Information Technology & Data Analytics
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02-Lesson_02.pdf
Lesson 2: Major Business Initiatives
Information Technology & Data Analytics
September 20, 2021
Information Technology & Data Analytics
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Chapter 2
Major Business Initiatives: Gaining Competitive Advantage with IT
Information Technology & Data Analytics
1. Define supply chain management (SCM) systems and describe their strategic and competitive opportunities.
2. Define customer relationship management (CRM) systems and describe their strategic and competitive opportunities.
3. Explain the significance of enterprise resource planning (ERP) software as the integration of functional software systems.
4. Define social media and describe a few of its many dimensions that make it important in the business world.
STUDENT LEARNING OUTCOMES
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Information Technology & Data Analytics
DEATH OF A TRAVEL AGENT
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DEATH OF A TRAVEL AGENT
10 Statista
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➢ The previous slide shows the dramatic impact of technology on the number of travel agents in the U.S.
➢ Because consumers are now “empowered,” travel agents have declined from 171,600 (1999) to 95,000 (2009).
➢ By 2016, there were 81,700 jobs, with an expected decline of 9% by 2026 (7,500) less jobs1.
➢ In 2019, the number is 66,670
➢ For 2020, they decreased to 55,180
DEATH OF A TRAVEL AGENT
11 1 U.S. Bureau of Labor Statistics
Information Technology & Data Analytics
1. When you last flew, did you use a travel agent or directly to the Web for tickets?
2. What is your preferred travel site? What features do you like?
3. Why do airlines support moving reservation systems to the Web?
4. Have you traveled in the last year and a half ? How was the customer service of the airlines?
5. In which cases would someone use a travel agent instead of booking the trip yourself ?
Questions
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Information Technology & Data Analytics
1. Supply Chain Management
2. Customer Relationship Management
3. Enterprise Resource Planning
4. Social Media
Major Business Initiatives
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Information Technology & Data Analytics
SCM: Supply Chain Management
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Information Technology & Data Analytics
➢ Supply chain management (SCM) – tracks inventory and information among business processes and across companies
➢ Supply chain management (SCM) – Coordination and oversight of the flows of materials, information and finances as they move from the supplier to manufacturer to retailer to consumer
➢ Supply chain management (SCM) system – IT system that supports supply chain management
➢ Just-in-time (JIT) – method for producing or delivering a product or service just at the time the customer wants it
SUPPLY CHAIN MANAGEMENT
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Information Technology & Data Analytics
Dell’s Effective SCM Through JIT
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Information Technology & Data Analytics
➢ Most supply chains use inter-modal transportation, multiple transportation channels (railway, truck, etc.) to move products from origin destination
➢ This creates supply chain complexities
Supply Chain Management
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Information Technology & Data Analytics
➢ Business strategy
• Running the organization (RGT framework)
• Competitive advantage (Porter’s strategies)
➢ A well designed SCM will optimize:
• Fulfillment – parts or products arrive at the right time
• Logistics – cost of transportation as low as possible yet reliable
• Production – ensuring production lines work smoothly
• Revenue and profit – ensuring no sales are lost due to empty shelves
• Cost and price – Keep costs and prices at acceptable levels
Opportunities of SCM
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Information Technology & Data Analytics
➢ Goal is to squeeze out every penny of cost possible in the supply chain, by:
• Reducing purchasing costs – less inventory means better prices
• Reducing production costs – availability of materials means less down time
• Decreasing fixed assets – fewer plants, warehouses, vehicles
• Increasing profit – based on efficiencies
• Increasing cash flow – can invoice sooner
Goals of SCM
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Information Technology & Data Analytics
➢ Information partnership – companies sharing their IT systems
➢ Eliminate redundancies -> Shrink overall process
➢ Reduce inventory Costs
➢ Avoid product obsolescence
➢ Reduce Transportation Costs
➢ Adaptability to change – Natural disasters, emergencies, trends
➢ Improve product availability – deliver orders faster to customers
➢ Green Initiatives
➢ Improves overall customer satisfaction
Importance of SCM
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Information Technology & Data Analytics
➢ SCM systems pioneered by specialist companies such as i2 and Manugistics
➢ SCM is now part of ERP software (discussed later)
➢ Learn more
• Supply Chain Knowledge Base
• Supply Chain Management Review
• i2 Technologies
• CIO Magazine
IT Support for SCM
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Information Technology & Data Analytics
CRM: Customer Relationship Management
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➢ Customer relationship management (CRM) system – uses information about customers to gain insight into their needs, wants, and behaviors in order to serve them better
➢ Includes multi-channel service delivery, multiple ways in which customers can interact with a business
➢ CRM looks to limit negative interactions and increase positive experience, mainly by getting to know the customer
➢ It is not only SW. It includes SW, HW, services, support, and strategic business goals
CUSTOMER RELATIONSHIP MANAGEMENT
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The Focuses of Customer Relationship Management
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Analytics is now a huge part
of CRM. Analytics use hard
data to support decision
making.
