What

1
Whats Happening?!

• Cisco and Ericsson have announced a new
  partnership to focus on selling to the telecom
  service companies.

Comcast had dropped its bid to buy Disney.
Nortel has fired its CEO.
GM has produced its last Oldsmobile.
2
Database Project

• Tuesday, May 4 Access orientation and interview
  BIS Market Research boss.
• May 13 Submit survey form at beginning of
  class.
• May 18 PC Lab to prepare Access database.
• May 25 Project is due.

Database project team assignments are on the next
two slides.
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Database Project
BIS Market Research has been hired by a Venture
Capital firm to do an analysis to determine the
better business model for a company to pursue to
be successful selling to consumers using the
Internet. Some of the people who have been money
sources for the VC are very upset that they have
lost a significant amount of money on dot.com
companies that have gone bankrupt. The VC wants
data to support their contention that there are
valid business models that can be successful
selling products to consumers over the Internet.
The focus of this analysis should be on consumers
and not business to business.
6
Database Project
It would make sense to break the analysis into
four consumer groups 1) teens, 2) young adults,
3) mid-range adults and 4) seniors. This
assignment will concentrate on the young adult
category. The final results of this project
will provide a statistical profile of factors
that support a better business model for a
company to be successful selling to consumers
using the Internet and a list of survey
respondents that will be contacted to be part of
a focus group based on the fact that they have a
high potential to buy things using the Internet.
7

• To complete the database project, it will be
  necessary to accomplish the following
• Determine appropriate questions to generate the
  necessary data and design the questionnaire form
  (source document).
• 2. Edit the data in the source documents.
• 3. Input the data to create a database using
  Access database software.
• 4. Do an analysis of the data collected.
• 5. Prepare reports for the client summarizing
  the market analysis.
• Prepare a report for BIS Market Research that
  summarizes the key learning points of the
  assignment.
• When in doubt regarding any part of this
  assignment, do as you
• would in a real world situation.

8
Advice

• Never forget that the client is paying a very
  large fee for the market survey and results that
  should assist them in their business.
• If you collected the data, give it to the client.
  All of it!
• How long of a survey would you be willing to
  complete?

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Presentation Assignments

• Ch. 6 Summary Eric Pease
• Ch. 7 Introduction Chad Stallons
• Ch. 7 Summary Claire Meneely
• Ch. 8 Introduction Ivan Ditmars
• Ch. 8 Summary Jonathan Belliss
• Ch. 9 Introduction Chester Chiu
• Ch. 9 Summary David Diep
• Ch. 10 Introduction Charles Cooper
• Ch. 10 Summary Thanya Isabel
• Ch. 11 Introduction Maitland Kelly
• Ch. 11 Summary Ka Kwok
• Ch. 12 Introduction Emerson Lin

15
Question!
Name five companies that represent the best IS
management jobs in the US.
16
5 Best IS Management Jobs

• Wal-Mart
• Dell
• Schwab
• Cisco
• eBay

17
Chapter 6 Introduction

• Enterprise e-Business Systems

Applications in Business and Management
18
Plan for the Day

• Successful e-Business company examples
• With a continuing eye on business benefits,
• challenges and trends
• B2B versus B2C (e-Business/e-Commerce)
• The significance of e-Business communities

19
What is e-Business?
Electronic business not only deals with buying
and selling online but also encompasses the
entire online processes of developing,
marketing, selling, delivering, servicing, and
caring for products and services transacted on
inter-networked, global market place of
customers.
20
E-Commerce Versus E-Business
E-Commerce is the front end of a web-based
approach. E-Business is positioning the entire
organization to function in the most effective
way possible in support of an E-Commerce
approach.
21
Scope of e-Business

• Business to Consumer (B2C)
• Business to Business (B2B)
• Consumer to Consumer (C2C)

22
Company Examples

• Colgate-Palmolive ERP success.
• Cisco Systems ERP success
• Agilent Technologies ERP problems.
• Wal-Mart SCM success
• Solectron Corp. SCM problems
• McKesson Web-based SCM integration
• Mitsubishi Motors CRM success.
• Dell, Inc. Direct Business Model (online
  everything)

23
Cross Functional Integrated Systems

• ERP Enterprise Resource Planning
• SCM Supply Chain Management
• CRM Customer Relationship
• Management

24
Customers are in charge!

• It is easier than ever for customers to
  comparison
• shop and with a click of the mouse to switch
• companies.
• For this reason, customer relationships have
  become
• a companys most valued asset.
• Every company strategy should address how to find
  
• and retain the most profitable customers possible.

