Chapter 8 Enterprise

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Chapter 8 Enterprise
Business Systems

James A. O'Brien, and George Marakas.
Management

Information Systems with MISource
2007, 8
th

ed.


Boston, MA: McGraw
-
Hill, Inc.,
2007.


ISBN: 13 9780073323091

Chapter 8 Enterprise Business Systems

2


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

Chapter 8 Enterprise Business Systems

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

Chapter 8 Enterprise Business Systems

4

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

Chapter 8 Enterprise Business Systems

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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

Chapter 8 Enterprise Business Systems

6

Case Study Questions


Why can’t 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?

Chapter 8 Enterprise Business Systems

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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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9

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
customer’s account status and history before
scheduling a sales call

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11

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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12

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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13

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

Chapter 8 Enterprise Business Systems

19

ERP: The Business Backbone


ERP is a cross
-
functional enterprise backbone
that integrates and automates processes within


Manufacturing


Logistics


Distribution


Accounting


Finance


Human resources

Chapter 8 Enterprise Business Systems

20

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

Chapter 8 Enterprise Business Systems

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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 Tesco’s SCM direction Graham Booth
helped revolutionize Tesco’s 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



Chapter 8 Enterprise Business Systems

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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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37

Roles and Activities of SCM in
Business



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38

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

Chapter 8 Enterprise Business Systems

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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

Chapter 8 Enterprise Business Systems

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Trends in SCM



Chapter 8 Enterprise Business Systems

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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 company’s culture
should all be taken into consideration


According to Enterprise Applications Consulting


99 percent of rollout fiascoes are caused by
management’s inability to spec requirements, and
the implementer’s 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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46

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?