Information Technology & Data Analytics
➢ Sales force automation (SFA) systems – automatically track all the steps in the sales process
• Sales lead tracking • Listing potential customers • Market and customer analysis • Product configuration • Getting repeat customers
➢ SFA systems empowers sales representatives with information and BI focused on customer’s buying patterns and needs
Customer Relationship Management
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Information Technology & Data Analytics
➢ Customer Service and Support
• Post-sales prompt customer service and product support
➢ Marketing Campaign Management and Analysis
• Design campaigns
• Target audiences and preferred media
➢ Analytics
• Numerical data to analyze and make better decisions
• Businesses act on quantifiable data that allow them insight
Customer Relationship Management
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GM’s Sales Force Automation (Purchase Funnel)
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➢ Goal: To provide an excellent experience to the customer
➢ Business strategy • Differentiation and focus (Porter strategies) • Growing the organization (RGT framework)
➢ Classic goals • Treating customers better • Understanding their needs and wants • Tailoring offerings • Providing “delightful” experiences
Opportunities of CRM
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➢ Front-office systems – primary interface to customers and sales channels
➢ Back-office systems – fulfill and support customer orders
➢ Both interface to CRM database and analysis and reporting systems
IT Support for CRM
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IT Support for CRM
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➢ Software-as-a-service (SaaS)
– software model in which you pay for software on a pay-per-use basis instead of buying the software
➢ Learn more
• Salesforce.com
• CIO Magazine
• CRM Today
• destinationCRM.com
IT Support for CRM
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Information Technology & Data Analytics
ERP: Enterprise Resource Planning
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Information Technology & Data Analytics
➢ How do you bring together SCM, CRM, and other systems? With an ERP system.
➢ Enterprise resource planning (ERP) system – collection of integrated software for business management, accounting, finance, supply chain management, inventory management, customer relationship management, e-collaboration, etc.
ENTERPRISE RESOURCE PLANNING
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Information Technology & Data Analytics
➢ ERP is big business
➢ Federal government spent $7.7 billion on ERP by 2010, from $5.5 billion in 2005
➢ 60% of Fortune 1000 companies have ERP systems
➢ As of 2011, 80% of US state and local agencies had, were contracting or thought about implementing ERP
➢ Overall IT SW budget in 2021increased 4.4% to $103 billion. Why?
ENTERPRISE RESOURCE PLANNING
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Information Technology & Data Analytics
ENTERPRISE RESOURCE PLANNING 2009
38The Big 4 ERP Vendors
Information Technology & Data Analytics
SAP Oracle Infor Workday Microsoft
• Enterprise
Management
• Finance Management
• Professional Services
Management
• Manufacturing
Management
• Procurement
Management
• Financial Management
• Procurement
Management
• Project Portfolio
Management
• Risk Management
• Enterprise
Performance
Management
• Order Management
• Manufacturing
Management
• End-to-end ERP
solutions
• Product proposal
by industry
• Financial
• Financial
Performance
• Human Capital
• Prism Analytics
• Professional
Services Automation
• Student
• Sales
• Customer service
• Field service
• Talent
• Finance and
operations
• Project Service
Automation
• Marketing
• Customer insights
• Retail
• Procure to Pay
• Plan to Product
• Order to Cash
• Request to Service
• Core Human
Resources
• Core Finance
• Human Capital
Management
ENTERPRISE RESOURCE PLANNING
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Information Technology & Data Analytics
➢ Economic Order Quantity (EOQ) – paper-based manufacturing system for production scheduling 1 developed by Ford Whitman Harris
➢ Material Requirements Planning (MRP) – Developed in 1964 by Black and Decker. Combined EOQ with a Mainframe Computer
ERP Origins
40 1 What is ERP?