It is significantly cheaper to retain existing
customers than to gain new ones.
25
Internet Communities
Considered an important dimension in pursuing B2C
opportunities via the Internet.
Has there ever been an Internet buzzword that
has been more abused or confused than community?
26
Success in e-Business
27
The Future
B2C, e-tailing, e-commerce, online retailing,
online merchandisingwhatever it is calledis
here to stay. Yet, its got a ways to go until
it hits the maturity curve. The latest trends
to watch are online customer service,
permission-based e-mail marketing and affiliate
networks.
28
Chapter 6

• Enterprise e-Business Systems

29
Plan for the Day

• More on ERP, SCM and CRM
• Successful e-Business company examples
• Keys to e-Business success

30
Chapter 6
Section I Customer Relationship Management
The Business Focus Section II
Enterprise Resource Planning
The Business Backbone Section III Supply Chain
Management The Business
Network
31
What is e-Business?
E-Business not only deals with buying and
selling online but also encompasses the entire
online business processes of planning,
developing, marketing, selling, delivering,
servicing, and caring for products and services
transacted on inter- Networked systems for a
national and in many cases a global market place
of customers.

32
e-Commerce Versus e-Business

• Jack Callon says that e-Commerce is the systems
  front end of e-Business. It is primarily the web
  page and the closely related functions and
  activities.
• E-Business is posturing the organization so that
  business strategies, processes and systems are
  all prioritized and positioned to support such an
  approach.

33
Scope of e-Business

• Business to Consumer (B2C)
• Business to Business (B2B)
• Consumer to Consumer (C2C)

34
Terms

• e-Commerce
• e-Business
• Virtual Corporation
• Partnerships
• Outsourcing
• Internet
• Intranet
• Extranet
• Electronic Data Integration (EDI)

35
Company Examples

• Colgate-Palmolive ERP success.
• Cisco Systems ERP success
• Agilent Technologies ERP problems.
• Wal-Mart SCM success
• Solectron Corp. SCM problems
• McKesson Web-based SCM integration
• Mitsubishi Motors CRM success.
• Dell, Inc. Direct Business Model (online
  everything)

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Accounting and Financial Information Systems

• What are they?
• Who uses them?
• How are they used?

37
Types of Accounting Systems

• Operational
• Management

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Why do company use computers for their accounting
systems?
Must do it!
Repetitive
Clearly defined procedures
Accounting is a combination of multiple
sub-systems
Frequently meets all three of the common
criteria volumes, complexity and timing.
39
Basic IS Premise BICARSA
Order Processing System
Customer Purchase Order
System Database
Accounts Receivable System
Inventory Control Systems
Sales Analysis
40
Basic Business Premise

• You cant sell from an empty wagon.
• Inventories are the graveyard of a business.

Inventory carrying costs Cost of money tied up
in the manufactured or purchased inventory
item. Direct inventory costs warehouse,
logistical equipment, utilities, employees,
security, physical inventory and record
keeping. Other inventory costs obsolescence,
damage, theft, lost, etc.
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Inventory Control Criteria
1. What balance is desired between inventory
investment and customer service?
2. What balance is desired between inventory
investment and costs associated with changes
in the production line?
3. What balance is desired between inventory
investment and the cost of placing inventory
replenishment orders?
4. What balance is desired between inventory
investment and transportation costs?
42
Three Typical Objectives
1. Maximize customer service. 2. Minimize
inventory investment. 3. Efficient, low-cost
manufacturing operation.
43
Next Business Premise

• Three kinds of manufacturing companies
• Vertically integrated.
• Vendor emphasis for componentsassemble and test.
• Outsource.
• A company can do combinations of 2 and 3.

