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Chapter 8 Enterprise Business Systems

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. Learning Objectives.

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Chapter 8 Enterprise Business Systems

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  1. Chapter 8 Enterprise Business Systems James A. O'Brien, and George Marakas. ManagementInformation Systems with MISource 2007, 8th ed.  Boston, MA: McGraw-Hill, Inc., 2007.  ISBN: 13 9780073323091

  2. 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 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

  5. 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

  7. 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 Chapter 8 Enterprise Business Systems

  8. Application Clusters in CRM Chapter 8 Enterprise Business Systems

  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 Chapter 8 Enterprise Business Systems

  10. 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 Chapter 8 Enterprise Business Systems

  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 Chapter 8 Enterprise Business Systems

  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 Chapter 8 Enterprise Business Systems

  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 Chapter 8 Enterprise Business Systems

  14. The Three Phases of CRM Chapter 8 Enterprise Business Systems

  15. 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 Chapter 8 Enterprise Business Systems

  16. 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 Chapter 8 Enterprise Business Systems

  17. 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 Chapter 8 Enterprise Business Systems

  18. 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 Chapter 8 Enterprise Business Systems

  21. 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? Chapter 8 Enterprise Business Systems

  22. 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 Chapter 8 Enterprise Business Systems

  23. ERP Application Components Chapter 8 Enterprise Business Systems

  24. ERP Process and Information Flows Chapter 8 Enterprise Business Systems

  25. 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 Chapter 8 Enterprise Business Systems

  26. Costs of Implementing a New ERP Chapter 8 Enterprise Business Systems

  27. 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

  28. Trends in ERP Chapter 8 Enterprise Business Systems

  29. 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 Chapter 8 Enterprise Business Systems

  30. 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 Chapter 8 Enterprise Business Systems

  31. 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 Chapter 8 Enterprise Business Systems

  32. 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. Chapter 8 Enterprise Business Systems

  33. 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 Chapter 8 Enterprise Business Systems

  34. Supply Chain Life Cycle Chapter 8 Enterprise Business Systems

  35. 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 Chapter 8 Enterprise Business Systems

  36. Typical EDI Activities Chapter 8 Enterprise Business Systems

  37. Roles and Activities of SCM in Business Chapter 8 Enterprise Business Systems

  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

  39. 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 Chapter 8 Enterprise Business Systems

  40. Goals and Objectives of SCM Chapter 8 Enterprise Business Systems

  41. 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

  42. Trends in SCM Chapter 8 Enterprise Business Systems

  43. 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 Chapter 8 Enterprise Business Systems

  44. 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 Chapter 8 Enterprise Business Systems

  45. 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 Chapter 8 Enterprise Business Systems

  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? Chapter 8 Enterprise Business Systems

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