Information Technology & Data Analytics
➢ MRP – 1970s; focus on production planning (provide the right materials at the right time), calculating time requirements (when?), procurement; basic automated manufacturing focus
• SAP created in 1972
➢ MRP II – 1983; closed the loop to include financial and accounting systems and serve as a decision support tool for managers (purchasing, bill of materials, scheduling, and contract management)
ERP Evolution
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Information Technology & Data Analytics
➢ ERP – late 1980s/early 1990s; focus on critical “time to market”; shorter lead times; customers want it now
➢ ERP II – today; focus on complete ERP integration with CRM, business intelligence, and a host of other applications across the organization
ERP Evolution
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ERP Functionality
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➢ Attempts to integrate everything
• CRM drives what SCM will produce
• Everyone works together in e-collaboration
• The entire organization knows the entire organization
➢ Think about your school
• Can you register for class with a bill outstanding?
• Can you register for a class for which you haven’t completed the prerequisite?
ERP
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ERP Integrates Everything
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Information Technology & Data Analytics
➢ Many ERP vendors based on organization size
➢ Small business – less than 100 seats
➢ Medium-size business – 100-500 seats
➢ Large business – more than 500 seats
ERP and Market Size
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Information Technology & Data Analytics
➢ Average company spent 5.9% of their annual revenue on their implementation
➢ 93% of the organizations customized their solution to a certain degree
➢ 21% of companies considered their ERP implementations as a failure
➢ SaaS implementations sky-rocketed to 33%, from 4% the year before
➢ 52% of companies faced operation disruptions at their go-live
ERP in 2015
47 * Figures from the 2015 ERP report by Panorama Consulting Solutions
Information Technology & Data Analytics
➢ 45% of companies overrun their budget
➢ 37% of the organizations stick with their current vendors
➢ 46% of the organizations are satisfied with their vendors
➢ 12% of companies considered their ERP implementations as a failure
➢ 53% of organizations found organizational change to be the most difficult part of the implementation