How many companies do vertically integrated
manufacturing?
44
Therefore

• An emphasis on just-in-time manufacturing and
  shipping direct to customers.
• This can mean inventorying at the assembly level.

The basic issues are lead-time to customer and
related operating costs.
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Why Automate Manufacturing?

• Consistency
• Repetitiveness
• Precision
• Quality
• Cost
• Worker Safety
• Eliminate Worker Boredom

46
ERP

• The cross functional enterprise system that
  integrates and automates many of the internal
  business processes of a company.
• This includes manufacturing planning and
  operations, logistics, distribution, accounting,
  finance and human resources.
• Serves as a vital backbone of the enterprise to
  achieve efficiency, agility and responsiveness
  required to succeed in a dynamic business
  environment.

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Business Processes and Functions Supported by ERP
Manufacturing Planning
Distribution Planning
Demand Planning
Logistical Planning
Order Entry
Enterprise Resource Planning

• MRP
• Inbound
• Inventory
• Plant
• Management

• Purchasing
• and
• Accounts
• Payable

• Distribution
• and
• Accounts
• Receivable

• Manufactur-
• ing and
• Production
• Scheduling

• Inventory Control

Suppliers
Customers
Finance and Accounting
Human Resources
Fig. 6.9
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ERP Benefits and Challenges

• Quality and Efficiency through integration of
  business processes.
• Decreased Costs in both business and IT
  operations.
• Decision Support based on more complete and
  timely information.
• Enterprise Agility through more flexible
  organizational structures, managerial
  responsibilities and work roles.

49
Colgate-Palmolive
Implemented SAP to access more timely and
accurate data, get the most out of working
capital and reduce manufacturing costs. It needed
the ability to coordinate globally and act
locally. Expanded to all divisions worldwide
during 2001.
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Costs to Implement ERP

• Reengineering business processes 43
• Training and change management 15
• Software 15
• Data conversion 15
• Hardware 12

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Colgate-Palmolive
Before After Acquire an order 1-5 days
4 hours Process an order 1-2
days Distribution planning and picking up to 4
days 14 hours On-time deliveries 91.5
97.5 Order to delivery time -50 Total
delivery cost per case -10 Domestic
inventories -1/3 Working capital ( of
sales) 11.3 6.3
52
Cisco Problems

• Financial Justification of IS
• Backend Infrastructure
• Caliber of customer support decreasing

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Cisco Solution
54
CFP Model

• Client Funded Project Model
• Necessary Overhead to Strategic Partner
• Utilize IT as a Competitive Resource
• Foundation of future small, large-scale projects

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Cisco ERP

• 15 million dollar project
• Management Support
• Annual Goal
• Functional Management
• Foundation of Cisco integrated systems

56
Agilent Technologies

• The good news The ERP system is stable.
• The bad news It involved a rocky migration that
  cost the company 105 million in revenue and 70
  million in profit.
• The Oracle e-Business software froze production
  for a week.
• The Oracle systems handles half of the companys
  worldwide production and almost all of its
  financial operations including order entry and
  shipping.

57
Agilent Technologies

• Agilent brought 2,000 legacy systems from HP when
  they were spun off as a separate company.
• Part of the migration was moving 6,000 orders to
  the new system which resulted in problems.
• Disruptions to the business after implementing
  the ERP system were more extensive that we
  expected.
• The issue wasnt the quality of the Oracle
  software but the very complex nature of the ERP
  implementation.

58
Agilent Technologies

• Agilent comments based on this experience
• ERP implementations are a fundamental
  transformation of a companys business
  processes.
• People, processes, policies and the companys
  culture are all factors that should be taken into
  consideration when implementing such a system.

A consultants perspective Ninety-nine percent
of such rollout fiascoes are caused by
managements inability to spec out their own
requirements and the implementers inability to
implement those specs.
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SCM

• Supply chain management is a cross-
• functional inter-enterprise system that
• integrates and automates the network of
• business processes and relationships between
• a company and its suppliers, customers,
• distributors and other business partners.

