnkey system then you
have to follow the below mentioned steps.
Things You Need:
z
Telephones
Internet Access
Computers
Step 1: Pick your niche. If you're passionate about, and have expertise in, a particular
field, stick with it.
Step 2: Set up your Web site. You might need to hire a Web developer to help you
build the site.
Step 3: Write and, if necessary, buy articles that deal with your topic. Post the articles,
calendar items, tips, links to other sites and resources, and other relevant information
on your site.
Step 4: Arrange to have your articles published or referenced on related Web sites.
Offer those sites the same courtesy.
Step 5: Approach potential advertisers. Make sure you know your audience or
market's demographics and that the advertisers you approach fit the character of your
site.
Step 6: Market the site. Consider sponsoring events - for example, a conference - that
allow you to promote the Web site. Agree to plug other Web sites if they will give
your site a plug.
Step 7: Consider selling merchandise on the site. Ensure the merchandise you decide
to sell is directly related to the content of your site.
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Benefits: More than $8 million in hard and soft dollar savings. Reduced the length of
the budgeting cycle and the number of people involved in the process, keeping the
company financially competitive in a growing market. The system now provides
online, real-time access to information.
Now, analysts can individually access the same data warehouse for current, real-time
information for their analyses. This means the vice presidents from each business unit
in the division now have the data they needbudget or actualson a timely basis,
thus, enabling business units to make better, faster business decisions based on more
accurate information. Their increased understanding of the data helps them run their
slices of the business more effectively, because they can now make real-time, online
decisions that help them stay on budget or shift business direction.
process. Their deployment project will continue for the next 12 to 18 months, as they
move the system out to all additional existing businesses in the UK, Japan, the Czech
Republic, Hungary, Switzerland, France, Poland, etc.
Benefits: As they deployed the applications in Norway and Denmark, they went from
55 days to 4 days. They just deployed the system in Sweden and havent done a close
there with Oracle yet. ABC also deployed in Australia and went from a close cycle of
about 14 days down to 6 days. The intent is to bring the closing cycle down at least to
3 days, with the future expectation of shortening the cycle even more.
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Benefits: Major benefit was envisaged in strengthening the supply chain management
and customer order execution. It was felt that the planning for raw materials and for
work-in-progress goods would show susbstantial improvement. SAP would help in
standardising business processes in various functional areas within the organisation.
Since, it is an integrated package, it gives a lot of online information to the senior
management regarding the performance of the organisation. Earlier, the same
information required some time in consolidation and compilation.
across the group to improve once the company went live. In short, Calcom should get
better decision support. Most importantly, the Baan solution should help it cut
burgeoning inventory costs yet service orders/order-fulfillment in time.
The company managed to reduce order fulfillment time by a little over 20% and the
inventory costs also by approximately 20%. The company has very good visibility of
data for analysis and there is synchronisation of data and planning across platforms.
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z
Better, easier customs management through the customs and excise module
developed by LINC, which is on top of the GTM (global tax management)
module on excise and customers provided as a part of the Mfg/Pro solution.
Poor on-time performance, as focus is on monthly targets and not on customer due
date.
Expensive tools like MRP II and ERP are being used formally, but shipment was
being done informally.
So what did ABC get after implementing expensive tools like ERP dissatisfied
customers, high cost of production and poor quality. But werent these systems built
to address these issues? The answer is YES, but only if it is used effectively.
Solution: To eliminate this month end crisis, the company concluded that the month
end should be the end of the week. Hence, the company decided that performance
would be measured on a weekly budget.
Since ERP is capable of date wise planning and scheduling, the teams did not have
any major problem in shifting their focus from monthly to weekly budgets and with an
additional focus on weekly budgets, the company was able to substantially improve on
cost of production, on time performance and quality.
But now the company had a four hockey stick phenomena i.e., weekend crisis.
Shipment for the week were maximum on Fridays and some times Saturdays were
being used to meet the weekly budgets. Now, the company was paying for the labor
cost for overtime on a holiday and for four days in a month but was still less as
compared to monthly budget planning. Shipments were delayed only by a week but
not weeks.
But as the customers became more and more demanding, ABC found that the goal of
weekly budgets was inadequate to meet the customer demands. The question was,
even though they had a tool which could assist in date wise planning and scheduling,
why were they unable to ship the products on the required date? The answer was very
simple wrong focus.
Since the focus was on weekly budgets, everyone was emphasising on meeting the
weekly budgets and not the customers requirements. The focus was not in line with
what the customer required and only solution to it was daily budget. Every day should
be a month end.
Check Your Progress 2
Fill in the blanks:
1. . is evolved from manufacturing resource planning.
2. . e-commerce is often referred as e-tailing.
3. . e-commerce is often referred as e-procurement.
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functioning of ERP has gained much prominence and utility with the intervention of
web enabled and open source technologies. ERP has undoubtedly become an
important business application to all industries. However ERP needs lot of
improvement (this statement included the latest versions also)."E-" or "electronic"
marketplace in a business-to-business context is primarily a large online platform
(B2B portal) or website that facilitates interaction and/or transactions between buyers
and suppliers at organizational or institutional rather than individual levels. This rapid
replenishment system, coupled with accurate purchasing forecasting, helps Wal-Mart
reduce overall costs. Every serious company maintains a crystal-clear business plan but far too many serious companies venture onto the Internet without a sharp online
vision and without a well-defined business agenda tailored to the idiosyncrasies of
electronic commerce. As more and more business moves online, solid planning
becomes increasingly critical, and a business plan - specifically one that takes into
account the unique properties of e-commerce - is key to commercial success. Like any
business venture, starting a successful online store requires vision, planning and
strategic decision-making. The Internet poses unique challenges for online business.
Beyond defining mission goals, a business plan should explain how company
objectives fit into emergent e-commerce contexts. Any business lives and dies by its
marketing efforts.
15.8 KEYWORDS
ERP: ERP stands for Enterprise Resource Planning; it is a system which provides an
integrated information system for all departments and functions across a company that
can serve all those different departments particular needs.
Electronic marketplace: In a business-to-business context, it is primarily a large
online platform (B2B portal) or website that facilitates interaction and/or transactions
between buyers and suppliers at organizational or institutional rather than individual
levels.
e-procurement: Internet-based electronic procurement of goods and services between
companies is called e-procurement.
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