ERP in 2019
48 * Figures from the 2019 ERP report by Panorama Consulting Solutions
Information Technology & Data Analytics
➢ 35% of companies moving away from their legacy systems
• Main reason why: data analysis tools
• Lack of Integration
• ERP specialization
➢ Benefits
• 67% reporting and visibility
• 65% operational efficiency
• 62% growth and competition
• 15% updating technology
ERP in 2020
49 * Figures from the 2020 ERP report by Panorama Consulting Solutions
Information Technology & Data Analytics
ERP Tiers
502020 ERP report by Panorama Consulting Solutions
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ERP Deployment Model Chosen
51 * Figures from the 2020 ERP report by Panorama Consulting Solutions
Information Technology & Data Analytics
ERP Deployment Model Chosen
52 * Figures from the 2020 ERP report by Panorama Consulting Solutions
Information Technology & Data Analytics
Reasons for not Choosing Cloud
53 * Figures from the 2020 ERP report by Panorama Consulting Solutions
Information Technology & Data Analytics
1. Lack of due diligence during the ERP software evaluation and decision phase.
2. Fixed-priced contract.
3. Poor business requirements and system design.
4. Inadequate project planning and controls.
5. Under-qualified project resources and poor project staffing.
6. Lack of attention to organizational change management.
Lessons Learned from a Government ERP Failure
54 * Lessons Learned by Panorama Consulting Solutions
Information Technology & Data Analytics
1. Technical focus instead of business focus.
2. Unrealistic expectations.
3. Insufficient business process reengineering.
4. Lack of change management.
5. Too much software customization.
6. Hiring inexperienced resources.
Top 6 Reasons for ERP Failure
55Panorama Consulting Solutions
Information Technology & Data Analytics
1. Understand your business strategy objectives.
2. Set realistic expectations.
3. Prepare employees for Organizational Change.
4. Optimize your business processes.
5. Plan for data migration.
6. Limit software customization.
6 Ways to Mitigate Risk
56Panorama Consulting Solutions
Information Technology & Data Analytics
ERP Comparison in 2017
57 * Figures from the Clash of the Titans 2017 report by Panorama Consulting Solutions
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ERP Comparison in 2019
58 * Figures from the Clash of the Titans 2019 report by Panorama Consulting Solutions
Information Technology & Data Analytics
ERP Global Revenue by Year
60 * https://www.statista.com/statistics/681596/worldwide-erp-software-revenue/
Information Technology & Data Analytics
ERP Current Models
61 * SAP, 2017
Information Technology & Data Analytics
➢ Customer Focus value proposition: Designed to handle the customer value side of the business
➢ Ability to integrate social media and other technologies via Internet
➢ The Internet of Things
➢ Direct customer collaboration
➢ Collaboration with the marketplace
➢ “Borderless Enterprise” Integration beyond the enterprise boundaries
The Future: ERP III
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Information Technology & Data Analytics
Social Media
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Information Technology & Data Analytics
➢ Social media – Web-based and mobile technologies that create interactivity among users, mostly allowing users to be both creators and consumers of content
➢ Quick History • 1978: BBS (Bulletin Board System) • 1998: IRC (Internet Relay Chat) • 1994: Geocities • 1995: Class Mates • 1996: ICQ • 1997: Six Degrees, AOL Messenger • 2002: Friendster • 2003: LinkedIn, MySpace • 2004: Hi5 • 2006: Facebook (2003), Twitter
SOCIAL MEDIA
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Information Technology & Data Analytics
➢ Fueled by Web 2.0
➢ Web 2.0 – second generation of the Web focusing on:
• Social networking
• Media sharing
• Online collaboration
• Users as both creators and modifiers of content
• Dynamic and customized information feeds
• Other engaging technologies
SOCIAL MEDIA
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Information Technology & Data Analytics
The Evolution of the Web
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Information Technology & Data Analytics
➢ Social networking
➢ Social shopping
➢ Social playing
➢ Social “saving the world”
➢ Social “locationing”
➢ Social payment
➢ There are many more
Some Aspects of Social Media
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Information Technology & Data Analytics
➢ Social networking site – site on which you post information about yourself, create a network of friends, read about other people, share content, and communicate with people
➢ The big ones:
• Snapchat
• TikTok
• YouTube
Social Networking
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Information Technology & Data Analytics
Social Networking Players
71Statista (July, 2021)
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Social Networking Players
74 World Map of Social Networks
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Social Networking Players
75Messaging Apps
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➢ Estimated advertising revenue in 2014: $ 17.85 billion USD
➢ Advertising revenue in 2020: $ 41.5 billion USD
Social Networking Revenue
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Information Technology & Data Analytics
Social Media Usage
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Information Technology & Data Analytics
Ad Spending in the US
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Information Technology & Data Analytics
➢ Social shopping –
• The shopping experience is shared with contacts and friends.
• See what other people are buying and wearing, trying to find the same, and informing others of where the best deals are.
➢ Nowadays, most retailers use social networks to sell and promote their products
➢ 2011: Pepsi – social vending machines
• Give the gift of a beverage
• Random act of kindness
Social Shopping
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Information Technology & Data Analytics
➢ No formal categorization, but we could group them as follows:
• Group shopping: Goldstar, Groupon, Living Social
• Shopping communities: Listia, Varagesale
• Shopping marketplaces: Etsy, Polyvore, Wanelo, even Pinterest
• Recommendation engines: Amazon, Google
Social Shopping