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SCM Goal

• The goal of SCM is to enable a company to achieve
  
• agility and responsiveness in meeting the demands
  
• of its customers and the needs of its suppliers
  by
• enabling it to design, build and sell its
  products
• using a network-based approach involving
• business partners and processes within the supply
  
• chain.

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SCM Functions

• Planning
• Supply Chain Design
• Collaborative Demand and Supply Planning
• Execution
• Materials Management
• Collaborative Manufacturing
• Collaborative Fulfillment
• Supply Chain Event Management
• Supply Chain Performance Management

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Supply Chain Life Cycle
Deliver
Schedule
Commit
Make
See Fig. 6.14 for complete diagram
63
Wal-Mart Stores

• 2004 FY Revenue 259 Billion
• 2004 FY Profit 55 Billion
• Cash position 5.2 Billion
• 3,200 stores in the US
• 1,100 stores in nine foreign countries
• 1.3 million associates
• Largest corporation in the world
• Ranked No. 1 in Fortune Most Admired
• Founded in 1962 in Rogers, Ark.

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Impressive Profile

• Timely basic business strategy
• Strong, effective customer focus.
• Strong culture (at least traditionally under
  Sam)
• Phenomenal growth (stores, revenue and profit)
• Outstanding distribution system.
• Good Information Systems organization.
• Good business leaders.
• Execute, execute, execute!

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Business Leaders

• Sam Walton
• Store founder and CEO until 1988
• Died in 1992
• David Glass
• Replaced Sam and was CEO for twelve years
• Took Wal-Mart sales from 16 billion to 165
  billion
• Lee Scott
• Replaced David Glass as CEO in 2000
• Started working for Wal-Mart in 1989
• Served as Director of Transportation and
  President of Wal-Mart stores
• Kevin Turner
• Current CIO and Senior Vice President
• Randy Mott
• Former CIO and Senior Vice President
• Advanced the EDI

66
Wal-Mart and Mattel

• Being a supplier to Wal-Mart is a two-edged
  sword. They are a phenomenal but tough customer
  as they demand excellence.
• Wal-Mart invested early and heavily in a system
  to identify and track sales on an individual item
  level.
• This made its IT infrastructure a key competitive
  resource that has been studied and copied by
  companies around the world.
• Wal-Mart changed the face of business.
• First major company to share sales and inventory
  data with suppliers.

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Wal-Mart

• Treats its suppliers as business partners.
• Implemented a collaborative planning, forecasting
  and replenishment system.
• Results in lower inventory carrying costs for
  both Wal-Mart and its suppliers.
• Wal-Marts margins can be far lower than other
  retailers because they have such an efficient
  supply chain.
• Key to Wal-Marts success is that it gets buy-in
  from its suppliers to an incredible degree.

68
Mattel Perspective

• Having sales data on a specific toy dictates
  ramping up or shutting down manufacturing.
• Having data on a daily or hourly basis is
  necessary to figure out what is selling best and
  where to tailor manufacturing.
• The greatest efficiencies will appear when the
  kind of trusting mutually beneficial relationship
  that Mattel has with Wal-Mart is duplicated with
  the rest of the companys retail customers.

69
McKesson and CVS

• McKesson is the largest US distributor of
  pharmaceuticals, heath care products and
  medical/surgical supplies.
• CVS is a leading drug retail chain who wants
  better integration with McKessons systems.
• This dictates a much closer relationship between
  the two companies with McKesson even taking
  responsibility form CVS stock levels.
• This requires seamless business process
  integration between the two companies and new
  applications that link CVS to McKessons
  operations department.

70
Solectron Corp.

• SCM theory contends that technologically driven
  improvements in inventory management especially
  through just-in-time production, direct online
  sales and supply chain management will result in
  increased efficiency and tailored output to match
  demand.
• Because of these benefits a company will gain
  increased working capital, boost profit margins
  and level business cycles.

