Chapter 8 Enterprise Business Systems

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Chapter 8 Enterprise Business Systems

• James A. O'Brien, and George Marakas. Management
  Information Systems with MISource 2007, 8th ed. 
  Boston, MA McGraw-Hill, Inc., 2007.  ISBN 13
  9780073323091

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Learning Objectives

• Identify and give examples to illustrate the
  following aspects of customer relationship,
  enterprise research, and supply chain management
  systems
• Business processes supported
• Customer and business value provided
• Potential challenges and trends

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Customer Relationship Management

• A customer-centric focus
• Customer relationships have become a companys
  most valued asset
• Every companys strategy should be to find and
  retain the most profitable customers possible

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Case 1 Business Benefits of CRM

• Forex Capital Markets trades 20 billion worth
  of currency per month
• 12,000 clients in 70 countries
• Tracking sales leads and prospects
• Began with Excel spreadsheets
• Switched to Access database
• Volume forced move to CRM system
• Access controlled through data security and
  information sharing privileges

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Case 1 Business Benefits of CRM

• Wyse Technology
• World leader in thin-client computing
• Revenues in excess of 180 million
• Doubled sales within 12 months of installing CRM
  system
• No additional staff needed

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Case Study Questions

• Why cant Microsoft Excel spreadsheets and Access
  database software handle the customer
  relationship needs of companies like FXCM?
• What functions do CRM systems like Salesforce
  provide to a company that these software packages
  do not?
• What business benefits has the Salesforce CRM
  system provided to FXCM?
• To Wyse Technology?
• Salesforce.com is an example of an ASP
  (application service provider), which was
  discussed in Chapter 4.
• What benefits do you see in this case for that
  method of providing a CRM system to a company
  versus installing a CRM software package?
• What disadvantages might arise?
• Which method would you prefer?

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What is CRM?

• Managing the full range of the customer
  relationship involves
• Providing customer-facing employees with a
  single, complete view of every customer at every
  touch point and across all channels
• Providing the customer with a single, complete
  view of the company and its extended channels
• CRM uses IT to create a cross-functional
  enterprise system that integrates and automates
  many of the customer-serving processes

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Application Clusters in CRM

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Contact and Account Management

• CRM helps sales, marketing, and service
  professionals capture and track relevant data
  about
• Every past and planned contact with prospects and
  customers
• Other business and life cycle events of customers
• Data are captured through customer touchpoints
• Telephone, fax, e-mail
• Websites, retail stores, kiosks
• Personal contact

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Sales

• A CRM system provides sales reps with the tools
  and data resources they need to
• Support and manage their sales activities
• Optimize cross- and up-selling
• CRM also provides the means to check on a
  customers account status and history before
  scheduling a sales call

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Marketing and Fulfillment

• CRM systems help with direct marketing campaigns
  by automatic such tasks as
• Qualifying leads for targeted marketing
• Scheduling and tracking mailings
• Capturing and managing responses
• Analyzing the business value of the campaign
• Fulfilling responses and requests

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Customer Service and Support

• A CRM system gives service reps real-time access
  to the same database used by sales and marketing
• Requests for service are created, assigned, and
  managed
• Call center software routes calls to agents
• Help desk software provides service data and
  suggestions for solving problems
• Web-based self-service enables customers to
  access personalized support information

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Retention and Loyalty Programs

• It costs 6 times more to sell to a new customer
• An unhappy customer will tell 8-10 others
• Boosting customer retention by 5 percent can
  boost profits by 85 percent
• The odds of selling to an existing customer are
  50 percent a new one 15 percent
• About 70 percent of customers will do business
  with the company again if a problem is quickly
  taken care of
• Enhancing and optimizing customer retention and
  loyalty is a primary objective of CRM
• Identify, reward, and market to the most loyal
  and profitable customers
• Evaluate targeted marketing and relationship
  programs

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The Three Phases of CRM

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Benefits of CRM

• Benefits of CRM
• Identify and target the best customers
• Real-time customization and personalization of
  products and services
• Track when and how a customer contacts the
  company
• Provide a consistent customer experience
• Provide superior service and support across all
  customer contact points

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CRM Failures

• Business benefits of CRM are not guaranteed
• 50 percent of CRM projects did not produce
  promised results
• 20 percent damaged customer relationships
• Reasons for failure
• Lack of understanding and preparation
• Not solving business process problems first
• No participation on part of business stakeholders
  involved

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Trends in CRM

• Operational CRM
• Supports customer interaction with greater
  convenience through a variety of channels
• Synchronizes customer interactions consistently
  across all channels
• Makes the company easier to do business with
• Analytical CRM
• Extracts in-depth customer history, preferences,
  and profitability from databases
• Allows prediction of customer value and behavior
• Allows forecast of demand
• Helps tailor information and offers to customer
  needs

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Trends in CRM

• Collaborative CRM
• Easy collaboration with customers, suppliers, and
  partners
• Improves efficiency and integration throughout
  supply chain
• Greater responsiveness to customer needs through
  outside sourcing of products and services
• Portal-based CRM
• Provides users with tools and information that
  fit their needs
• Empowers employees to respond to customer demands
  more quickly
• Helps reps become truly customer-faced
• Provides instant access to all internal and
  external customer information

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ERP The Business Backbone

• ERP is a cross-functional enterprise backbone
  that integrates and automates processes within
• Manufacturing
• Logistics
• Distribution
• Accounting
• Finance
• Human resources

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Case 2 Business Value of ERP

• Autosystems produces headlamps for major
  automobile manufacturers
• Until a few years ago, the manufacturing process
  was managed with paper documents
• An ERP system was installed, but did not extend
  to the shop floor
• Significant research was done before deciding to
  add the shop floor reporting module
• Installing PCs and ERP software on the shop floor
  allows Autosystems to
• Enter timely, accurate information
• Plan more efficiently
• Make production changes in order to avoid labor
  or scrap problems
• Discuss these issues with employees while they
  are still current and meaningful

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Case Study Questions

• Why did Autosystems decide to install the
  ActivEntry system?
• Why did they feel it necessary to integrate it
  with their TRANS4M ERP system?
• Which three business benefits of the use of
  ActivEntry provided the most business value?
• What changes are already being planned to improve
  the use of ActivEntry?
• What other improvements should the company
  consider?