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Information Technology & Data Analytics
➢ MMORPGs (massively multiplayer online role-playing games) – thousands or millions of people play and interact in a robust virtual world
• World of Warcraft
▪ Over 100 million accounts created over the game’s lifetime
▪ Complete quests in a world of monsters, uber-warriors, and mythical creatures
Social Playing
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Information Technology & Data Analytics
➢ eSports: • $325 million USD in revenue • Audience of 226 million people • MOBA: Multiplayer Online Battle Arena
▪ Dota 2 – see video ▪ League of Legends – YouTube channel ▪ Counter Strike – YouTube channel ▪ Call of Duty – YouTube channel
➢ Check out how big eSports are by watching the Opening Ceremony of the 2017 eSports World Championship Finals • 2018 League of Legends final watched by an estimate of 200 million people
➢ Second Life: It is the largest virtual world ever created • Linden Lab earn about $70 million USD every year • Users earn $60 million USD per year • Virtual world • Users create their own avatar • Linden dollars
Social Playing
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Information Technology & Data Analytics
➢ Zynga
• 19 million daily active users (DAUs) in 2017
▪ 1 billion in their history
• $740 million USD in revenue in 2016
▪ $5.1 million in revenue in Q2FY17
➢ Games include:
• Casino games
• Farmville
• Wizard of Oz
• Ice Age
• Words with Friends
Social Playing
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Information Technology & Data Analytics
➢ Electronic Arts (EA)
• Net revenue of $4.8 billion USD in FY17
➢ Games include:
• FIFA Series
• Madden NFL Series
• NBA Live Series
• NHL series
• Sim City
• The Simpsons
• Star Wars Series
Social Playing
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Information Technology & Data Analytics
➢ ESL gaming
• Has 9 official pro-leagues
• ESL has exponentially grown since its inception
• Counter-strike: Team Liquid made 1 million USD for winning the ESL One in Cologne
➢ Kyle Gierdsorf won 3 million USD after winning the Fortnite World Cup in 2019
Social Playing
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Information Technology & Data Analytics
➢ Games that support sustainability and triple-bottom-line efforts
Social “Saving the World”
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Information Technology & Data Analytics
➢ Social “Saving the World”: Looking for ways to build sustainable practices and processes that address the needs of the three P’s:
➢ Sustainability’s three P’s: People, Planet, and Profits
➢ Social networking projects are based on games with money awards for top innovators: • Pepsi Refresh Project – education, arts and music, communities • Toyota Ideas for Good – use Toyota technology for non-auto uses • Volkswagen Fun Theory – change behavior of people for the good • TOMS One for One
▪ Shoes give shoes, eyeglasses give sight ▪ Coffee gives water, bags help with safe birth ▪ Backpacks provide anti-bullying training
Social “Saving the World”
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Information Technology & Data Analytics
➢ Global Citizen
• Massive global campaigns and events to amplify actions
• Actions: emails, tweets, phone calls, petition signatures
➢ Unicef ’s Tap Project: One day of clean water for every 10 minutes you do not use your phone via sponsors
➢ There are also awareness projects:
• Digital Green: helps farmers in India
• I Paid a Bribe: Anti-corruption in various countries
• Stop and Frisk Watch
Social “Saving the World”
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Information Technology & Data Analytics
➢ Crowdfunding: collection of small amounts of money from a large number of persons to finance something.
• Kickstarter, indiegogo, GoFundMe
➢ Since 2012: #GivingTuesday
➢ www.causes.com
➢ www.doublethedonation.com
Social “Saving the World”
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Information Technology & Data Analytics
➢ Social locationing (location-based services) – use of a mobile device and its location to • Check into locations • Find friends and their locations • Receive rewards • Take advantage of specials based on location • Usually monetized via advertising
➢ Examples: • Games like Code Runner, Ingress, Landlord, Pokemon Go and Geocaching • Find My Friends • Foursquare / Swarm • Glympse • Google + / Google Maps • Highlight • Social Radar • Waze
Social Locationing
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Information Technology & Data Analytics
➢ Social payment – use of social media to transfer money to another person or business • Peer-to-peer • Online Purchases
➢ Examples • Android Pay • Apple Pay • Facebook • Google Wallet • Snapcash • Twitter Buy • Venmo (PayPal) – Estimated $20 billion processed in 2016
➢ Have banks followed through?
Social Payment
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Information Technology & Data Analytics
➢ Social networking
➢ Social shopping
➢ Social playing
➢ Social “saving the world”
➢ Social “locationing”
➢ Social payment
➢ There are many more
Some Aspects of Social Media
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Information Technology & Data Analytics
Social media (class discussion) Advantages Disadvantages
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Information Technology & Data Analytics
➢ Web 3.0 – Not here yet. Consider a personal assistant.
• Semantic web – complete answers based on questions
▪ Natural language search
• Artificial intelligence - learn your preferences and be less specific in the future
• 3D Graphics – Virtual reality
• Connectivity
• Ubiquity
• Data-mining
• Microformats
Web 3.0
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Information Technology & Data Analytics
1. Define supply chain management (SCM) systems and describe their strategic and competitive opportunities.
2. Define customer relationship management (CRM) systems and describe their strategic and competitive opportunities.
3. Explain the significance of enterprise resource planning (ERP) software as the integration of functional software systems.
4. Define social media and describe a few of its many dimensions that make it important in the business world.
STUDENT LEARNING OUTCOMES
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Questions?
Thank you!
