Transcript Chapter 8
Chapter 8
Business Across the
Enterprise
McGraw-Hill/Irwin
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
Identify and give examples to illustrate the
following aspects of customer relationship
management, enterprise resource
management, and supply chain management
systems:
Business processes supported
Customer and business value provided
Potential challenges and trends
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Learning Objectives
Understand the importance of managing at the
enterprise level to achieve maximum
efficiencies and benefits.
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Getting All the Geese Lined Up:
Managing at the Enterprise Business
Level
Customer Relationship Management,
Enterprise Resource Planning, and Supply
Chain Management all share the same Goal: to
get the organization to line up and head in the
same direction (like geese).
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Section 1
Customer Relationship Management:
The Business Focus
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I. Introduction
Businesses today must be
Customer-centric/Customer-focused –
Customer, Customer, Customer!
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II. What Is CRM?
Providing the organization with a single
complete view of every customer, and
providing the customer with a single complete
view of the organization and its extended
channels
Contact and Account Management – capture
and track relevant data about past and
planned contacts
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II. What Is CRM?
Sales – providing software tools and data
sources to manage sales activities, and
optimize cross-selling and up-selling
Cross-selling – selling related products to
current customers
Up-selling – selling better products than the one
currently purchased
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II. What Is CRM?
Marketing and Fulfillment – automate
direct marketing, scheduling, and tracking,
and assist in scheduling responses and
requests, while capturing relevant
information for the marketing database
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II. What Is CRM?
Customer Service and Support – provide
customer service software tools, and realtime access to the customer database
Call Center Software – routes calls to customer
support agents
Help Desk Software – provides assistance for
customer service agents having problems with a
product/service
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II. What Is CRM?
Retention and Loyalty Programs – enhancing and
optimizing customer retention and loyalty is a
major business strategy because:
It costs 6 times more to sell a new customer than an
existing one
Dissatisfied customers will tell 8–10 people about bad
experiences
A firm can boost sales 85% by increasing customer
retention 5%
Odds of selling a new customer – 15%; Odds of selling a
current customer – 50%
If a firm resolves a service problem quickly, 70% of
complaining customers will do business with the firm
again
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Zip Realty: E-Mail and CRM Integration
with Open-Source Zimbra
What was the problem with the systems used
by Zip?
What benefit did Zimbra offer that other
systems being considered did not?
What benefits does the system offer to users?
How do the costs of the various systems
compare?
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III. The Three Phases of CRM
Acquire – CRM helps a new customer
perceive value of a superior product/service
Enhance – CRM supports superior customer
service, and cross-selling/up-selling
Retain – CRM helps proactively identify and
reward the most loyal and profitable
customers
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Hard Rock Hotel and Casino: Drinks – and
CRM – Go Mobile
What is the usual problem at a Las Vegas bar?
What idea has Hard Rock come up with?
What technologies are involved?
What other customer services can it provide?
What other benefits does it accrue for Hard
Rock?
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IV. Benefits and Challenges of CRM
CRM helps identify and reward the best
customers
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V. CRM Failures
Although over 70% of firms plan to implement
CRM, over 50% of CRM projects fail to produce
promised results due to:
Lack of senior management sponsorship
Improper change management
Projects take on too much too fast
Poor integration between CRM and core business
systems
Lack of end-user incentives leading to low user
adoption rates
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Unum Group: The Long Road to CRM
What was Unum’s problem?
How many systems were originally involved?
How many did they get rid of?
What is the difference between CRM and CDI?
What is the intention of Unum for the future?
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VI. Trends in CRM
Firms must create tighter linkages with
customers while enhancing the customer
experience
Operational CRM – supports/synchronizes
customer interactions
Analytical CRM – extracts customer information
and predicts customer behavior
Collaborative CRM – enables collaboration with
customers, suppliers, and business partners
Portal-Based CRM – enables access to customer
information and CRM tools
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Integrated CRM: Hilton’s Welcome Mat
Starts on the Web
In what ways is Hilton customer-oriented?
What is Hilton’s goal?
How does Hilton view technology?
What is SuiteSelection and how is it customeroriented?
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Section 2
Enterprise Resource Planning:
The Business Backbone
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I. Introduction
ERP is a multifunctional enterprisewide
backbone that integrates/automates
business processes and information
systems
II. What is ERP?
A cross-functional software suite
supporting basic internal business
processes of a firm
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Colgate-Palmolive: The Business Value of
ERP
What were Colgate’s needs?
What solutions did SAP provide?
What results have occurred with this
installation? What impact does this have
on business?