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What is ERP?

• Enterprise resource planning is a
  cross-functional enterprise system
• An integrated suite of software modules
• Supports basic internal business processes
• Facilitates business, supplier, and customer
  information flows

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ERP Application Components

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ERP Process and Information Flows

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Benefits and Challenges of ERP

• ERP Business Benefits
• Quality and efficiency
• Decreased costs
• Decision support
• Enterprise agility
• ERP Costs
• Risks and costs are considerable
• Hardware and software are a small part of total
  costs
• Failure can cripple or kill a business

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Costs of Implementing a New ERP

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Causes of ERP Failures

• Most common causes of ERP failure
• Under-estimating the complexity of planning,
  development, training
• Failure to involve affected employees in
  planning and development
• Trying to do too much too fast
• Insufficient training
• Insufficient data conversion and testing
• Over-reliance on ERP vendor or consultants

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Trends in ERP

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Supply Chain Management (SCM)

• Fundamentally, supply chain management helps a
  company
• Get the right products
• To the right place
• At the right time
• In the proper quantity
• At an acceptable cost

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Goals of SCM

• The goal of SCM is to efficiently
• Forecast demand
• Control inventory
• Enhance relationships with customers, suppliers,
  distributors, and others
• Receive feedback on the status of every link in
  the supply chain

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Case 3 Applying Lean Logistics to SCM

• The Tesco supermarket chain is a pioneer in
  retailing
• Used SCM to overcome disadvantage of weak
  supplier leverage and expensive logistics
• Changed product distribution methods to reduce
  labor costs and inventory levels
• Got suppliers to ship in smaller quantities,
  preconfigured for sales display
• Reduced total product touches from 150 to 50
• Reduced throughput time from 20 days to 5

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Case Study Questions

• What key insights of Tescos SCM direction Graham
  Booth helped revolutionize Tescos supply chain
  and range of retail store formats?
• Can these insights be applied to any kind of
  retail business?
• How did Dan Jones and the Cardiff Business School
  of Wales demonstrate the inefficiencies of the
  Tesco and Britvic supply chains?
• Can this methodology be applied to the supply
  chain of any kind of business?
• What are the major business and competitive
  benefits gained by Tesco as the result of its
  supply chain initiatives?
• Can other retail chains and retail stores achieve
  some or all of the same results?
• Defend your position with examples of actual
  retail chains and stores you know.

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What is a Supply Chain?

• The interrelationships
• With suppliers, customers, distributors, and
  other businesses
• Needed to design, build, and sell a product
• Each supply chain process should add value to the
  products or services a company produces
• Frequently called a value chain

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Supply Chain Life Cycle

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Electronic Data Interchange

• One of the earliest uses of information
  technology for supply chain management
• The electronic exchange of business transaction
  documents between supply chain trading partners
• The almost complete automation of an e-commerce
  supply chain process
• Many transactions occur over the Internet, using
  secure virtual private networks

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Typical EDI Activities

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Roles and Activities of SCM in Business

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Planning Execution Functions of SCM

• 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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Benefits and Challenges of SCM

• Key Benefits
• Faster, more accurate order processing
• Reductions in inventory levels
• Quicker times to market
• Lower transaction and materials costs
• Strategic relationships with supplier

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Goals and Objectives of SCM

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Benefits and Challenges of SCM

• Key Challenges
• Lack of demand planning knowledge, tools, and
  guidelines
• Inaccurate data provided by other information
  systems
• Lack of collaboration among marketing,
  production, and inventory management
• SCM tools are immature, incomplete, and hard to
  implement

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Trends in SCM

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Case 4 Consequences of ERP Failure

• The goal Agilent Technologies Inc. specializes in
  measurement and technology
• Its goal is to enable customers to speed their
  time to market
• Achieve volume production
• Obtain high-quality precision manufacturing
• Consequences of a new ERP system
• One year to stabilize system
• 105 million in lost revenue
• 70 million in lost profits

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Case 4 Consequences of ERP Failure

• Lessons Learned
• Disruptions can be more extensive than expected
• Enterprise resource planning is very complex
• ERP implementations are more than software
• People, process, policies, the companys culture
  should all be taken into consideration
• According to Enterprise Applications Consulting
• 99 percent of rollout fiascoes are caused by
  managements inability to spec requirements, and
  the implementers inability to implement specs

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Case 4 Consequences of ERP Failure

• Russ Berrie and Company
• First ERP implementation attempt took three
  years and cost 10.3 million
• Litigation is pending between Russ Berrie and
  SAP
• Second attempt
• Uses new applications
• Is being implement department by department
• Uses stand-alone systems

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Case Study Questions

• What are the main reasons companies experience
  failures in implementing ERP systems?
• What are several key things companies should do
  to avoid ERP systems failures?
• Why do you think ERP system in particular are
  often cited as examples of failures in IT systems
  development, implementation, or management?