71
Solectron Corp.

• Killer applications cannot compensate for
  old-fashioned business judgment.
• SCM cannot synchronize every party in the product
  chain by providing a transparent view of supply
  and demand.
• Forecasts are still provided by people who can be
  overly optimistic or pessimistic.

72
Solectron Corp.

• In the fall of 2000, company management felt that
  there was a glut of telecom equipment supply.
• Its major customers Cisco, Ericsson and Lucent
  was experiencing explosive growth and told
  Solectron to produce massive product volumes.
• Solectron ended up with 4.7 billion in inventory
  that it obtained from its 4,000 suppliers.

73
CRM

• Customer relationship management is a cross-
• functional enterprise system that integrates and
• automates many of the customer serving processes
  in
• sales, marketing and customer services that
  interact
• with a companys customers.

74
Customers are in charge!

• It is easier than ever for customers to
  comparison shop and
• with little more than a click of a mouse to
  switch companies.
• For this reason, customer relationships have
  become
• a companys most valued asset.
• Every company strategy needs to address how to
  find and
• retain the most profitable customers possible.

75
CRM Applications
Customer Service and Support
Marketing and Fulfillment
Fax
e-Mail

• Sales
• Cross Sell
• Up Sell

Retention and Loyalty Programs
Prospects or Customers
Telephone
Web
Contact and Account Management
76
Mitsubishi Motor SalesImplementing CRM Systems

• Traditionally was primarily about (selling) cars.
• Had 18 toll free customer service numbers for
  customers to find information ranging from sales
  to repair service.
• Concluded that they lacked a cohesive customer
  focus.
• Company shifted to an increased focus on
  customers in 1999.

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Approach Criteria

• The Three S Test
• Is it simple?
• Does it satisfy?
• Is it scalable?

78
CRM Implementation

• Centralized to one call center.
• Outsourced to a service center for basic calls.
• Gained flexible skills-based call routing.
• Half of calls received information from an
  interactive voice response unit.
• Consolidated 11 screens of customer data into
  one.
• Call center handled 38 more calls in 2000 with
  no more staff.
• Customer satisfaction rose 8.

79
Project Team

• Included people from sales, marketing, finance
  and the IT department.
• Obviously had the backing of senior management.
• Emphasized the selection of the best-of-bred CRM
  software.
• Decided to implement changes slowly based on
  employee use of previous new approaches.

80
Major Vendor Siebel Systems

• Call center software.
• Customer-centric database.

Dirty data was a major stumbling block.
81
Digital Phone Switch

• Flexible call routing.
• Half of callers got answers from a voice response
  unit.
• GUI enabled 11 screens worth of information to
  be put on one screen of a call agent.
• Siebel software provided agents with
  decision-tree scripts and automated customer
  correspondence.
• Added ability to monitor outsourced service
  calls.
• Added software to hourly forecast call center
  coverage.
• Added software to record agent voice and screen
  activity for quality assurance and training.

82
Impact on Agents

• Career growth and higher pay.
• Agents can handle broader product calls.
• Can be trained during slack time.
• Reduced turnover of agents.

83
Company Benefits

• Better feel for customer concerns.
• Helps drive marketing decisions.
• Accelerated earlier results.

84
CRM Applications
Customer Service and Support
Marketing and Fulfillment
Fax
e-Mail

• Sales
• Cross Sell
• Up Sell

Retention and Loyalty Programs
Prospects or Customers
Telephone
Web
Contact and Account Management
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SCM Stages

• Information Sharing
• Product/Sales Data
• Sourcing Help
• Logistics
• Order Fulfillment

• Collaborative
• Marketing
• Sales and Service
• SCM Optimization
• Collaborative
• Design and Delivery

• Order Management
• Inventory
• Management
• Resource Allocation
• Systems Use and
• Integration

• Stage 2
• Intranet/extranet
• links to trading
• partners
• Supplier network
• expansion

• Stage 3
• Collaborative
• Planning/fulfillment
• Extranet and
• exchange-based
• collaboration

• Stage 1
• Current supply
• chain improvement
• Supply chain,
• e-commerce loosely
• coupled