Transcript Slide 1

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
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
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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
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Case 1 Business Benefits of CRM
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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
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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
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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?
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What is CRM?
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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
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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
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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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Marketing and Fulfillment
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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?
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Enterprise resource planning is a crossfunctional 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
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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
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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)
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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
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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
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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
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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?
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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
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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 ecommerce 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
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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
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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
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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
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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
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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
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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
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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?
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