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III. Benefits and Challenges of ERP
Major Business Value from ERP
Quality and Efficiency – significant improvements in
quality and efficiency of customer service, production,
and distribution
Decreased Costs – significant reductions in transaction
costs, hardware and software, and IT support staff
Decision Support – provides cross-functional information
that enables better decision making across the enterprise
Enterprise Agility – breaks down departmental/functional
walls and enables more flexible, adaptive organizational
structures
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III. Benefits and Challenges of ERP
Costs of ERP – if you do not do ERP properly
you can kill the firm
Causes of ERP Failures
#1 cause – underestimating the complexity of
planning, development, and training necessary
for success
Failure to involve affected employees
Trying to do too much too fast
Overreliance on claims of software
vendors/consulting firms
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ERP Implementations: When They Fail,
They Fail Big
How is an “ERP Failure” define?
What was the original budget? What
was the last cost?
If the project was a failure, why did they
go ahead with it?
What part did the users have in the
failure?
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Capital One Financial: Success with ERP
Systems
In the old system, how many people had
to sign off on an address change?
Which ERP system did they choose?
(NOTE: also see the Imperial Sugar case)
What cultural change was effected? Why
is that important?
How are software applications accessed?
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IV. Trends in ERP
Improvements in Integration and Flexibility
– ERP modules have become more flexible
and easier to install
Extensions to Business Applications – access
to intranets/extranets
Broader Reach to New Users – use of the
Internet, intranets and extranets provides
new links to customers, suppliers, and
partners
Adoption of Internet Technologies –enables
all the above
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VISA International: Implementing the eBusiness Suite
What were the problems with VISA’s
internal systems?
What did the solution do?
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Section 3
Supply Chain Management:
The Business Network
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I. Introduction
Successful SCM is based on accurate order
processing, JIT inventory management, and
timely order fulfillment; this was theoretical
10 years ago, but is now a competitive weapon
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II. What is SCM?
A cross-functional interenterprise system using
IT to support/manage links between key
business processes and suppliers, customers,
and business partners
Electronic Data Interchange (EDI) – an early SCM
methodology for exchanging information between
partners using standard document message
formats, still very popular but being replaced by
.xml-based Web services
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PC Connection: Learning to Stop, Drop, and
Ship
What was the problem with PC
Connection’s ERP system?
What was their solution?
How well has it worked?
What does the system have to do with
customer satisfaction?
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Telefonica TSAI: Internet EDI
How much of Spain’s EDI traffic does
TSAI handle?
What service does TSAI offer smaller
customers?
How does this help these smaller
customers?
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III. The Role of SCM
• To optimize the effective/efficient movement
of materials between suppliers, customers,
and other partners
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Imperial Sugar: Supply Chain Management
to the Rescue
What was Imperial’s problem following
the refinery explosion?
What software did they use to help?
What did this software offer them to
help with the problem?
Which ERP system failed them? Why did
it not work?
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IV. Benefits and Challenges of SCM
SCM solutions are becoming more complex
Benefits:
Faster, More Accurate Order Processing
Reductions in Inventory Levels
Quicker Times to Market
Lower Transaction and Materials Costs
Strategic Relationships with Suppliers
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IV. Benefits and Challenges of SCM
Challenges – SCM Failures Caused By:
Lack of Knowledge about Demand Planning
Inaccurate/Overly Optimistic Demand Forecasts
Inaccurate Production, Inventory, and Other
Business Data
Lack of Adequate Collaboration Among Marketing,
Production, and Inventory Management
Departments
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Emerson Transaction Hub: A Bright Idea
That’s Paying Off
What problem did Emerson identify?
What was the solution to this problem?
How was the solution implemented?
What percentage of costs was saved by
shipping in the same container?
How much did Emerson invest in the
communications hub? Have they
recovered their costs?
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Nike Inc.: Failure (and Bouncing Back) with
Supply Chain Management
How much did Nike’s “speed bump”
cost, and in what areas?
How does Nike use historical models?
What have the benefits of the ERP
system been?
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V. Trends in SCM
3 Stages to SCM Implementation
Improve Internal Supply Chain Processes
and Improve Relationships with Suppliers
and Customers
Use Supply Chain Software, Intranets, and
Extranets with Trading Partners
Develop and Implement Collaborative SCM
Applications
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CVS, McKesson, and MPT: Web-Based SCM
Integration
Why does CVS prefer push to pull
promotions?
What do both CVS and McKesson
achieve through this relationship?
What was MPT’s problem?
What solutions does i-Supply offer?
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