ch 8 Enterprise Business Systems Enterprise Business Systems .ppt

8 Enterprise Business Systems 307
Section I: Getting All the Geese Lined Up:
Managing at the Enterprise Level 308
Section II: Enterprise Resource Planning:
The Business Backbone 320
Section III: Supply Chain Management:
The Business Network 330

1. James A. O'Brien, and George Marakas
ManagementInformation Systems, 9
th
ed.
Boston, MA: McGraw-Hill, Inc., 2009.ISBN:
13 9780073376769
Chapter 8 Enterprise Business
Systems
McGraw-Hill/Irwin
Copyright© 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

2. 1.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
Learning Objectives
8-2

3. Customer Relationship Management
•A customer-centric focus
–Customer relationships have become a company’s
most valued asset
–Every company’s strategy should be to
find and retain the most profitable
customers possible
8-3

4. Case 1: NetSuite Inc., Berlin Packaging,
Churchill Downs, and Others
•CRM software enables sales and marketing
professionals to increase sales revenue by providing
more and better services to customers and prospects.
•Many CRM implementations have failed because of the
difficulty data migration from old disparate systems to
new system.
•CRM implementation is lot easier to do early in a
company’s history than it is later.
•Companies need to make sure data are in order before
they launch any major CRM initiative.
•Without accurate, complete, and comprehensive data,
any CRM effort will be less than optimal.
8-4

5. Case Study Questions
1.What are the business benefits of CRM
implementations for organizations such as Berlin
Packaging and Churchill Downs? What other uses of
CRM would you recommend to the latter? Provide
several alternatives.
2.Do you agree with the idea that smaller organizations
are better positioned to be more effective users of CRM
than larger ones? Why or why not? Justify your answer.
3.One of the main issues noted in the case is the
importance of “good” data for the success of CRM
implementations. We discussed many of these in
Chapter 5, when we compared the file processing and
database.
8-5

6. 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
8-6

7. Application Clusters in CRM
8-7

8. 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
8-8

9. 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 customer’s account status and history
before scheduling a sales call
8-9

10. 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
8-10

11. 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
8-11

12. 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
8-12

13. The Three Phases of CRM
8-13

14. 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
8-14

15. 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
8-15

16. 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
8-16

17. Trends in CRM (cont’d)
•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
8-17

18. ERP: The Business Backbone
•ERP is a cross-functional enterprise
backbone that integrates and automates
processes within
–Manufacturing
–Logistics
–Distribution
–Accounting
–Finance
–Human resources
8-18

19. Case 2: IT Leaders, Vertex
Distribution, and Prevention Partners
•ERP systems have become the vital business software
backbone to many companies that just cannot live
without them anymore.
•According to Gregor Bailar, former CIO of Capital One,
the most exciting emerging technology for enterprises
in the next three to five years is Open source ERP.
•Many small to medium size companies are finding the
licensing fee for commercial ERP systems to be very
high and are looking for open source ERP systems.
•Some of the companies are spending the money they
are saving from the license fees on customizing the
package as per their needs.
8-19

20. Case Study Questions
1.The case highlights differences in adoption of open source
ERP systems between small or medium and large
companies. What are the main reasons behind these
differences? Do you think it is only a matter of cost? Justify
your answer.
2.Enterprise resource planning systems are clearly the
backbone of the modern enterprise. How comfortable would
you feel about recommending the adoption of an open-source
package to perform these functions, and why? What kinds of
resistance, if any, would you expect to find about your
proposal?
3.Do you agree with the rationale stated by some of the CIOs in
this case that if ERP systems need to be customized anyway,
starting with an open-source package may make more sense
than with a commercial one? Why or why not? Justify your
answer.
8-20

21. 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
8-21

22. ERP Application Components
8-22

23. ERP Process and Information
Flows
8-23

24. 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
8-24

25. Costs of Implementing a New ERP
8-25

26. 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
8-26

27. Trends in ERP
8-27

28. 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
8-28

29. 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
8-29

30. Case 3: Perdue Farms and Others
•Every year even the best companies are challenged by
the pressure placed on their supply chain during the
holiday season.
•According to Brian Tomlin “The holiday season is a
difficult time for manufacturers and retailers because
they’re making educated guesses and bets on what
demand is going to be, and they’re not going to get it
right every single time.”
•Delivering the right number of products to the right
customers at the right time has become very important
for businesses and they are turning to forecasting and
supply chain management tools.
8-30

31. Case Study Questions
1.What are the key factors that determine the
success or failure of supply chains during the
holiday season? Which of these are or could be
under the control of companies, and which are
inherent in the end consumer business? Provide
several examples.
2.Consider the increasing use of gift cards in lieu of
gifts during the holiday season. What effects does
this new practice introduce into demand planning
and supply chain management? Consider the fact
that virtually nothing is known about the recipients
of gift cards.
8-31

32. 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
8-32

33. Supply Chain Life Cycle
8-33

34. 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
8-34

35. Typical EDI Activities
8-35

36. Roles and Activities of SCM in
Business
8-36

37. 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
8-37

38. 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
8-38

39. Goals and Objectives of SCM
8-39

40. 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
8-40

41. Trends in SCM
8-41

42. Case 4: Autosystems: The Business
Value of a Successful 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
8-42

43. Case 4: Autosystems: The Business
Value of a Successful ERP
•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
8-43

44. Case Study Questions
1.Why did Autosystems decide to install the
ActivEntry system? Why did they feel it necessary
to integrate it with their TRANS4M ERP system?
2.Which three business benefits of the use of
ActivEntry provided the most business value?
3.What changes are already being planned to
improve the use of ActivEntry? What other
improvements should the company consider?
8-44